Category Archives: Featured Posts

the myth of the parent that NEEDS to work

My wife is an extremely intelligent woman who decided to quit her professional career as a management-tracked analyst with a huge investment bank in order to be a stay-at-home parent when our son arrived. I would have willingly stayed home in her place but being older and further along in my career I was making twice as much as she so it would not have made sense. She has now been at home for almost two years and I have noticed that there is a subtle campaign against her choice, and it makes me angry. Despite all of the talk about mothers making the ‘tough choice’ to go back to work, I think the tough choice is staying home.

First of all, I know there are single mothers and poorer families who have no choice! I would maintain this is a very small proportion of the population, though. Single mothers definitely have no choice as the primary breadwinner, of course. Some families may have special circumstances that require both parents to work - health care costs spring to mind. I wonder, though, how many times the choice to work is the choice to support owning a second television, or keeping the premium movie channels, owning the house with the extra two rooms, or leasing a nice car - versus staying home with a child.

My family took a big hit to our finances when my wife quit work. We went from two people living in a two-bedroom apartment on two salaries to three people living in a three-bedroom house on one salary. We did it by making huge changes in our spending, and after a couple of years those changes have - surprise - become fairly routine. We understood that we could not afford as many luxury vacations or idle purchases of gadgets and jewelry and so on. The reward was that our son has been able to stay at home with his mother and be in a safe, healthy, fun environment.

This setup has not come without cost. My wife misses adult companionship and the sense of validation that you get from a professional position. We miss having the second salary, which for a while was all being plowed into savings and made for a relatively large down payment on our home. And of course my wife worries about her future job prospects once Little Buddy starts school and doesn’t need a stay-at-home mom. But the worst thing, recently, has been the assault on her decision by other women.

Bubelah relays conversations to me from her friends and ex-colleagues and so on where the subject is inevitably "when are you going to get back to work?" Aside from the obvious insult that caring for a child is not "work", this has a very negative effect on her state of mind. She usually laughs it off, but the simple fact is that she doesn’t really interact on a daily basis with anyone but me who supports her decision to make child care a full-time job. We don’t feel that the trade-off of getting another salary is worth having our son in day-care 10 hours a day before he’s even 2 years old, but that’s what we’re being told we need to do.

However, we don’t need the money, frankly. We may not be able to spend freely like our friends do (particularly since we also don’t take on any debt) but we really don’t NEED any more money to meet our current expenses. If Bubelah got a second job a lot of her salary would go to paying for day care, nannies and babysitters. I understand that sometimes both parents want to work. That is fine, but just be honest about that choice. Many people claim to be "forced" to work two jobs to make ends meet, but is it really "making ends meet" when you drive a new car and have premium movie channels and take a vacation to Aruba every year?

stopping negative thoughts

Type “stopping negative thoughts” into Google and you’ll get almost 2.5 million results. People recognize that although they have negative thoughts there is nothing that requires negative thoughts for health or mental stability. I believe you can live easily without them. Stopping them is a whole different problem.

A million different self-help gurus can give you seminars and motivational tools designed to help you wean yourself off the negative thought habit. The best tip I ever picked up, though, is a simple one. I can’t tell you where I heard it first, although I think Tony Robbins made a passing anecdote about trying it in his early days of self-improvement. I’m sure it’s not original to me, but then again “spend less than you earn” is offered up as advice by everyone on the planet and that’s pretty old advice, too.

I made a comment once that I am very fond of complicating things. What do I mean by that? If I need to poach eggs, I will buy an egg poacher instead of using a pan. If I need to crush spices, I will buy a mortar and pestle instead of using a big spoon. Write a blog? Download LiveWriter. Paint a room? Buy 15 different types of brushes: one for corners, one for edges, one for broad strokes, etc. I have never seen a problem that I can’t complicate by attacking it with overwhelming force and a multitude of tools.

This trick, however, works so well for me that I always wonder why I don’t do it more often, or even 100% of the time. It probably comes from my desire to buy a book to conquer negative thoughts, or watch a DVD. None of that is necessary (although it probably doesn’t hurt).

The simple solution? Put a rubberband on your wrist. Every time you have a negative thought stretch it out and let it snap. Pow. That hurts. It may even leave a welt if your rubber band is too thick. Take it easy, you aren’t trying to maim yourself, but you are trying to create a little bit of a pain avoidance reflex with the negative thoughts.

I have done this exercise for days at a time, then stopped or forgotten about it for weeks or months, then done it again. Currently I’ve been doing it for about a week. My post yesterday, which was at best gloomy and at worst outright negative, was actually written about a week ago - right before I donned the rubber band.

Generally the rubber band is pretty effective. The biggest problem is that it looks a little odd, but I imagine if you’re a woman with long hair you can tell people it’s for your hair in case it gets unruly. If you’re a man you can tell people it’s to remind you not to forget something. Or you can tell people it’s a hot new accessory, the Vulcanized Rubber Happy Thought Maker, and sell them one for $3.99 on eBay. Lance Armstrong did it, after all.

Try it for a few days. Every time you feel a negative thought creeping in, pop! If you complain to yourself or someone else - pop! If you feel sorry for yourself - pop! If you feel tired, or irritated at work, or even let down about a sports team - POP! It’s strange but you’ll find if you do this simple exercise the negative thoughts start dying down pretty quickly, and you’ll feel a lot happier.

photo by Cristiane Sousa

today is better than the day before

As I read what is written about self-improvement and becoming rich and dieting and being happy, I wonder if sometimes too much focus is placed on huge changes. Becoming frugal - staying sharply on the lookout for money - losing weight fast - all can be carried to extremes. Here are a few simple ways to make today better than the day before. Nothing more, nothing less. I know every day I should do all of these, but I take them all one by one.

  • Wake up early
  • Stretch or exercise
  • Wear comfortable shoes
  • Drink tea instead of coffee or soda
  • Walk slowly
  • Let someone merge in front of you in traffic
  • Drive slowly
  • Don’t listen to the radio in the car
  • Breathe deeply
  • Meditate
  • Eat less than you did yesterday
  • Don’t eat anything that had eyes at one point
  • Don’t eat or drink anything with high fructose corn syrup
  • Enjoy a piece of fruit
  • Skip reading the news
  • Take off your headphones
  • Get off the Internet
  • Don’t buy anything
  • Reuse something
  • Recycle something
  • Don’t check email first thing on arriving to work
  • Don’t watch any TV
  • Take a nap
  • Don’t curse
  • Be positive
  • Don’t worry about money
  • Take the stairs
  • Don’t say anything negative about anyone
  • Smile
  • Laugh
  • Walk outside again
  • Drink water for lunch
  • Chew your food thoroughly
  • Sit quietly for five minutes and do nothing
  • Hold a door open for someone
  • Read at least one chapter of a book
  • Say ‘hi’ to everyone you pass in the hall at work
  • Make eye contact
  • Leave work early
  • Take off your shoes before you walk in your home
  • Sit down for dinner
  • Read a children’s book to your kids, or even just read it to your yourself
  • Go outside after dark and listen
  • Take a piece of paper and write down 2 things you were grateful for today
  • Take a shower right before going to bed
  • Go to sleep early

I would like to think that none of these are particularly hard to do, but they are. It’s always hard to take the long view and the short view at the same time. But even when we’re all trying to pay down debt and fight the good frugal fight, it’s important to step back sometimes and literally smell the flowers.

7 ways to stifle your creativity

After writing for this blog for a few months, I’ve noticed that occasionally I’m really stumped for topics. I don’t really get writer’s block, since once I have a topic I can usually fly away with it, but I do get stifled on overall themes and ideas. I was trying to come up with a list of ways that my creativity gets stifled in order to fight that tendency. Here they are:

I write for a living…technically. The kind of writing you do in a corporate environment does not encourage any creativity whatsoever. Here is a lovely gem I put in an email: “John Doe - Based on your note, I think the 5/31 date needs to be revised for the 2nd and 3rd issues, and the first issue (negative admin credits) still appears to be ready to be closed pending whatever verification is necessary. These will need corrected close dates, revised action plans if necessary and an updated open/closed status by 6/15 at the latest.”

That is not exactly the kind of writing that would draw visitors back to this blog, I think.

I watch TV. I have given up watching regular TV and only watch Netflix, but every now and then I will be distracted by something someone else is watching at our house or someone else’s house. I try not to be tempted, but something about flashing lights and loud noises draws me in. I find these shows fill up the empty, creative and quiet places in my head and replace them with light and fluffy cotton candy-like filling. The advertising pounds away at your senses and fills your head with jingles and multiple jarring images. I have a different experience watching a good movie on DVD, since it can inspire me to think about deeper issues and is not broken up every 10 minutes by commercials asking if I have heartburn or want to buy a new car.

I read too much. I have just finished speed-reading through the seven books of the Thomas Covenant series (which are wonderful books). I read about 70 blogs per day, dozens of emails and reports and memos and even the occasional children’s book aloud. Trying to pull in and process all of that information can crowd out creativity. I did quit reading any news that was not business or sports-related a few months ago, so at least my attention is not distracted by the latest developments with Paris Hilton. All of this is on top of my work-related reading, which is full of gems like this one I got in a memo today: “If applicable, does the appendix include a listing of all applications processes included in the assessment process and the process conclusion for said processes?” Read that again. Yes, I have to read this kind of writing and reply to it all day long.

During my commute, I read instead of brainstorming. I have a huge advantage over many people in that most of my commute is on public transportation. The trains on the particular route I’m taking to my current client are seldom very crowded, so I have a seat. I like to spend that time reading, since it makes the commute pass much more quickly, but I really should use it to let my mind wander and make notes of that wandering. I find that once I’m home there are too many other distractions – at least until everyone else goes to sleep – to properly brainstorm.

I do not write ideas down as soon as they occur. Too often, I have a great idea and tell myself “excellent post idea! Write an article about it this evening!” only to forget it by the time I get home. I make an effort to carry around a small notebook all day and write ideas in it as they occur, but I still sabotage myself constantly by thinking “remember to write that down when you get back to your desk.”

I am still learning to be creative. When I first started blogging about four years ago, I wrote a virulent political blog that was a huge series of links and videos and random comments and thoughts on almost a stream-of-consciousness basis. If I read an article, I would throw out a link and two lines of commentary, and then move on. Being creative means taking all of the influences you receive during the course of the day and processing them and creating something new, not just consolidating information. Many blogs just turn into link fests, but my favorite ones are usually written by people unafraid to present their own ideas rather than linking to others’.

Football. I used to be a sports fanatic, following the NFL, NBA, MLB and college football and basketball. I even watched the Tour de France and most tennis Grand Slams and golf majors. Other than hockey, I seldom missed a game of any sort on TV. SportsCenter was the wake up call and the goodnight lullaby. Those days are gone – the demands of marriage and fatherhood have crowded them out. However, I still love the NFL so much that I make time for it. I do realize, though, that spending time reading about NFL roster news, watching the games and buying Jets merchandise are bad, bad habits. Nothing about football will help me write this blog, be a better person or be more frugal. Still, I have loved the NFL since becoming a fan of the almost-great Browns teams of the 80s (Brian Sipe and Bernie Kosar, anyone?). I have to admit I am a footbaliholic. That barrier to creativity will probably remain.

Learning to overcome these barriers to creativity is part of what I am enjoying about the blogging process; having a small idea and then seeing the words spill out on the page once I get underway writing is a tremendous feeling.

ten tips for new bloggers

As a grizzly old veteran of the blogging business (3 months on this blog but 3+ years on a previous one) I have a few ideas about what makes a blog successful or not, at least in the early stages. Part of this knowledge comes from running a blog for years and years and years… with no readers. I then blew up the site, refocused on different topics, changed the way I approached building a blog, and voila! Readers. My site is certainly no Zen Habits, but the traffic levels are continuing to trend upwards. Here are ten tips on how I did it:

Get a domain name. I know that not everyone think a domain name is a reasonable expense, but your site will be taken far more seriously if you register a domain name. I kept a blogger account for years, but once I switched over to using bripblap.com I think people took it more seriously. I’m not saying you have to host your site and start using WordPress if you aren’t ready to, but at least get a domain name and have it redirect to your blogspot.com or wordpress.com (or LiveJournal, etc.) blog.

Leave comments. I like getting comments. The old advice “give and ye shall receive” is completely true in this case. If you leave meaningful, insightful comments on other blogs, those bloggers and their readers are more likely to come visit your blog and leave comments. Maybe not at first, but keep plugging away. I know that there are a few sites in the blogosphere that have very active readers who love following comments - The Simple Dollar always has dozens of comments for even the briefest posts.

Find out what other bloggers in your field are reading. One of the first exercises I did when I decided to leap back into blogging was to go to a few of the “big names” in the fields I’m interested in (personal finance, parenting, health, environment, career, and blogging) and go through their blogrolls. Those blogrolls are there for a reason. I identified the blogs from the “big guys” blogrolls and kept working my way down. I found a few gems here and there, many dead blogs and a few that simply didn’t appeal to me. That exercise gave me an idea of what people find appealing in those areas and helped spur me on some topics.

Post daily. This one may irritate people, but don’t go more than 24 hours without a post. If you use a free blogging service, this may be difficult, but WordPress lets you load up posts for future publishing. Even if you are going to Antarctica for two weeks your blog can look like you never left. This is important. Many fine writers’ blogs I’ve come across start off strong then trail off over time to four posts a week…three…one every two weeks…dead. However, avoid the temptation to leave “oops, sorry, busy, no time to blog!” posts to fill space. I did that once myself and saw half of my RSS subscribers unsubscribe, and it took me a week to build readership back up to where it was before I did that. Even if you write a three-line post (“here’s a great tip on how to clean countertops: use white vinegar and water mixed 1:3 in a spray bottle! non-toxic, too!”) people will keep coming back.

Don’t reinvent the wheel. Most browser users are simple folk. When they come in from a hard day’s working the soil - figuratively speaking - they don’t want to figure out that your site uses bold lettering to indicate hyperlinks, a big book icon to subscribe to RSS or cursors that turn into butterflies when you click something. They want blue underlined hyperlinks, the big orange icon and no further monkeying with their browser setup. Just don’t do it.

Keep the site clean. I think most people understand that pop-up ads, 5000 adsense links, endless widgets and noisy graphics distract from a site. The most popular sites can get away with being visually busy not because they arranged it just a little better, but because they have great content! A new blog doesn’t have that luxury - a sloppy design or aesthetically unpleasing design will scare people right away before they get a chance to become readers. At first, keep the ads and widgets and fancy text to a minimum.

Don’t use partial feeds. I understand that most bloggers don’t get any ad revenue if you don’t visit their site. I don’t. However, I am happy if someone signs up for my feed, and it’s up to them to come to the site on their own time. I try to offer other resources at the site to lure people in, but if not, fine. I think a partial feed in your RSS feed is a none-too-subtle bash at your readers. I don’t subscribe to any partial feeds, personally. Too often I want to skim through my Google Reader rather than flipping from site to site. If I find something good, I’ll flip over to the site and leave a comment, but I want that to be by choice, not because I’m forced to go.

Make yourself accessible. If you want to be the mysterious X-Blogger and be anonymous, that’s fine. If you do decide to do that, though, set up an email account at Gmail or Hotmail or Yahoo like “mysterious-x-blogger@gmail.com.” Don’t keep people from emailing you just to remain anonymous. Even if you aren’t anonymous, make sure that you allow people to contact you very easily. Keep a contact page or put your email on your site (here’s a handy site to generate email logos to help dodge spammers). Make sure you reply to every email, even if you don’t have much to say other than “thank you for reading!” People want that feedback, and if they get it they’ll be more excited to keep coming back.

Don’t do link posts. If you want to write a paragraph mentioning a URL somewhere else, fine. Make sure you explain where the reader will go (e.g., “warning! PDF link!” or “read my article about quasars here”). Most people don’t like being told to read here and here and here for more information. A blog that’s filled with one-line posts (“hey, check this out! <EOM>”) should be moved to Twitter or Tumblr.

Spellcheck, grammar proof! I know people hate being told they need to spell correctly. An occasional typo is fine. I recently visited a blog that prominently displayed “Please visit our sponsers!” towards the top; a big banner that you couldn’t miss. There is really no excuse in this day and age for misspelling words. If you have trouble with “there” versus “their” or “it’s” versus “its”, spend a little time with Strunk and White. Not everyone cares as much about spelling as I do, true - but do you want to lose readers because they came to you’re sight and wrote someting tuff to follow their? It’s annoying enough to me that I’ll move right on.

As a final bonus tip (#11) I will tell you the most important tip on starting a blog: love the subject. I liked (not loved) politics, so I started out strong on a political blog, but I found it really just made me angry and frustrated after a few years. I love writing about all of the topics I cover now. I would do it for no readers, honestly. But I love the feedback and it does exactly what it says - it feeds readers’ interest and enthusiasm straight back to me and helps me develop even more passion for what I write about. If you don’t like personal finance, don’t blog about it. If you get bored by productivity writing, don’t do it! If you love astronomy, don’t try to blog about the market just because you think that’s the way to make money. I realized that I’m passionate about learning about and teaching certain subjects and there was no reason not to blog on them. I took some unrelated topics and started other blogs (on movies and books) and eventually as I get into more and more of a groove I’ll start others (maybe on other topics that wouldn’t quite fit Brip Blap like food and travel). But I have decided never to worry about starting a blog on auditing (my profession) since I realized I have very little enthusiasm for it as a writing subject. I’ll stick to the fun stuff!

Now go out there, start a blog (or update your existing one) and let me know if any of these tips helped you out, I’d love to hear about it.

raises - are they for suckers?

If you work for an employer, chances are that you get paid a fixed amount and it is increased every year. Chances are also good that you are being paid in money, which is subject to inflation. The result is probably that your real wages are probably stagnant. As the New York Times pointed out recently:

Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year that they had to make ends meet with less money than at the peak of the last economic expansion, new government data shows.

Total income listed on tax returns grew every year after World War II, with a single one-year exception, until 2001, making the five-year period of lower average incomes and four years of lower total incomes a new experience for the majority of Americans born since 1945.

Go read the article before it goes in the (pay to view) Times archive.

I calculated my own raises, year over year. My best year was a 62% raise, and my worst was a three-year tie at 4%. The 62% raise was an exception to the rule. I left a stable job in a small Southern city, Memphis, and moved to the gargantuan metropolis of Moscow and received, in effect, hazard pay. The actual raise in real terms was even more, because I didn’t have to pay US taxes on it.

Over the last 5 years, my average annual raise was 5% - so my salary this year is 27% higher than my salary in 2002. For the last 5 years, the inflation rate was 14.29% (inflationdata.com). Therefore, my real purchasing power increased approximately 13% over 5 years.

This is not tremendous growth. If you had an investment that had returned no more than 13% over five years (more or less 3% annually) you would probably dump it. Isn’t your career an investment of sorts?

I am a consultant, so there is no real possibility of huge upward leaps in my salary unless I go back to a salaried job. I was a senior manager when I snuck out of the workforce and into consulting, so I would probably go back in as a senior-level manager or a very junior executive. I know from talking to various investment bank clients that I already make more in base salary than an experienced vice president, let alone a junior one. The bonuses are much larger, but are certainly not guaranteed. So while I might eventually hit the big time executive salaries, chances are good that the 4-7% kind of range would continue. Another consideration is my time, since as a junior executive I’d probably be pulling long hours trying to prove myself. I have grown accustomed to my consulting “8-‘n’-done.”

So if you work in a salaried job and love it or feel that you are gaining valuable experience, feel lucky. But if you are expecting to become rich as a salaried employee, sit down and calculate your raises over the last five years, and honestly assess your chances of becoming an executive at what you do. I think you’ll find that while being employed can maintain your standard of living, it’s unlikely to make you wildly rich.

How can you become rich - and should you want to? Coming soon…

I will not pay for my children’s college education, part 2

Continued from Part 1. Many of the personal finance sites I read concentrate on a few key areas: reducing debt, making investments, emergency funds, saving for your children’s college education and saving for retirement. I agree that most of these are important topics, but I don’t believe that you should save for your children’s college education. This may come across as a shocking or neglectful thing for a parent to say, but I have my reasons.

College costs. A report, “Trends in College Pricing 2006” (warning, big PDF), noted that “[p]ublished tuition and fee charges at four-year private colleges average $22,218 in 2006-07. The $1,238 increase over 2005-06 represents an increase of 5.9 percent, or 2 percent after adjusting for inflation. The average total tuition, fee, room, and board charges at private four-year colleges and universities are $30,367.” The report goes on to note that this amount is usually reduced by student aid, but let’s assume you’re trying to pay for them to go to the best college possible (no Cornell for my baby, only Yale/Harvard/Stanford for her!)

If we consider that tuition, fees, etc. increase at the same rate going forward (no sure thing) then a private school tuition for four years will be $42,000 in today’s dollars by the time my son is in college, around the year 2024. If you consider inflation, that will be $80,000 or more. So you’ll need $80,000 in the bank for each child. Keep in mind that the starting point, $22,000 is the average for a four-year college, not for the very best colleges. Yale, for example, now costs $35,000 per year all in. In 2024 a Yale education might cost – get ready - $370,000 for a four-year degree by my very rough calculations. I won’t have that much saved, frankly.

Personally I am not convinced that there is a lot of value in a private school education that is not present in a state university education. There may even be an argument that not everyone needs a four-year degree, to be honest. I am prejudiced. I received a bachelor’s degree and a master’s degree from a state university, and I work alongside Ivy League grads every day. They don’t make any more money or have any more prestige due to their schooling than I do; the distinction between our backgrounds was flattened out back in the first 3 or 4 years of our careers. By year 15 nobody asks where you went to school unless you’re talking about sports.

Those Ivy grads I work with may not be the most successful Ivy alumni, though. If you want a career with the movers and shakers of the world, you need to go to a school where you’ll meet fellow future movers and shakers. For every Ronald Reagan attending Eureka College there are a thousand Bill Clintons/John Kerrys/George Bushes attending Yale, I’m sure. But don’t think that a state school means your ambitions will be cut short, and unless you have ambitions to be the next hedge fund manager or a U.S. Senator I’m not sure a private school is that much better. After you get that first job, no-one will much care if you went to State U. or Fancy Institute except on football weekends. Of course, if you want to major in some specialty that only exists at some private school, or you have some other reason for going (family ties, etc.) there’s nothing wrong with it, but I don’t plan on giving my children an extra $328,000 just for the heck of it.

Invest in early education. One of the main reasons I’ve been uncomfortable with 529s is the fact that you are tying up money for a college education. I know you can get it out, I know it can be used for your own education if your child decides to run off to Nepal, and so on – but what if you need money for education in the early years? We are considering a private pre-school and kindergarten for our son; first, for safety and quality reasons and second, for our own opinions on educational philosophies (we are very interested in Waldorf education, for example). We hope that money spent early on can provide some love of learning that will help earn scholarships later on. I won’t have an answer on whether this was a good idea or not until 18+ years in the future, but it makes sense to me.

Conclusion

I guess in the end this is more of a decision related to your personal values. My parents helped me a lot during college, but I provided the great majority of the money for the total costs of my undergraduate and graduate education came from scholarships and teaching jobs, including 100% of tuition. While my parents could have (and I am sure would have) scraped together the money for me to attend Harvard (yes, I was accepted there), I never felt a burning desire to attend and haven’t ever felt that I shortchanged myself.

My hope is that my son will appreciate the fact that I have enough confidence in him, even now, to know that he’ll be able to put himself through college with scholarships and hard work, and hopefully we will return the favor by making sure first that we are never a burden to him.

I should also point out that I do have a 529 for my son (set up by his grandparents), but it’s mainly a place for relatives to put gifts. I haven’t contributed anything to it myself to date. Please don’t beat me up too much in comments.

I will not pay for my children’s college education, part 1

Many of the personal finance sites I read concentrate on a few key areas: reducing debt, making investments, emergency funds, saving for your children’s college education and saving for retirement. I agree that most of these are important topics, but I don’t believe that you should save for your children’s college education. This may come across as a shocking or neglectful thing for a parent to say, but I have my reasons.

Save for your retirement and debt reduction first. Quite simply, there is a good chance that any 529 or savings plan you start today will not have a better return than debt reduction or your own retirement savings. You may argue that a 529 and a 401(k), for example, have a similar pre-tax benefit, but if your 401(k) has an employer match it’s going to come out ahead of a 529. Now, if you have an employer who will match 529 contributions, then it’s probably a good idea (and hold on to that job like grim death because I bet it offers very good benefits in general). But I doubt your 529 will return 15% if your IRA is returning 3%; most likely they’ll both be in the ballpark of the market in general, assuming you have similar funds in each.

Just remember that if you are a burden on your children when you retire, due to debt or lack of savings, much of the money you saved for their education may be lost. You may unconsciously think of putting money into your child’s education as a retirement plan (“my son the rich doctor will buy me a house in Arizona when I’m old!”) but that’s putting a huge amount of faith in a future unknown. What if your child decides instead to work as a doctor for “Medicin Sans Frontieres” or has eight children of their own (i.e. no money leftover)? Or, more brutally, decides that he or she want a vacation home in California and decide to leave Mother and Father in the one-bedroom in Funkytown? I hope that my son will spend his money on himself and his family rather than needing to help me out. I hope that if I really need help, he’ll be there, but more in the sense of physical or emotional or ‘administrative’ help when I’m too old to manage for myself. And it takes a lot of money to pay for the golden years.

Finally, I think it goes without saying that if you’re paying 18% on credit card debt but skimping on debt repayment to fund a 529, and your 529 returns are 10% per year (even considering the tax advantages) it’s probably better to pay the debt down first, then worry about your children’s education.

Student loans/scholarships. Quite simply, nobody is going to give you a loan or a gift to fund your retirement. On the other hand, student loans are easy to come by and scholarships, while not always easy to come by, are plentiful. I was no great athlete, but I received tennis scholarships. I also received a number of academic scholarships. Some were general, but others were award-related (National Merit Finalist scholarship, for example). If your child studies hard and participates in extracurriculars, they will receive scholarships. They may not receive scholarships to every school they want to attend, but I guarantee there will be a college willing to extend “free money” in the form of a scholarship to attract students with good grades or community leadership activities or athletic ability.

…to be continued…

things I learned from my grandparents about money, part 1

Most of my relatives have some very different ideas about money, and by relatives I am including the wide range from my wife to my parents to my in-laws, etc. I realized a long time ago that it is very easy to pick out the flaws in other people’s philosophies or actions while failing to recognize them in your own thoughts and actions. However, I still find it a fairly useful exercise to try and determine where people make 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, have always been very 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 (hard to believe the US still had a horse cavalry less than 70 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 very well over the years. He did this although he had a state pension and could have chosen to spend that money. 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 grandfather maintained an almost emotional attachment to some of his 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 they could pass them on, but as they have moved into more and more expensive housing (nursing homes are much more expensive than regular apartments, obviously) it has become obvious that all of that money will be gone soon, regardless. Had they moved it into a savings account paying 5% ten years ago they could have been earning steady income.
  • Never really spending, good and bad. Although they amassed such a gigantic fortune (relatively speaking) on retirement my grandparents never really 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 Germany. They did ‘live large’ in some senses - they ate out almost ever day, they bought new cars for cash every few years while they could still drive and they were almost insanely generous to my parents and my brother and myself. 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 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 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 to high - and hasn’t smoked in 15+ years now. 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.
  • 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 (and still give) 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. I know this is a somewhat selfish approach, but I think it’s right. Give when you are able. I do not subscribe to the Christian teaching that I should give ALL I own to the poor, and apparently from the number of Mercedes 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.

boosting your career with an overseas stint

When I was younger, I was largely unaware and uninterested in the world outside the US until I won a scholarship to study in Germany when I was 15. I had a terrific experience, both personally and academically, that inspired me to continue my German studies and someday return to live and work in Germany. One of the main reasons I went into accounting was the knowledge that it was a worldwide profession – business travel, international business, and so on made it likely that I would have a shot at going overseas sometime in my work life.

During college I decided that I had studied German long enough and that I would fulfill my language requirements with courses in Japanese. This being the late 80s, Japan’s economy was blazing and knowing Japanese seemed like a good idea. However, when I showed up at the registrar to sign up for Japanese I found that the course was full. The university I went to had a fairly limited selection of languages, including mostly the usual suspects – French, German, Spanish and Italian. However, I noticed they had added a course in Russian, so I signed up for that, instead. I had some history with Russian, so I figured I could do fairly well in this language that was, at the time, a pointless diversion.

In the late 80s there was no real reason to suspect that (a) Russia would ever be particularly open to Westerners or (b) a place that would offer any sort of opportunities to anyone other than academics and writers. That would of course change rapidly but at the time it did not seem particularly likely. So I studied Russian, and my professor – Dr. Don – was a real inspiration and one of the two or three best teachers I’ve ever had. He was young, enthusiastic, friendly and had a real passion for languages and linguistics. I stayed in the class past the minimum requirements and went on to be one of the first two Russian minors in the school’s history.

So approximately five years later, in late 1995, I was approached by a partner in the Big 4 firm I was working in. I had told everyone quite frequently that I wanted to work in Germany, and the partners had told me they would keep an eye out. Of course, Germany didn’t lack for accountants so the idea of me working there had a slim chance of success. However, the partner told me that they had received an unusual request from the Moscow office for short-term assistance for any Americans. The partner knew I had a Russian minor, and asked if I was interested.

Of course I was, so I jumped at the chance. I did a phone interview and was all set to go in February of 1996. I flew to Russia and realized on the taxi ride into Moscow that I didn’t even remember the word for snow (“snyeg” if you’re curious). My Russian was very, very rusty. I had a lot of adventures in Russia, both in my initial four month stint and in my return for a year and a half for a different company, and in further visits and business trips there. I will cover those in future posts.

Today, however, I am going to focus on the five most important outcomes of my work in Russia as it has related to my career since. I think these outcomes are critical if you’re considering working overseas, or want a big-time corporate job. I’m not sure working in England would give you the same cachet as more exotic locations like Russia or Indonesia or China, but it might.

  1. I learned a foreign language really well – not just grammar, but some slang, intonation, and so on. This is only moderately useful if the language in question is Russian, but considering Russia has one of the hottest economies in the world and is used as a lingua franca throughout Central Asia, it is more useful than Italian or German.

  2. I embraced a culture and by doing so, became more open to all cultures. I wasn’t close minded or terribly parochial, but I really learned what it was like to be immersed in a culture fairly alien to one’s own. I can’t say I went native. I lived in an apartment that cost 10 times what the normal Russian could pay. I spent more on a meal and drinks on a date than most Russians would see in a month. I had an Internet connection and a state-of-the-art computer. But I did make friends, and spent time at their homes and talking with them and doing things with them on the weekends that a lot of my colleagues – who uniformly didn’t speak Russian – never did. And that experience made it that much easier for me to relax in the future when I went to other countries around the world (although I never got comfortable with midnight steak dinners in Argentina…)

  3. I learned true independence. If you want to learn how to deal with customer service problems in the US, try standing in line at the Russian phone service center and arguing with a 50 year old grandmother in Russian about your disconnected phone bill. And if that example’s too mild, try going cross-country in a four-wheel drive with two bodyguards to a former prison camp surrounded by radioactive wastelands, then eating lunch with a sobbing drunken bank director choking out patriotic Soviet songs while eating toasted pine cone seeds. If you don’t feel a little bit lost during that experience and a little bit more confident about handling yourself after it’s over.

  4. I gained tremendous work experience. I had to constantly work not only on accounting, but on three different types (US, Russian and international), all while constantly switching back and forth between two languages, managing clients and handling a huge workload. I had been managing a staff of maybe 1 person, auditing $2 million dollars in sales per year companies at home. The next year, in Moscow, I was managing 25 people on an audit of one of the biggest clients of my firm in Russia, with audit fees alone of $2 million.

  5. Finally, and most importantly, I created a massive shining bright spot on my resume that, ten years later, still draws more attention, more conversation and more interest than anything else I’ve ever done. I’ve worked since then in locations from Turkey to Argentina, and nothing compares to the shock and amazement your average corporate worker expresses to me when they found out I worked in Russia. It has gotten my foot in the door at several companies; it has wowed recruiters and it has become an endless source of anecdotes that seem to fascinate people (or it could be just that they are polite but I think I can tell the difference).

If you’re planning on getting a job in the corporate world, you should consider a stint overseas, preferably someplace that isn’t ‘safe’. At every step of my career there have been people competing with me for positions, assignments and promotions. Many went to better schools, had more certifications, had better connections or frankly were smarter or better looking. But I have yet to encounter many who could top the conversational firestorm I can usually unleash by dropping “that reminds me of the time I got arrested by Russian immigration on a business trip in Vladivostok” or “at least no-one is getting assassinated like the general director of my client in Moscow” and so on.

I suppose that despite my appearance, my mild southern accent or my calm outward appearance my willingness to go work in the wild East in the mid-90s, when things were just 30 minutes away from total chaos in Russia, makes me look like a super-confident, devil-be-damned risk taker to some people. It’s not true; I am a pretty conservative guy in most of my actions. However, the appearance is enough to provide an ‘in’, and that’s usually what it’s all about in appearance-conscious corporate America.

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