an unending itch

Imagine your wrist is itching right now. It’s the kind of itch that just has to be scratched – it doesn’t matter what you are doing, because the urge to scratch rises up and blocks your ability to concentrate on almost anything else. I am sure you know this feeling – the sudden intensity of the itch narrows your vision to a tunnel. You stop, you scratch, you resume whatever it was you were doing.

Now imagine that keeps happening.
Again and again. You itch at random all over. Your nose itches, you stop and scratch and take ten steps before your knee itches. The aggravation becomes unbearable – every few minutes another urge to scratch, another pulsating itch.

But after a while, a funny thing happens – you are so consumed with scratching and itching that you realize that you can ignore some of the milder itches.
Your mind blocks them out, because otherwise you’re just in a haze, waiting for the next tickle on your shoulder or your ear. You realize, hey, I can block these itches out.

Before long, you are blocking out more and more of these urges to itch.
After a while, you can ignore almost all of them. Your mind learns how to block bigger and bigger urges, until only the most pressing itches needs scratching. One day, you realize that although you still itch all over, you don’t need to scratch anymore. You have conquered the urge and no longer have a knee-jerk reaction when it strikes.

This is more or less the way you need to approach spending if you’re in debt, or eating if you’re trying to lose weight, or getting over a bad habit of any kind. It may seem like an oversimplification but that’s what it is. Your mind is an amazing tool (but also a dangerous one) but you are its master.

Creative Commons License photo credit: Sugar Pond

The Final Four

No, not the basketball one – I’ve made the Final Four in Free Money Finance’s March Madness. I’m being killed right now by the (quite worthy) article from I’ve Paid For That Twice Already on snowflaking! I’ve been cruising through the tournament up until this point, but it looks like I’ve got an uphill struggle to win this one. Gimme a hand if you have a sec – just go there and comment “Game 1: Late, Game 2: Lessons” (the second one is my fellow Money Writer, SVB of the Digerati Life).

I want to win the whole thing. The proceeds, should I win, go to a charity, The Russian Children’s Welfare Society (link to my article about it), that I’ve already won some money for this year, and I’d desperately like to do it again. I need some votes so if you have a second and can help me out, I’d be grateful! Head on over and help me help Russian orphans. It’s a nice way to spend your Sunday!

Creative Commons License photo credit: *sean

go to hell

After you have built up your emergency fund, started saving for your children’s college education (if you want to make that choice, which I don’t agree with) and invested in whatever retirement plans are available to you, it is time to build up your “go to hell” fund.

That’s right.

Your “go to hell” fund.

If you are working for a living, you need to start building this fund as soon as possible.
With the shifting economic landscape you run a far higher risk of being part of a massive company-wide layoff than ever before. When that happens, it won’t matter who you are, whether it’s a good time for a layoff or a bad time, or whether you have enough money to pay for that new set of brakes you need on the car.

Let’s put this in perspective. When I was working in corporate finance, I participated in a “restructuring” project. This word is a euphemism for “firing lots of people to improve the bottom line and making the remaining people pick up the duties performed by the ones who got fired.” There are a million cute terms for it these days: downsizing, rightsizing, eliminating redundancies, even the old-fashioned “layoff,” which implies that your job will be given right back to you when the company gets over this tough little patch… awww, thanks, Mr. Smithers.

You will be fired at some point, or you will come so close to it that you will be asked to leave or you will fire yourself. The chances are very good – particularly if you work for a big corporation – that the glacial movement of your titanic company will inevitably smash your department into another through mergers or spinoffs or simple cost-cutting. You will be gone.

Alternatively, you may be frustrated.
You may not WANT to go from being the Assistant Associate Vice-Manager of Finance at Bank of America to being the Associate Assistant Vice-Manager at Citigroup. You may want to go spend a year starting up that flower shop, or that consulting business or that scheme selling freeze-dried soup over the Internet that you dreamed up over margaritas on vacation last year.

In every case, wouldn’t it be nice, when they call you in to discuss your future with Megacorp with quivering tears in their cold mechanical eyes, to be able to say “go to hell” and walk out the door?

I’m not actually advocating saying “go to hell”.
You have no need to burn bridges, but figuratively speaking there is no greater freedom – short of actually having financial freedom – than knowing you have enough money to walk away from a job for a few months and start your job-hopping again at a leisurely pace. That is true freedom in the corporate world.

Most importantly, if you have a “go to hell” fund, it won’t bother you when your company disappears from existence on a Sunday.

Creative Commons License photo credit: chatirygirl

green acres

Green acres is the place for me.
Farm livin’ is the life for me.
Land spreadin’ out so far and wide
Keep Manhattan, just give me that countryside.

from “Green Acres” by Vic Mizzy

This past weekend I took the Brip Blap crew (myself, Bubelah, Little Buddy and almost-out-and-about baby #2) on a drive over to Queens to a birthday party for the daughter of Bubelah’s friend. This couple recently purchased a nice house in a nice neighborhood with nice schools and near to the epicenter of their ethnic community. The house was a fixer-upper when they bought it, so they had to put in some substantial money to fixing it up. They have not yet finished doing so, and the total cost, to date, is over $1 million. Although that is in the almost-worthless-US-dollar, it is still a substantial amount of moolah.

Switch to a couple of days before that. Out of curiousity, I looked on Ye Olde Internet for real estate in a small town in Pennsylvania outside of Philadelphia that Bubelah and I have visited and really like. A house, finished in grand style similar to our friends’ house but far bigger with a substantially larger yard was listed for about $500,000. Bigger house, bigger yard, all finished (no fixing up really necessary) for half as much – and probably half the property taxes, too.

Switch to years earlier and swoop down South to the ancestral estates of the Brip Blap family, sprawling across 3 acres of land in the Deep South.
My parents have vacated their home in the South to move closer to my brother’s family (and closer to mine, as well). Their Deep South house – which I am sure they will not mind me referring to as “stylistically dated” (but a very nice home) – is a little smaller than the Pennsylvania and Queens houses, but on a huge lot with practically no property taxes. It is probably selling for about 15% of the cost of the Queens house.

So where do you draw the line? I know I could move to Kansas (no offense, Kansanians, I pick on Kansas because of the free land being offered there) and build Neverland II for what a decent-sized single family house would cost in Queens OR a 650-sq foot studio in Manhattan. Bubelah and I have often toyed with the idea of moving to Florida, a place we both like a lot, as well, and I am sure real estate on the beach is a lot more affordable today than it was two years ago. I used to joke about moving to Portugal, but I suspect with the dollar’s value where it is that wouldn’t be much of a bargain.

I think it says something about your core values if you choose to spend big on a place to live.
I know there is a point at which we all draw the line, because I don’t see huge numbers of bloggers from the Soft Coasts moving to the heartland, nor vice-versa. Our friends in Queens spent big because they feel THAT IS IT. The home is in the midst of their community, near family, good neighborhood, schools, etc. etc. They have planted their flag, and staked their financial future to it; they will not have financial freedom in the next 10 years (or 30). But they are happy with that decision.

My point? I know financial freedom is not my #1 goal when I analyze it in this context. Bubelah and I could move to my parents’ home in the South and neither of us would need to work at a day job, starting tomorrow. With our various side-income producing ventures, given a little growth, we could probably support most of our needs. The schools are fine (I is a product of them, and I can haz edgercation). But we won’t do it: family, climate, etc. enter into it but the kicker is really that neither of us can imagine living in a small town anymore. But this does mean, then, that our number one value is not financial freedom, as I often like to say it is. Our number one value may be family, or a more liberal big-city atmosphere, or the ability to eat Turkish cuisine frequently ( – but whatever our #1 value is, it is not financial freedom. So for now, no green acres!

Creative Commons License photo credit: joiseyshowaa

my contribution to Luxembourg’s GDP

Who knew the Brits had more debt than the Yanks? This article from the Times was disturbing, particularly so since it seems to indicate that although much of the debt incurred in the Colonies is mortgage-related, the Queen’s subjects have been racking up credit card debt to pay for fox hunting gear or Pop Idol CDs (yes, we can also blame the UK for American Idol’s inspiration).

Wikipedia has an article on debt-to-GDP here although it has all of the little “this article may be full of hooey” warnings across the top of the page. It looks like the top 5 countries with the worst debt-to-GDP ratio are (the higher the number, the better):

1 Zimbabwe 189.90 (the worst)
2 Lebanon 188.00
3 Japan 182.40
4 Seychelles 143.30
5 Jamaica 134.30
And the countries with the BEST debt-to-GDP ratio are:

126. Luxembourg 2.60 (the best)
125. Equatorial Guinea 2.70
124. Oman 2.80
123. Chile 3.60
122. Estonia 3.80
The US, Great Britain and Canada came in at #65, #49, and #21, with lower numbers being worse. So Canada’s even more of a mess than the US in terms of debt? Who knew?

If you’re like me, you imagined that places like Zimbabwe and Lebanon were probably the worst because of instability in the economy or the country itself; people borrow because they have to, or interest rates are sky high, or something like that. I didn’t expect to see Japan there. Does that mean that Japanese consumers are going nuts even worse than US consumers? Or is it just the result of the long slow economic malaise that has gripped Japan for the last 15 years?

And turning around to the best, I would have guessed Luxembourg or Switzerland for #1, but the rest? Is it a lack of access to debt, or are Chileans simpler smarter about debt than Americans and Brits (and everyone else in the world who isn’t an Omanian or Equatorial Guinearianan)? It’s possible – other cultures aren’t as consumer-mad as the US. Runners-up for lowest ratio included Libya and Russia. Odd results – to me, at least.

Looking up stats like that just proves that you can’t do much in the way of guessing about economic factors, because I would have been UTTERLY wrong. With the levels of literacy, education and supposedly gung-ho zap pow entrepreneurial/capitalist knowledge in places like the US, you would think we would have collectively figured out debt is stupid, wouldn’t you? It’s amazing that places like Estonia are “frugal” countries, living well below their means, and places like the US, Canada and Britain are apparently busy putting flat-screen TVs on their 18% APR credit cards. And don’t forget – until about 15 years ago, Estonians didn’t even have an economic system where debt existed! Yet they’ve avoided incurring it in post-Soviet “free markets.”

So hats off to you, Luxembourg! I visited Luxembourg many years ago with my brother. We had just finished a disastrous trip to Brussels, and took off for the greener pastures (so to speak) of Switzerland, but detoured through Luxembourg. This was in the era of the strong dollar, and we were sidetracked – first for an afternoon but eventually for (I think) four days by the local brewhouses. Over many beers we made the repeated decision to stay “just one more day and visit just one more pub” so at least in some small part I helped pump up the GDP that year. Through my the staunch efforts of my brother and myself, we put a tiny uptick into the Luxembourgeronian economy, at least in the beer sector. I played some small part in that excellent ratio. Just my little contribution to Luxembourgishnian financial supremacy. You’re welcome, Luxembourg. I miss you and hope I’ll see you again someday.

Creative Commons License photo credit: snaiwedu

15 ways to make your 9-to-5 a 10


I like to think of myself as being a step past the normal employee grind, but I still get up most days and schlep to my client’s office. Sure, I take off when I feel like it and work moderately flexible hours, but I do the lunchpail shuffle. I do know that there are changes that I’ve made over the past couple of years that have made a big difference in my daily life, and my Life, capital L. These changes make the day better and make me more productive – and, invevitably, have made me a little bit richer, too. They didn’t cost anything and didn’t take any great effort. Give them a shot:

  1. Get up early. If you are an early riser, the early hours of the day are probably your most productive. If you are not an early riser, you should become one. If you wake up 30 minutes before tumbling out the door you will be less likely to exercise, eat well, prepare a lunch or simply become alert before leaving. Set your alarm clock back 5 minutes before you go to sleep tonight, and do that every night for the next month. You will be amazed how much productive time this will add to your day.
  2. Stop smoking. I am not sure this needs much explanation, but if you are a smoker you are wasting money with that morning smoke-and-joe. I won’t even touch on the health implications; you’re wasting time and money, all for the sake of a stimulant you don’t need.
  3. Stop eating junk food. Eat protein the morning. Forget low-fat/low-carb/vegetarian/slow food etc.; the simple fact is that you will be perkier in the morning if you eat protein rather than carbs. Eating protein in the morning keeps you energized longer, makes you more productive and probably will make you eat less for lunch, too. Eat eggs for breakfast, or egg whites. No bagels, young Jedi.
  4. Exercise. Exercising gives you more energy, makes you happier, increases your stamina and if done correctly even makes you more creative. Running is a great way to brainstorm; leave the iPod at home.
  5. Groom. Spend some money on hair care products or hair cuts or razors or whatever you use to groom. Some people will tell you spending money on that type of stuff is not frugal. True, it is not; but you will not get ahead in this world if you don’t keep a presentable appearance. Think even rock stars roll out of bed looking appropriately rumpled?
  6. Hygiene. Like #2, this one explains itself. Nobody likes to be around people who smell. Wipe when wiping is needed. Spend a little extra on high-quality deodorants.
  7. Stand up straight. Confidence projects itself through your posture. If you slump and slouch and avoid eye contact throughout the day, you not only project an insecure, pathetic appearance to others, you feed your own brain an unhealthy diet of intimidated glances at your shoes. I make this mistake myself, sometimes, but try it. When walking in public, keep your shoulders thrown back, your back straight and your chin in the air. Walk like you own the sidewalk, and soon you will.
  8. Smile. As in #7, project happiness and you’ll make people happy around you. There is nothing quite as startling as a smile from a stranger these days. Don’t be creepy about it, but stop scowling. Put a smile in your eyes if not on your face, and you’ll see a change in people around you.
  9. Read/listen. If you commute to work – and chances are you do – make sure you make good use of that time. I know listening to the wacky Morning Zoo on X-Rock 103.6 may be the highlight of your day, but try to make use of that time. If you commute 40 minutes each way to work (the average US commute time) you spend approximately 9,800 minutes (163 hours commuting) each year. I spend almost 720 hours commuting per year! You can read a lot of books if you take public transportation, or listen to a lot of audio books on any subject (if you drive or take public transportation). Don’t give that time over to phone pranks and Rhianna.
  10. Eat lunch with humans. I know the frugal approach is to avoid the office lunch, or the “wasted time” with colleagues in the cafeteria – but even if you have to bring lunch for everyone once in a while to tempt them to stay in the company cafeteria, do it. Don’t spend lunch reading a book or gobbling a PBnJ at your desk. Get up and take a break for a few seconds!
  11. Take breaks. I have a terrible habit of “getting in the zone” at work and sitting without moving for hours, IMing and emailing and preparing documents. It’s a bad idea. Stand up once every 10 minutes. Yes, 10 minutes. Stand up when you take a phone call. Get a small cup for your water so you have to walk back and forth to the water cooler constantly. Breath. You are not chained to your desk.
  12. Leave early. Trust me. If you are working for an employer and complete what is expected of you for that day. Do not chit chat. Do not check your emails one last time – my guess is that unless the corporate servers are impounded by the FBI, your emails will be there tomorrow. “Forget” your Blackberry on your office desk as you leave for the day. Leave 5 minutes before you normally do each day. Nobody will fire you, I promise. Think anybody at Bear Stearns is keeping their job because they turned out the lights every night? No. Take that time in the evening for YOU, and building YOUR wealth.
  13. Do errands on the way home. Don’t wait until the weekend to run by the drugstore for shampoo (although you probably should be buying it from amazon or drugstore unless you’re clipping coupons). Get it on the way home. You’re already out. Save your free days for life – or better yet, for building wealth – not errands.
  14. Take off your shoes, wash your hands and shower when you get home. If you are like me and ride the New York subways, you probably have 8,000 different emissions and fluids and various unpleasant emanations on your hands and the bottom of your shoes when you get home. Take them off at the door, then go shower. You reduce the chance of spreading illness throughout the house by staying clean.
  15. Go to sleep early. Unless you have a thriving 24 hour business that requires your input at 1 am, chances are good that there is nothing “live” requiring your attention at that time. Go to sleep and get up earlier – you are more productive early in the morning than you are late at night. Let your evenings be for your family and for more positive productive activity – thinking, writing, making phone calls and reading.

Creative Commons License photo credit: Saveena (AKA LHDugger)


Creative Commons License photo credit: hans s

“Fools and their money are soon parted.”

This phrase makes me nervous every time I look at it. Somewhere buried deep in my psyche a little gremlin cackles these words out over and over again. While I may not be the smartest person in the world, I like to think of myself as being moderately smart. I have my fair share of sheepskin. I have a long string of academic honors trailing along behind me like tin cans behind a newlyweds’ car. Maybe because of my brains I’ve always been afraid of being called a fool.

Here’s my definition of a fool: someone who does something stupid. Er, yes, Steve. Very original. The subtle distinction is that it’s someone who DOES something stupid rather than just IS or THINKS stupid. That probably sounds pretty harsh, but basically what I’m saying is that even smart people can be fools, and less-than-smart people can avoid being fools.

Let me be harsh. I am fairly sure you are a fool in some sense. I am, too. I have done stupid things. I may have known they were stupid, but I did them anyway. Let me give you a few examples.

  1. Flush with cash after leaving Russia in the mid-90s, I kept $30,000 in cash in my checking account for about 5 years because it made my Manhattan single days footloose and fancy-free. Remember the late 90s? Think dropping some of that money into a decent index fund might have been worth it?
  2. I bought a car and financed it when I had enough cash to pay for it outright. I paid interest just for the kicks, apparently.  That, incidentally, was the first and only time I ever paid interest for anything other than my mortgage interest.
  3. I didn’t carefully review my car insurance and found out – after two years – that I had been paying for “rental car lending insurance” – if I had to take my car in for repairs and needed a rental car, up to $50 a day was covered.  With two cars and an abundance of public transportation available, this may not have been insurance I needed, eh?
  4. I sneered at people paying $600,000 for a two bedroom in Manhattan when I moved there and probably could have scraped together the money to buy one. Now the same places probably are worth $2 million.

That’s just a sampler. The common characteristic of most foolish actions is that the fool fails to take into consideration the long-term consequences of their action… or inaction. You might be foolish today for one of these reasons:

  1. You are still adding to your debt.  C’mon, all the cool kids are doing it…
  2. You are saving but not investing because you “don’t have enough knowledge to invest”.  Last time I looked there are about 20,000,000 books that could help you correct this problem.
  3. You are waiting for the real estate market to ‘cool’ or ‘get hot’ but you don’t know enough about real estate to know when that is.
  4. You are counting on your job to exist forever.  My acquaintances at various big banks’ corporate headquarters here in the New York area thought their jobs were safe.
  5. You aren’t accumulating new skills.  I’m not just talking about book knowledge, either.
  6. You are buying stuff you don’t need.  For 10,000 years of human history people got by without owning more than two pairs of shoes at a time, for example.
  7. You have allowed yourself to get complacent about where you are in life.

I could add another dozen items to the list not related to finance: you don’t exercise, you are rushing into bad relationships, you are keeping bad influences in your life, and so on.

I try not to do foolish things, but I think about foolish things all the time. Sometimes it is actually a good thing to have foolish thoughts, but it’s more important to learn how to identify them as foolish before I’m parted from my money. The only way I know to avoid being foolish – learning. If you are worried about being parted from your money, the only way to avoid it is to keep educating yourself about money – keep reading, keep discussing, keep watching what successful people do.

It’s a tall order, because we’re all busy with life and jobs and family and the whole business of being a person on this planet, but you have to do it. Otherwise you’re just going to stay where you are or fall further behind. Nobody gets ahead without continuously learning throughout life.

31 causes of failure #4: insufficient education

Education is not preparation for life; education is life itself.
John Dewey

This is a continuation of my series on Napoleon Hill’s book Think and Grow Rich that began with this post.

Of the causes of failure listed by Napolean Hill, insufficient education is one of the simplest to overcome.

Too often the word “education” these days is confused with the words “school” or “college.” A common belief that education can only be obtained from school has made whole segments of the population of the Western world undereducated. Let’s face it – your college years are probably some of the worst times of your life for real learning. With the distractions available, a serious pursuit of academics is probably one of the last things on your mind. In addition, the learning in college is too often static. You may “learn to think” – a common expression for the supposed benefit of sitting around talking to your fellow classmates, etc. – but a lot of what you will learn specifically is going to be completely useless later in your life. Example? I learned Pascal in college. Now, it was a good course – it “taught me to think” around computers, and made me structure my brain in a manner that let me “think” in computerese, but I doubt those Pascal skills count for much these days.

Hill is talking about continuous education. You can acquire this continuous education in a few different ways:

1. Continuing your education in a semi-formal fashion. I don’t do this myself but I know many people who do – keep taking courses at your local college, university, community college or even just some community organization (churches, clubs, etc.) The courses can range from practical (technical courses to advance your career) to meaningless but enjoyable (in my case, something like early Soviet history or astronomy). I think this is very difficult for most people. With busy lives, children, spouses, work and frankly the creep of old age, taking a class “just for the sake of learning” reeks of self-indulgence. It shouldn’t feel that way, but it does.
2. Brief “burst” education (such as seminars). I’ve gone to a number of seminars, almost all of them professional seminars around my line of business (audit and corporate governance). Every time, I go into the seminar feeling superior and telling myself “I have nothing to learn from these hacks!” Every time, I come out of the seminar having learned SOMETHING. I’ve interacted with my fellow students; we’ve laughed, we’ve cried, we’ve learned something about ourselves. OK, that’s a bit much, but you get the point. You can sign up for short, intensive training courses or boot camps and cram a lot of learning into a short span of time. The major objection to this is usually cost. I went to one course that cost my company $5000 for three days. “Holy Corporate Overspending, Batman!” I wouldn’t pay $3000 for a three-day course! But the skills I learned in that course made me invaluable to the company, secured a promotion and even beefed up my resume substantially when I jumped to my next working life, consulting. I have seen a tremendous return on investment from that seminar; but I would still get squeamish at doing something similar today. Ah, cognitive dissonance!
3. Reading. If you are reading this blog, you probably read more than your average person (and your reading tastes are exquisite, and you are charming and beloved by small children and pets, I imagine, Dear Reader). But in general, reading is tricky. I have a couple of bad reading habits: I like to reread books and I like to read novels. I just read the whole Earth’s Children cycle. If you aren’t familiar with it, it’s an epic that covers about 20 years in the life of a cavewoman over about 6000 pages. I think the author has about 4 more books to go. I am not sure reading those books educated me. Sure, I know a lot more about what a novelist thinks cavepeople did in their daily lives (think hunt, sleep, eat and, er, the “other” kind of sleeping – a lot). But it didn’t educate me. At the same time I’m usually working my way through financial books, parenting books, productivity books, self-improvement books, etc. – not to mention 100+ blogs dailiy. Reading can be a form of education, but you have to keep a filter on it. But it is far and away the simplest, cheapest and often easiest way to keep educating yourself.

But the most important thing you can do with knowledge is apply it. I know a lot of Soviet history, for example. You know what I get out of that? Not education, per se. I enjoy it, reading good works probably helps me understand human history in general and Russia in particular (a matter of some importance to me since I lived there and my wife grew up in the Soviet Union) but it’s not exactly education. I don’t apply that knowledge – particularly towards getting rich. This is an important point: I think learning for the sake of learning is fine. Have fun. Learning is growth, and that’s worth something. But don’t kid yourself into thinking that reading something you’ve read before or reading a dopey novel or reading about the horrors of crime and terrorism in your paper make you more educated. No, no, no. What makes you more educated is learning something new that improves your life. Flower arranging blogs may make your life better just by bringing beauty into your life; but if you read and never DO anything with it it’s just entertainment – like watching “Lost” or playing video games. You have to DO something with that knowledge to make it REAL education.

But if you feel undereducated, you have no excuse to feel that way.
Between public libraries in most of the Western world, the Internet and even the creaky old print-on-paper the wealth of knowledge available today is staggering. If I wanted to learn about freaky astronomical theories or commodities trading it takes seconds to find them. Want to learn how to lose weight or build prosperity? A single click away.

So if you want to get rich – or even just have a better life – identify areas you like to study, and like to read about, and attack them. Take a seminar. Audit a community college course. Read 13 blogs and 5 books on the subject. But keep learning, because if you aren’t growing and learning, you’re just marking days off the calendar of your life.
Creative Commons License photo credit: clgregor

does fidelity matter?

no hooking anytime
Creative Commons License photo credit: telethon

Even for someone like me who avoids the news, it has been hard to avoid the recent stories about New York’s ex-governor or current governor (let alone New Jersey’s ex-governor new scandal on top of his old scandals). Each one committed a sexual indiscretion (to put it mildly). and In two of the cases, the governors stepped down; in the most recent, Gov. Paterson will survive although his confession comes a little too close on the heels of his ascension to New York’s executive spot.

I do not care about the morality of what each of those men did. What Eliot Spitzer did with a call girl is a matter for his conscience, frankly. His wife and children and friends have to make their own decisions about whether they will reject him or forgive him, but it has less than nothing to do with anything I might think – although I do have an opinion. But what has bothered me in each case – Spitzer, McGrevey, and Paterson – is the lack of fidelity, and the inability to keep a promise.

“Why are you talking about fidelity and promises in a personal finance blog,” you may ask. Stop interrupting! Let me digress a little bit further and go back to my days as a bright-eyed MBA student, ready to take on the world. One of the courses we were required to take (two semesters, actually) was business law. A huge portion of the courses was devoted to contract law – the study of how contracts are made and when they can be considered to be in force. A contract is a binding agreement between two parties that can be enforced by the law. We make contracts every day. Your house, your telephone, your car, your credit cards are all yours only through a contract. If you are married, you signed a marriage contract. If you drop off dry cleaning, an effective contract has been formed that the dry cleaner will clean and return the clothes for a sum.

I remember a million examples of conditions when a contract was valid and a very, very small number of examples of cases where it wasn’t. If you are drunk you can’t enter into a contract. You can’t contract to do something illegal (because the law couldn’t force a remedy). But the main point is that if you enter a contract, you are promising X in exchange for Y with another party.

Each of these governors had a contract with their wives. Each of them had a contract, in effect, with the citizens of their states, too. Spitzer, a lawyer, had a contract of sorts to uphold the law (and made a contract for illegal services, obviously). Does the fact that these men broke promises – most famously, the promise to stay faithful to their wives – matter? Does it matter that people made a contract to pay XYZ Mortgage Inc. a usurious rate of interest after an initial low-payment period ended matter? And does it matter that the Federal government has promised that $100,000 of deposits in any FDIC-insured financial institution is insured no matter what?

You bet all of that matters. I think the fact that people were more disgusted by the fact that Spitzer slept with a prostitute than broke his vows was telling. I was more bothered that he couldn’t keep a promise he made to his wife. If he had broken his vows with Mary Sue Goodneighbor, his childhood sweetheart and true love, it would have been just as bad. It does not matter that he slept with a prostitute. Adultery is still illegal in New York state so it’s not a question of legality. The ability to keep a promise is a sign of a person of good character; the inability to keep a promise is a sign of bad character. It doesn’t matter so much what the promise IS. I count on elected officials to honor FDIC insurance, for example; but if they can’t keep promises to their wife, why are they going to keep one with me? If I can’t count on my governor to keep a promise that he made before his God (or on his word or to Zeus, or whatever), why can I even vaguely count on him to keep campaign promises, or even uphold the Constitution?

So many aspects of our lives are bound up in contracts that it’s hard to imagine the implications if that system broke down.
What if your mortgage company called you up one day and told you they’d met a younger, prettier homeowner and they’d like you to get out of the house so they can give it to them? What if your President told you that despite his promise to uphold the Constitution he had decided to ignore large portions of it?

Anybody who can’t keep a promise is suspect in my eyes, and if you count on politicians, who have almost become a laughable group of philanderers and thieves, to protect your property rights and your money and your investments, I have a bridge to sell you in Brooklyn, and I won’t even make you sign a contract.


Creative Commons License photo credit: davidChief

If you’ve ever visited a doctor about an ache in your shoulder you’ve probably been given the cliched-but-true advice “get a second opinion.” What if, instead of just getting two opinions you could get three? Eighteen? 48,132? That’s the principal behind crowdsourcing.

Crowdsourcing is – at a very basic level – throwing a task or request for information out into the public, and accumulating and selecting the best results. The theory is similar to “getting a second opinion.” You go see a second doctor because you want to see (a) if the doctors agree – which gives you a level of confidence that they are both right, or (b) if they disagree – in which case you’ve been given a level of confidence that at least one of them is wrong. If they disagree, you may need to seek a third opinion as a tiebreaker. If you take that and extend it to 10,000 doctors, you’re crowdsourcing.

Crowdsourcing – as a term – was first used by Jeff Howe in a June, 2006 Wired Magazine article (from Wikipedia). Most people are familiar with crowdsourcing through sites like Wikipedia, which uses tens of thousands of contributors and editors to create “encyclopedia” articles, on the assumption that errors and inaccuracies by the few will be corrected by the many. You don’t have to go far to find “offline” examples of crowdsourcing (Wikipedia even cites a few). When the World Trade Center towers were destroyed, the public was asked to vote on architects’ renderings for new construction on the site. American Idol is almost a form of crowdsourcing – instead of record executives plucking the next Britney or Hillary or Rhianna out of obscurity, AI relies on the assistance of the American voting public to select the Next Big Thing (with surprisingly mixed results – for every Kelly Clarkson there’s a Justin Guarini).

Crowdsourcing is evident daily in the New York public transportation system. Law enforcement is crowdsourcing surveillance, a tactic used by the US in World War II and (slightly more disturbingly) by the Soviet Union.

The Internet has made crowdsourcing simpler. Some interesting examples:

Each of these sites rely on crowdsourcing. Digg and Wikipedia, for example, effectively have thousands and thousands of people working diligently to provide, vet and publicize their content – for free. Manipulation of these services is attempted from time to time – Wikipedia quite famously has had bad publicity over paid crowdsourcing. Interestingly, the crowds usually supress efforts at manipulating content – but as the value of crowdsourced information becomes greater and greater, the efforts by third parties to manipulate the results will grow both more effective and more subtle. However, the results of sites like the National Journal’s Political Stock Exchange have been remarkably accurate over time – often more accurate than paid professional pollsters. Witness Senator Clinton’s comeback win in New Hampshire over Senator Obama, for example.

Since I learned of the term I’ve been fascinated with the idea. There is a book, The Wisdom of Crowds, that’s on my reading list that talks about this phenomenon, as well. The ideas of individuals are less and less reliable today, particularly coming from the Internet. You may still trust your neighbor when he tells you his doctor is the best in town. But can you trust BookLuvver439 on’s review of a book? I imagine you don’t. What you DO trust is looking at a book with 15 reviews that are all positive, and this trust grows with the number of reviews. Would you trust 486 positive reviews more than 3?

So how can you apply this concept to your personal life? First of all, rely on crowdsourcing wisely. If you read crowdsourced advice on losing weight, it’s what’s popular for the crowd – but it may not be applicable for you. Your tastes may be different (I was the only person in America who thought Titanic was boring, poorly acted and cheesy, I think). However, it can be a powerful tool. In personal finance blogs bits of advice like “invest in index funds” and “live frugally” and “buy a Wii” (just kidding) are so common that I would call them crowdsourced. Look for areas where consensus has evolved around the answer to a common question.

I want to find the next great crowdsourcing idea. I doubt I have the programming skills to make a website like Digg work, but all it takes is an idea. Could you crowdsource crowdsourcing ideas? The possibilities are endless.

When you look at my most popular posts on the upper right hand side of this blog – that’s crowdsourced. A lot of people stumbled my article on losing weight. Does it make it right for YOU? It might, although if you’re seeking to alter your diet or exercise I would always check with a health professional. A lot of people read those tips, liked them and thought they were good enough to recommend to the rest of their crowdsourcing “group” at StumbleUpon (my favorite crowdsourcing site). What I find really cool about it, though, is the fact that what other people choose as the most interesting articles are not the ones I would have chosen – that teaches me something about what works and doesn’t, and that’s always a lesson worth learning.

poor kid blues

I was rich as a child. Just kidding. I wasn’t. I lived in humble conditions in subsidized housing. My family was so poor we used the residual heat from cooking to heat our home. I had to share a room with my brother. I didn’t get a puppy. We only had one car, and it didn’t even have air conditioning! And worst of all, I didn’t have a Wii.

Now granted the subsidized housing was married student housing since my dad was still in PhD school when I was born. It was a cheerful, happy community with dozens of kids my own age. We did use heat from cooking to heat the house, but so what, why not? I never minded sharing a room with my brother – I assumed that’s how brothers were supposed to live! I didn’t get a puppy because I never really wanted one. We only needed one car because everything was close by, and most cars didn’t have air conditioning back then. And although I didn’t get a Wii, I did get a computer when I was 10 – a Tandy Color Computer – because my parents thought learning some computer skills could be useful if it ever managed to evolve into a useful device. Too bad computers never really took off, eh?

When I read the Science of Getting Rich, there was a passage that my wife pointed out to me that really struck me:

“Do not tell of the poverty of your parents or the hardships of your early life. To do any of these things is to mentally class yourself with the poor for the time being, and it will certainly check the movement of things in your direction. Put poverty and all things that pertain to poverty completely behind you. “

One of the memes of my financial life has been to proudly point out how my parents rose above their parents financially, and how I was rising above them (at least in terms of income – in terms of real long-term wealth they are still way ahead of me). This meme was always painted a massive struggle against near-impossible odds – primarily due to my big brain. I have been fond of telling people how I didn’t always have the big house and the big cars and the bling bling (does anyone still say that with a straight face)? I made it on my own! I never had STUFF! We lived in a SMALL PLACE! We struggled! We succeeded in the face of a harsh, cold world!

I got carried away again. It’s true that I didn’t have a lot of stuff growing up. Having a small apartment for four people restricts storage space. We never really lacked for much. I don’t think I ever saw a book in a bookstore when I was a kid that my parents wouldn’t buy for me if I asked. A toy? That they might deny. But I really can’t remember anything in retrospect that I felt I lacked. Maybe at the time I wished I had the Schwinn X22 bike instead of the X21, but I can’t recall it now.

A few points:

  1. Recalling your “poverty,” even for the sake of telling someone an inspiring up-by-the-bootstraps story, is putting a negative spin on your memories and a cloud over your future. Don’t remember your “lacks.” If you grew up in America, chances are good (although not 100%) that your “poverty” as a child was a lack of the coolest new bellbottoms.
  2. Think forward, not backwards. Your childhood was a launchpad for who you are today. Are you improving your health, your wealth, your finances and your well-being? If so, your childhood was rich, because it gave you the tools to improve yourself now.
  3. Talking about poverty will not make you rich, ever. If you spend time telling people about what you lack, you’ll continue to lack. If you don’t want to keep lacking stuff, go out and do something about it. Don’t whine about the poverty of your youth.
  4. When you are 20 years older today, do you plan on telling people those were the lean years? I bet if you read this blog or any of the blogs in my blogroll you don’t plan on that. You PLAN on telling people that these were the years you brought the booyah. The early 2000s were when I got my shiznit together! Think about 20 years ago the same way. Even if it’s not 100% true, doesn’t it make you feel better to think that way?
  5. Listen to rich people talk about their youth. Does Sergey Brin sit around complaining about being a Jew in Russia as a child, and having to emigrate when he was 6 years old?
  6. Two out of every three billionaires made their fortunes from scratch. Being rich as a kid means you are LESS likely to be a billionaire. That’s an amazing thought.

I try as much as I can these days to think of what I had, not what I lacked. Concentrating on the things you didn’t have then, or don’t have now, is a sure way to be miserable.

Creative Commons License photo credit: billy verdin

why be rich?

Some of the comments on my post on Friday (part 3 of my 31 causes of failure series, from Think and Grow Rich) made me think a little about how others might perceive my take on “getting wealthy.” I think “getting rich” and “getting wealthy” are two different things, but I blur the distinction in my writing. I’m approaching the list of causes of failures more from a goal/life perspective, and that’s the way I chose to interpret the book – but I don’t discount the “rich” part. Hill puts a substantial emphasis on getting rich but the second “rule” of getting rich is this:

“Determine exactly what you intend to give in return for the money you desire. (There is no such reality as “something for nothing.) “

If you get rich without an intention to give something in return then you are just a heartless machine. He even asserts that without a specific purpose built around giving back you won’t manage to become rich in the first place.

Hill and Wallace Wattles (who wrote The Science of Getting Rich, a predecessor of TAGR) both were emphatic that the purpose of wealth was to free up your life to achieve your purpose, and your purpose was to give back to the world in terms of charity or your talents or your knowledge. The failure to emphasize “giving back” is one of the reasons I am not as fond of new Law of Attraction works like The Secret. My idea of getting rich is so that I can become a better person, contribute more to the world and help others with my wealth – all while being happier with myself and a better provider for my family.

I like the idea of thinking as every action I do as something I can win. I can fight the battle to be more intelligent, or smarter about saving money, or become more successful at business, etc. I don’t think it makes me unpleasant – it’s not like I’m challenging people to arm wrestle me all the time!

Getting rich is important. You can do great things without getting rich. Gandhi wasn’t rich. However, for many of us the capacity to do good becomes significantly more pronounced if we do become rich. There are some caveats; you can’t work 18 hours a day and neglect your family to be rich. You can’t be the best stay-at-home parent in history if your spouse stays home, too – somebody has to earn money.

I have several very specific reasons I want to be rich, but one of the first and foremost is that I want to be a full-time dad, or at least one who spends more time parenting than working. Right now I spend more than 50% of my waking hours either working or commuting to work, and I am at the low end of time commitment for my profession since I’m an hourly-paid consultant (which discourages my client from keeping me for overtime). I don’t see any way to change that percentage without getting rich enough to not need to work (a lot). Someone who works a lot is not winning, in my opinion, they are losing. The trick is to work smart, not hard. Bill Gates is a good example – until recently the richest man in the world, he’s given $29 billion to charity, has three kids under 10 years old and is retiring early at the age of 53 later this year. That’s much more effective than someone who works hard, buys a Lexus and retires at 65 once his kids are gone from home. It’s also more effective than someone who drops out of society and lives an ultrafrugal lifestyle. The best way I can serve myself and my family and friends – and hopefully the world at large – will be to amass the resources I am able to and redistribute them in a beneficial way. Nobody will be served by high consumption or ultra-frugality. The best way to give back is to get rich.

So that’s just a small clarification. I don’t want to be rich so I can buy a Porsche. Travel to Italy? Yeah. Stay at home when I don’t want to work? Yeah. Support my extended family? Yeah. Have the means to give back to my community? Yeah. Buy a Wii, as so many of my frugal blogging compatriots aspire to? No. Getting rich is about removing money (or the lack thereof) as a barrier to my REAL goals.

Creative Commons License photo credit: aussiegall