should I tip or not?

If you’re careful with your money you probably face a frequent dilemma of how much to tip various people in service positions. Tipping ranges from the $3 slipped to a doorman who hails a cab to a couple of hundred for some guys who move your stuff cross-country.

Before I was married, I used to have a "local" in my neighborhood in Manhattan. That means there was a bar where I could drop by after work with friends and the bartender would have my usual drink set up before I even took a seat. The waitresses would stop by to chat, and I knew them by name. I would get the best seat in the house ahead of tourists waiting in line if I came in a group. The manager let me stay after hours, and invited me to special events.

If you have a situation like this, big tipping is tough to avoid. You get to know people and they provide wonderful, careful service on a constant basis. I never left less than a 15% tip even on rare occasions that I was dissatisfied, and 25%-30% was the norm. I got so many free drinks that often I would just take the amount I was given gratis and just hand it right back over to the waitresses or bartender.

Contrast this with stopping at a diner on an interstate trip. You get ho-hum service, perhaps, and ho-hum food. Do you leave a 15% or 20% tip like you would at a "local"? And if not, why? Would it make a difference if you knew that the cook got a fresh batch of salad out for your salad – and would it make a difference if it was just coincidence that he got it for you?

Tipping is an odd case of getting a service, then paying for it. If you hired a plumber to work on your house and said "you know what? I’ll pay you what I think it’s worth when you’re done" he would probably knock you over on the way out the door. Restaurant workers (and maid services in hotels, etc.) do the best they can to provide good service, not knowing if you’ll be the one-in-a-million person who leaves 10 $100 bills tucked under your check or the jerk who asks for 15 martinis and a steak done JUST SO before leaving a 3% tip. Imagine working at your job that way – if every payday you got a minimal base salary plus a "tip" depending on how happy your boss was with your work – or how annoyed he was that he dropped $1000 on the poker game last night.

It’s hard to balance tipping with being a frugal person. I don’t like tipping. I wish everything was a flat fee. I wish waiters and waitresses were paid minimum wage and I could write $0 for the tip without worrying about being a jerk. It’s easy if you’re a regular somewhere to be generous. If you live in Manhattan and have a super or a doorman, it’s easy to realize that you need their help, and they’ll give it whether you pay or not, so you SHOULD reward them for their help. It’s trickier when it’s the guy delivering the new couch. You’ll never see him again. He did his job. But it’s hard work, and maybe – just maybe – he could have dinged a wall or tracked in mud, but he took a little care not to.

I don’t know the answer. I generally tip generously at restaurants but not so generously when it’s "slipping cash" to someone, mainly because I’m embarrassed about it being too much (looking like a rube) or too little (looking cheap) so I often just pretend I "left my wallet upstairs." What I do know is that in general in life you’ll be a lot happier if you mentally price your tip BEFORE getting the service and then pay it that way after you get it. Think to yourself "I’ll tip the waiter 15% unless he ignores our table or gets an order wrong or forgets to bring us water," or "I’ll tip the housekeeping service $20 per day as long as the room is cleaned to a T," or "I’ll give that guy $50 to move the couch in unless he dings the wall or messes up the fabric," and so on. Tipping is an uncomfortable activity for most, and even more uncomfortable for someone who relies on them for a living.

merry xmas 2009


Hope your holidays have gone as well as mine.  Our family celebrates a multitude of ethnic/cultural etc. traditions so we’re busy from mid-December through the first of the new year.  It can be tiring, but it’s also fun.  Enjoy 🙂

photo by pareeerica

linklings, propane edition

So apparently if you have a propane tank to heat your water, you need someone to come fill it AFTER it’s been unlocked.  Having never dealt with propane before, I was a bit – to put it generously – confused about how it works.  Fortunately, after three days without hot water we finally got it sorted out and now have no excuse for smelling bad.  I put Little Pumpkin in a bath today and she positively babbled from excitement at being clean.

Having moved twice this year, I’ll recommend you never attempt it.  I think it worked out well enough, but the stress of packing and unpacking twice in six months is significant.  Add on Christmas – albeit a low-key one – and it’s a hectic time for us.  At least I don’t have to worry about snow this year.

you know, you might be a personal finance redneck if…

With the holidays almost on us, I decided rather than posting a serious piece, I’d just post a little lighthearted thing that I wrote a while back. It’s all in good fun – I grew up in a small town in Mississippi, and now I’m back in a small town in Florida, so don’t think I’m being prejudiced! This piece obviously owes a huge nod to the original idea by Jeff Foxworthy.

you might be a redneck cat if...

(photo credit: The Duke of URL)

You might be a personal finance redneck if…

…you don’t have to pay alimony because the state you live in never recognized your marriage to your sister in the first place.
…the only stock you care about is the racing car kind.
…somebody asks you if you’d like to invest in a CD and you tell them “no, I’d rather invest in a DVD.”
…when people ask you when you want to retire, you say “right after I get a flat one.”
…you reckon that diversifying is going to be tough to do because you never did any versifying in the first place.
…keeping up with the Joneses means moving your trailer 50 feet to the right.
…you think Warren Buffet is a place where rabbits have an all-you-can-eat bar.
…you pulled your kids out of school after you heard about ‘No Child Left Behind’ because you didn’t want a bunch of one-right-buttock-only children to support.
…you don’t have to worry about the Latte factor, you have to worry about the Kools-and-Schlitz Factor.
…everyone around you had a Poor Dad.
…only use the phrase debt snowball in the middle of a snowball fight: “Watch out fer debt snowball!”
…got all happy when you heard someone talking about an IRA, because you figured it’s time for the NRA to go International.
…you ask a worker at the Wal Mart where you can find the new Formula 401 … you know, the 401K?
…your financial adviser and your bartender are the same person.
…your idea of saving for the future is buying Coke by the case.
…you don’t worry about your retirement because Ed McMahon’s assured you that you might already be a winner.

…and finally…
…you actually know in detail why a subprime mortgage isn’t such a great deal after all.

Hope everyone enjoys the holidays (this is a rehashing of an old post of mine – between moving and the general chaos around the holidays I’m not writing much).

Assessing What is Important in Your Life


By Curmudgeon

You may have read on Steve’s blog a few weeks ago that I spent time in the hospital for a potentially life-threatening condition.  It was my first time overnight stay in a hospital since I had my tonsils removed, almost forty years ago.

It was a seminal moment in my life; I had never had a health scare before, and as such things go, this one was fairly serious. Among the contributing factors where the stresses of my day job, which at extreme levels can produce damaging enzymes that wreak havoc with internal organs.  My typical work week over the last two years lasted eighty hours, including weekends.  I did too much, drank too much, and kept my stresses inside, until my body cried enough.

Steve has a wonderful post that first attracted me to his site – 8 Steps to a Six-Figure Career. Through my day jobs, freelancing, and independent consulting, I’ve made six figures since 1992.  Last month, I suddenly came to the realization that a six-figure income was a poor goal to strive for if it were killing me to achieve it.

So I quit the day job, which was the source of 80 percent of my income. I am now entirely dependent upon independent project work for my income.  I don’t know how I want to spend the next ten or fifteen years of my working life, but I do know that it’s not going to be as an office slave, working for The Man.  My plan is to spend at least through the middle of next year working on discrete projects no more than forty hours a week, until I figure out what I want my future to look like.

In one way, it is easier for me than most people. I never got into the race to have the most toys (well, I did own a classic Corvette, years ago), and year after year saved around a third of my gross income.  Money is not a problem, although I would prefer keeping the portfolio largely intact until later in life.

However, in other ways it is more difficult. Unlike Steve, I don’t have a discrete and definable set of skills in a single recognized field.  Over the last 20 years, I’ve had a number of different jobs in several very different career fields.  No recruiter would touch me for contract or permanent work.

Also, I am not a sales person. My social skills are probably below average, and while I have to spend a lot of my time interacting with others, it takes a bit of energy and focus on my part.  Yet I have to market my difficult-to-define services, write proposals (I’d always undervalued my independent work when I didn’t have to make a living off it), and close deals.

Well, a month later, it seems to be working out just fine. It turns out that I know more people than I thought, and others are reaching out to me with offers of projects.  I have several thousand dollars worth of short term projects over the next month, and later in January begin a medium term contract that by itself should make up for most of my forsaken income, while working far fewer hours.

Even though it puts me on the road for another possible six-figure income in 2010, it’s not a goal, or even a desire.  In planning the tradeoffs of your life, don’t trade off your health for money.  It’s a bad deal.

photo by Untitled blue

linklings, life is good but life is busy edition

Once again, I found it way too easy to fall behind schedule.  Here are few links for reading – I have been swamped with negotiating multiple long-term contracts, setting up my own firm and dealing with an impending move (Saturday) and the omnipresent kiddies!  Life is good, but life is busy.

never underestimate the influence of a teacher


After writing my post on my grandparent’s influence on my investing habits, my Mom clarified on how my grandfather got “into” investing and I thought it was worth a guest post. Lightly edited:  how a Depression-era farm boy got into stocks.  Largely in my mom’s words…

Your grandfather’s 8th grade teacher, Mr. Woodfin, who was also the “principal” of the two-room school house in Science Hill, Tennessee, taught his tiny class all about the stock market. He made them “buy” stocks and look them up in the newspaper (that came once a week).  Your grandfather, in other words, participated in a very early version of the stock market game. This would have been in 1932-ish, so the timing is very odd but that’s what happened.  Mr. Woodfin really indoctrinated at least one of his students, because your grandfather referred to him always when asked how he got interested in the stock market.  Never underestimate the influence that teachers have!

As for how your grandfather picked stocks, he had two kinds of stocks:  the ones he knew about (i.e. AT&T, Coca Cola, Pepsi, Ford, etc.) and the ones he didn’t know anything about (Intel, Microsoft, etc.). He did do a LOT of research but his main point of reference was the P/E ratio.  He went to the library (well, he sent his wife, your grandmother) and checked out one of those big S&P stock reference books to do his research (it was navy blue, and I actually bought him one for his very own for Christmas one year).  He did tend toward companies whose products he used (all of the above, plus pharmaceuticals, energy, and insurance).   But he was also quite interested in the future during his middle age and early retirement years, so the whole computer thing fascinated him and he would ask your dad which companies looked like the ones that would succeed.

With regard to buy-and-hold, it worked well up to a point. He bought Cigna, his usual 100 shares, for a couple of thousand dollars, and we sold it right after his death for about $100,000 (at your – Steve’s – suggestion) in order to lock in some cash for Mother.  So that worked well.  On the other hand, he bought Ford at $40.  He loved Fords, I love Fords.  But we all know what happened to Ford.  It is coming back, but I doubt Mother will live to see Ford hit $40 again.  But he could barely stand to sell anything, partly because he was so sure that he had selected good companies, and good companies will always triumph in the end (right…).  And secondly, he hated paying capital gains taxes, so he figured he’d pass them on to his descendants, or give them away to relatives and let them deal with it!

All in all, he did well. If he had been a little more aggressive about selling, he would have done better, but apparently Mr. Woodfin didn’t go that far in his stock market lessons!

The lesson I’ve always taken away from my grandfather was that careful study and disciplined investment meant a return on investment.  I don’t know if the paradigm has changed; it’s been rough the last few years.  But if you want to assume that the game hasn’t changed that much, invest in good companies, hold, and sell when the time is right.  It ‘s a tough strategy to dismiss.  It worked for my grandfather – on a “poor man’s” salary, he ended up with – for lack of a better word – financial freedom at the end of his life.

photo by kla4067

Citi cards for college students

In accordance with the new FTC regulations – which still confuse me a bit – I’d like to VERY clearly state that I was compensated for this post:  yes, I was compensated for writing this post.  I was not asked to provide a positive review in return for the compensation, the opinion I express below is my own.  OK, now here we go:

Citi is promoting a couple of new credit cards for students. I’m not averse to the use of credit cards at all, as long as you have and exercise the self-discipline to pay them off in full monthly.  If you’re the kind of person who doesn’t have that self-discipline, you should (a) avoid credit cards for the time being and (b) work on your self-discipline.

For a limited time, Citi has new credit cards that can be used to earn enough points for a $25 Gift Card and more! The Citi® mtvU™ Platinum Select® Visa® Card for College Students and the Citi® Forward Card for College Students are offering the opportunity to earn up to an additional 3,600 bonus points just for paying your bill on time and staying under your credit limit. This offer is only valid for new cardmembers who are College Students approved through this offer.  This offer expires January 15, 2010.   If you want to learn more, just  sign up here.

I like the fact that you get bonus points for paying your bill on time and staying under your credit limit. It’s not as good as getting points for paying the balance off in full, but by the time you’re a college student you either need to start learning how to use a credit card responsibly, or stick to debit cards.   Sign up here.

what my grandparents taught me about money

old couple going for a stroll

Most of my relatives have divergent ideas about money and its place in our lives.  By relatives I’m including the wide range from my wife to my parents to my in-laws, etc. I realized a long time ago that it is a trivial undertaking to pick out the flaws in other people’s philosophies or actions – while at the same time failing to recognize them in your own thoughts and actions. However, I still find it a fairly useful exercise to try and determine the how-and-why of people’s good decisions and bad decisions. Even more important is trying to understand the ‘why’ behind those decisions.

My mother’s parents (my grandparents), for instance, were always quite frugal. They were both raised on farms in the 20s and 30s and suffered through the Depression. My grandfather left home to join the Army pre-World War II, serving in the horse cavalry – and yes, it’s hard to believe the US still had a horse cavalry less than 80 years ago, isn’t it? Here are some of their views towards money that I think are interesting, both good and bad, and my take on them.

  • Investing, a good habit. My grandfather was an early fervent believer in investing. Coming from a rural background and suffering through the Great Depression you might expect him to be very wary of investing, but he was quite the opposite. He invested heavily in the market, and on a schoolteacher’s salary did quite well over the years. He invested in the market although he had a state pension, and could have chosen to spend that money on other things. From him I learned a very conservative study-buy-and-hold approach. Although I didn’t know it at the time I learned it from him, his approach was basically the same as Warren Buffet’s. While it didn’t make my grandfather a billionaire, it did make him a huge ‘extra’ retirement fund on top of his pension and my grandmother’s.
  • Never selling, ultimately a bad habit. My grandparents maintained an almost emotional attachment to some of their stocks and held them year after year, even in times of declining prices, shrinking dividends and their own advancing age and deteriorating health. They saved these stocks thinking that they would be passed on to future generations (for example, me).  But as they moved into more and more expensive housing (nursing homes are much more expensive than regular apartments, obviously) until he passed away, it became obvious that all of that money would not outlive both of them.  Had they moved it into a savings account paying 5% ten years ago they could have been earning steady income and perhaps avoided some of the market fluctuations that ate away at their net worth.
  • Never really spending, good and bad. Although they amassed a modest “fortune “, during retirement my grandparents never spent much. They constantly talked of wanting to pass it on to my mother (an only child) and my brother and myself. They never traveled, although my grandfather dreamed of returning to see a peaceful France and Germany, where he had spent years during the war. They did ‘live large’ in some senses – they ate out frequently (albeit modest restaurants), they bought new cars for cash every few years while they could still drive, and they were extremely generous to everyone in their family. They gave us stocks, cash and other gifts for years. However, it is hard for me to look back on their 20+ years of retirement together before my Grandfather passed away and think that they never really did much after retiring. I know that part of that is my perception, since I love overseas travel, but I am not sure retirement was meant for watching TV and eating out. That’s a judgment each person has to make individually, I guess. But to view it in a more positive light, when my mom was younger and living at home they were very frugal, and even late in life my grandfather’s frugality could be amazing. A heavy, heavy smoker for his entire adult life, he quit cold turkey one day because he thought cigarette prices had finally gotten too high – and didn’t ever smoke again (17+ years). He never worried about the health aspect as far as I know, but paying $3 for a pack of cigarettes instead of $2 was apparently one dollar too much.
  • Avoiding debt, extremely good. My parents and grandparents gave me one gift that I realize is invaluable after I read many personal finance blogs: the fear of debt. I have been convinced since an early age that going into debt is practically a mortal sin, a stain on your character, a flaw. While I think it may have been overstated a bit, this philosophy has made me somewhat unique in a sense: I have never carried a balance on a credit card, EVER. I have had only two debts in my life: a car loan one time and a mortgage on my current house. Other than that, I have never bought anything I couldn’t pay for with my existing funds. So debt has never been a headache for me, which is a great gift.  Possibly the greatest one you can get, because with debt so little else is possible.
  • Charity begins at home, mixed. I know this may run counter to many people’s beliefs, but another closely held belief of my grandparents was to take care of themselves and their own before others. This philosophy meant that there was no ‘automatic giving’ to charity until everyone in the family was taken care of. They gave generously to their church every week, but I am sure (without ever having seen it put to the test) that had I been in need for some reason they would have given that money to me, instead, for as long as I needed it, and forgotten the church.  Give when you are able. Get your own financial house in at least minimal order before trying to help others.  I do not subscribe to the Christian teaching that I should give ALL I own to the poor, and apparently from the number of late model SUVs and families in nice clothes I see in church parking lots I’m not alone in rejecting that teaching. It doesn’t mean you can’t give to charity – I certainly give to several children’s charities – but take care of your family first.

Those points are really just highlights. The important lesson to remember is that anything your family or your friends teach you about finance is valuable. Sometimes you may learn by avoiding their mistakes, sometimes you may learn by taking their advice to heart – but it’s all learning. From my maternal grandparents, I learned to save and to avoid debt but also that sometimes you need to spend money, too, because there ARE things and experiences in life worth the money. The truly important thing was never the money, it was the security the money bought, and being able to give back to their family, that mattered to them.

(another reworking of an article originally appearing on brip blap in 2007)

photo by Ghostboy

linklings, mid-week edition

I’ve decided to shift the link roundups to Wednesdays and stop posting on Saturdays. Traffic drops off significantly during the weekend and I tend to put off working on the blog Friday and Saturday nights.

I have been attempting to pull together about 15 different mini-projects, ranging from the personal (getting termite monitoring underway) to the professional (completing multiple SOX projects at work) to the “future professional (setting up an LLC). So far, not going well.  I have been tripping myself up constantly by trying to jump from one to the next, rather than completing one and moving on to the next.  One of the takeaways from Getting Things Done (a book I didn’t care for that much so I won’t even put an affiliate link here) that I did like was the idea of “context” to-do lists:  instead of categories like “home projects” and “business”, you should have categories like “things I can do on the phone” and “things I can do while sitting at the computer”, etc.  I liked that idea except for the “at the computer” category – it’s so easy with multiple tabs, etc. to jump to the next task “just for a second.”  I need a British nanny to whack my hand every time I’m trying to complete a form online, then suddenly remember I need to check for a nearby oil change shop.

So for more click-away-from-what-you’re-doing fun, some links:

Robert Kiyosaki is Off his Rocker (Again) – Is The 401(k) Really the Biggest Scam Ever?:  I don’t know if the 401(k) is the biggest scam ever; Madoff might have topped it, for example.  I do think that a 401(k) is only worth investing in up to the point of an employer’s matching program.  Past that, I think you are better off investing in an IRA, where you aren’t limited to an arbitrary set of funds.  If your employer doesn’t match, it is a bit of a scam, designed to funnel workers’ savings into a narrow range of funds selected by the fund administrator, who may not be totally impartial.  Gasp.

How to be a Millionaire… Not!:  Statistics can be manipulated, quite cynically.  I suspect that you have to rely on the author’s honesty more than you’d like to in many cases, particularly with a book meant to sell a certain worldview.

I’d also like to mention Akemi’s new ebook over at Yes-To-Me: “Lightworker’s Guide to Self-Employment”. It’s a nice resource on becoming self-employed, and since she’s recently done it herself she’s filled the book with some very practical advice. It’s generously priced, as well…free.  Akemi’s more focused on the spiritual aspect of things than I would be, but I try to keep my mind open and she offers a lot of good advice in the practical sense, as well.

yo no hablo espanol


I’m sure I butchered that title, somehow. I don’t speak Spanish.  What I know I’ve learned from Dora, and I’m not sure that girl is playing with all her marbles, linguistically speaking.  I would never think to claim I could speak Spanish, for any reason other than maybe comedy.  Yet people do this all the time when they write their resumes.  One resume like this crossed my desk and created a “career FAIL” moment.

My audit department – eons ago, when I was still a corporate senior manager – had a fair amount of work in Latin and South America. I managed projects in Eastern Europe and the former Soviet Union, where my ability in Russian (and sometimes, German) made my work easier.  I also managed projects in Latin and South America, but almost always delegated fieldwork to one of the managers who spoke Spanish.  At the time our products were taking off south of the border, so the managers and staff were being overworked and we decided to bring on more mid-level staff.

So the calls to the recruiters went out and the interviewees started bouncing in wearing crisp suits and coiffed up for success (this was pre-recession). Unfortunately most of the candidates spoke the Spanish of the mandatory-high-school-language type:  they learned it, forgot it and now struggled to stammer out basic phrases.  In addition, business Spanish (or any language) may vary significantly from conversational Spanish.  When I worked in Russia I knew the words for “accumulated deficit” and “limited joint venture.”  I lived in Germany when I was in high school and never learned that type of language – in German I’m conversational.  I can talk about food or the weather or sports in both languages, but in German I’m at a loss when discussing business.  Most people know the difference.  Some people don’t…

One go-getter – let’s call him Rico Suave – came in claiming to speak fluent Spanish. Fluent’s a strong word.  A lot of native speakers are barely fluent in their language.  Fluency, to me, implies a grasp of slang, culture and a wide variety of vocabulary past “chit-chat.”  Rico Suave claimed to speak fluent Spanish.  I asked if he would feel comfortable leading audits of business units where English was either poorly spoken or barely spoken at all.  He did.  I told him we were looking for someone to work in South America.  He expressed confidence.  I mentioned to him  that after he finished his interview with me, the next interviewer was a manager who was a native Argentinian.  A look of panic washed across his face.  I introduced him to my colleague, and suggested they conduct the interview in Spanish.

What happened next? He could speak Spanish, but not even well enough to discuss his own biography in an interview.  Was he nervous?  Sure.  Could he have prepared for the interview differently if he had known part of it would be in Spanish?  Maybe.  During phone interviews the need for Spanish skills had been stressed again and again.  Could he have avoided the whole problem by claiming to be conversational instead of fluent?  Yes.  I would rather have hired someone who spoke basic Spanish, because they’d learn all the specialized vocabulary in time. But Rico Suave would have a tough time convincing me he could learn to be honest.

The moral of the story is simple:  dress up your resume as much as possible, but be prepared to be challenged – and meet that challenge – on key points. Don’t claim expertise in Dutch accounting if your experience in it came from a college course 15 years ago (yes, that’s me – that was time well spent).  Don’t sell yourself short, but remember that skills can be measured.  Employers aren’t fools – at least good ones aren’t – and if you’re lucky they detect the exaggerations and dishonesty before you’re hired.  If you’re unlucky, you’ll have a 90-day probation swing through the company and a gap on your resume.

photo by peasap