Monday, July 30, 2012

The Value of Index Funds: Part 1

I have friends who frequently ask me what's the best option for their 401k's. I've divided this post into two just because I want to take some time and explain everything fully. For those of you who don't know what this program is, let me elaborate. Up until about 30 years ago, company pensions were the chief mode of saving for retirement. In this scenario, companies would automatically deduct a certain amount of money from their employees' pay, and invest it for them (usually adding some additional money too). What was nice about this whole setup was that the employee was guaranteed to have some sort of income in the future when they retired. They were not tempted to spend their savings, because they never saw it. What was kind of annoying about these programs was that the employee really had no choice as to what their retirement money was being invested in. Often times, companies would mitigate risk by purchasing US Treasury bonds, etc... This allowed for only the bare minimum of interest to accrue in these plans. If the employ had been given this money and invested it wisely, they would have probably earned much more than what the pension was offering.

Along came 401k's and companies' desire to cut costs.  The basic 401k program involves the employee voluntarily selecting how much they want to remove from their pay (usually pre-tax) and putting towards a number of investments selected by the controlling company.  Usually, the company will match your investment up to a certain amount thereby providing some free cash for those who contribute.  401k's became preferable to companies, because they offered a much cheaper way to pay for retirement.  No longer would a company have to pay all the administrative fees and expenses in keeping a pension plan.  Furthermore, a company was "off the hook" for your retirement once they gave you the matching contribution.  It was up to you to determine how much was enough.  There lies the beauty of these plans; it offers each of us the freedom to control our own retirement destiny.

I mentioned earlier that your 401k contributions are tax free, however, you will have to pay tax once you draw funds in retirement.  This unfortunately, is the stink in the whole mess.  Imagine if you were a farmer and had to give up some of your seeds for taxes or some of your harvest.  Obviously, giving up your harvest is the more burdensome scenario.  Well, their is an alternative for those of you who happen to have a benevolent company; it's called a Roth 401k.  In this situation, your contributions are taxed and you get to withdraw your earnings when you retire tax free.  This is definitely the preferred situation!

If your company does not provide a 401k program (maybe it's too small), then you should open up an Individual Retirement Account (IRA).  It mimics the tax benefits of the 401k, but does not include a company match.  Additionally, you have a much wider choice of investments for an IRA.  Their is also a Roth version of the IRA for your financial amusement.

So, how much should I put into my 401k?

The most beneficial scenario is for you to put in at least as much as your company is willing to match (usually somewhere between 1 and 4%).  This will allow you to maximize the amount of company money going into your account.

Should I put in more?

This is a little trickier.  I think for most people out there, this is a good idea because it allows you to efficiently save for the future without having to do much work.  I however feel that if you are financially savvy and disciplined enough, you should instead use that additional money for your own investments and not be limited to the select provided by your company.

That leads us to the next question and the point of this mini-series: What investment should I put my money in?  Stay tuned....

Wonderful Moment of the Day: I'm actually knee deep in writing my first book which will be in the "e-book" format.  I just received my cover art today and am really motivated to finish up the second half.  The book is a conglomeration of much of the good advise that has gotten me through this world very successfully.  I'll let you know more once it gets closer to finish.

Friday, July 27, 2012

Home Insurance Shenanigans: Part 2

Insurance for Vacation Rental HomesYou may have followed me in my last post about the things home insurance companies do.  Well, the good news is that I did get a great deal on my home owner's insurance.  The bad news, however, is that the insurance company sent over an inspector and determined that if I want to keep them as my insurer, I will need to do the following things:

1.) Trim the tree that's touching my house (not so easy, because the branch is like 30 feet up)
2.) Apparently I have shingles on my house that need repair (I actually walked around up there and don't know what they are talking about)
3.) The detached garage roof is in need of repair

The garage and the tree are definitely things that are on my list to repair, however this just goes to show you that not everything always works out.  At least the extra $1000 bucks I would have had to invest in my previous insurer is instead going towards the equity of my property.

Needless to say, I have a year to think about how I'm going to tackle these issues, so stay tuned.  Also, I apologize for the short post, but my in-laws are visiting this week.

Wonderful Moment of the Day: BLT's....enough said.

Wednesday, July 25, 2012

Millionaire by Thirty - Book Review

Last week, I decided to take advantage of my local library and wanted to see if there were any financial schemes to mass riches that I haven't thought about already. Well, I found the perfect candidate in the "Millionaire by Thirty" book written by Douglas, Emron, and Aaron Andrew. I was enticed by the cover, the title, and especially the subtitle which said "The Quickest Path to Early Financial Independence". I was up for some good reading, or maybe a quick laugh, so I dived right in.

The book starts out nice enough, a couple short stories from the authors' own personal lives, but then lists three types of people:

1.) People who make things happen
2.) People who watch things happen
3.) People who wonder what happened

Well, let me tell you, I wanted to be the one that made things happen.  Needless to say, I started getting engaged.

Further reading through a few chapters on proper budgeting, and getting your financial house in order were basic enough, but I kind of already new all this stuff, and wanted to get to the point.  Finally, we reached the crux of their wealth generating tactics; home equity and arbitrage.  Basically, what they want you to do is purchase a home as early as possible with as little down payment as you can manage.  Next, work it out so that you will have the lowest initial monthly mortgage payments as possible.  They even suggest you get a differed interest or interest only mortgage so that you can take the money you would have spent on it and sock it away towards a higher interest bearing investment.  Every so often (maybe 1 or 2 years), take out a home equity loan on the appreciated value of your property, and use the money to invest in your higher interest investment.  Does any of this sound familiar?  It should, because what they are suggesting you should do is become your own bank and commit arbitrage (however, it's legal in this sense).

In case you didn't know, banks make money by taking your deposits in your checking or low interest savings accounts, and using that money to loan out at higher rates.  The margin between what they are paying you and what they are receiving from clients is the revenue that runs the whole organization.  What the authors are suggesting you do is the same thing; borrow at lower interest rates and invest in higher interest rates thereby reaping the margin in profit.

Finally, they suggest that you take the money ready for investing and put it into MFTA or Maximum Funded, Tax Advantaged Life Insurance.  Basically, this is a whole or universal life insurance policy that you can fund for a few years and then borrow from.  What's nice about this is that from beginning to end, this investment is tax advantaged meaning you don't get taxed on the money going in, accumulating, or coming out.  The problem with this investment is that there could be a bunch of fees if you're not careful.

This all leads me to my big problem with this whole concept: home prices took a huge dive back in 2008-2009.
The graph on the left shows the Case-Shiller home price index.  You can see that dotted line is the indexed value of American home prices.  Notice also that catastrophic drop in value in 2008 to 2009.  If you had invested the way these authors suggested to do it back in 2007 or 2008, you would now be in a situation in which all your homes would be loaned out more than their values, and now your mortgage payments are due.  Unfortunately, you cannot access your money for a couple more years, because you put it all in this life insurance policy that's only generating about 4% short your screwed!

OK, I can see where the authors came from when writing this book, in fact they did make huge amounts of money throughout the process, but those were in times where house prices did rise 7% per year, and investment rates were pretty good.  I only imagine how they weathered this whole ordeal.

I did learn a few things from this book that are helpful.  First, I learned a bunch on the tax savings you get from having a mortgage, plus all the other tax savings from the right kind of investments.  Secondly, I learned more about the concepts to maximizing my returns via home equity loans (which are hovering around 2.5% now).  It was a fun read, but I'm just glad to understand a scheme when I see one.

Wonderful Moment of the Day:  Realizing a crock of $%&# when I see it.

Monday, July 23, 2012

Treating Each New Venture as a Small Business

My square foot garden update 2
A little while back, I wrote a post about my plans for my little garden.  Previously, I discussed how having a simple garden can be soothing and inspiring, and may even lend itself towards future inspirations.  Today, I want to give you an update on how everything is going, not to fill some space with garden talk, but to introduce another way of looking at the world.  That new way I want you to think about, is to treat your next endeavor as if it were a small business.

As you can see from the picture, my cherry tomatoes are overflowing with fruit and buckling at their own weight.  Luckily, I have some steal cages propping them up.  To set up the garden, I had to buy some lumber, soil additives, electrical gauge, seeds, wire cages, and a couple other 1 time purchases.  The total cost for the project came to about $250, most of which I won't have to spend again for awhile.  I've also established a compost box that I'm hoping will provide future nutrients towards next year's garden.

Now the fun part; time to list out what I've reaped from this little guy thus far.  I actually took a visit to my local grocery store to see how much these produce would be if I had to buy them.  I ignored the fact that my veggies are organic.  Total revenue thus far includes:

1.) Pole Beans: 58 = $3.98
2.) Baby Carrots (not the kind you get at the store, these are actually a heritage breed): = 18 = $0.90
3.) Cherry Tomatoes: 49 = $6.52
4.) Yellow Squash: 4 = $2.44

Total = $13.84

My wife and I also have an herb garden with the following harvest thus far:

1.) Cilantro: 2 bunches = $3.58
2.) Basil: 4 bunches = $7.96
3.) Sage: 4 bunches = $7.96
4.) Marjoram: 1 bunch = $1.99
5.) Oregano: 1 bunch = $1.99

Total = $23.48
Grand Total = $37.32 (I'm still in the red by $212.68)

I guess that's not too bad since it's early in the season.  I have a couple more prospects that might improve my earnings; 9 heirloom tomato plants in my back yard, 8 pepper plants that are coming along pretty slowly, about 20 scallions, and continued harvest from all the other items I mentioned.

I went through this exercise to show you what having a business mindset is all about.  Just like in a small business, I had a number of up-front costs which hopefully will be far less in the future.  On top of that, earnings take awhile before they make up the initial expenses.  Some small businesses take years before they can reap a profit.  I'm hoping to get about $100 worth of produce this year, and make up the remainder next year.  We'll see how this all plays out.

Here's some practical advice on your next project.  Calculate all the expenses that will go into it, and then list all the revenue or "benefit" sources.  You may never see some of these benefit dollars, but you should list them if say the improvement you are doing is preventing you from some other disaster.  Most importantly, treating projects like a business can make the project much more fun.  I now have a concrete goal with my garden, and this little exercise will keep everything in perspective.

Wonderful Moment of the Day: Coming out to the garden each day and eating about 5 sun-ripened tomatoes each day.

Friday, July 20, 2012

Take Advantage of Your Library

Bates Hall in the Boston Public Library
I'm often amazed at the American institution known as the public library.  Think about it from a business perspective.  "Guys, I've got a great idea!  Let's set up a building where we house thousands of books containing information gathered from all the reaches of the world.  Let's also set up some computers, buy a bunch of DVD's and CD's and make this resource available to the public.  On top of that, let's allow people to borrow this information for the price of .... FREE!" Sounds kind of crazy doesn't it?

The amount of trust provided by a city's library is nothing short of amazing.  A couple weeks past, my nieces and nephew were visiting and since they are <8 years old, I knew that I needed something to entertain them in their down time.  Being the ever frugal person, I decided to hike on over to my public library and check out some kids movies.  I walk in and am amazed that they have thousands of kids DVD's free for rental.  You can even hold on to them for 10 days.  I grabbed 4 cases (Wallace and Grommit, Carmen Sandiego, The Muppets Show, and Fraggle Rock), check out at one of their self-check out kiosks, and am out the door in less then 10 minutes (9 of those minutes were actually spent looking for the right movies).  If you stop to think about, this is an amazing service provided to all of us for free.

Unless you live in some remote part of the US (sorry all you international readers, but I'm certain you have something similar) chances are you have a public library somewhere pretty close to where you live.  The modern library system as we know it today has its roots in the invention of the printing press by Johann Gutenberg.  Since printed material become exponentially cheaper and faster to produce, we could now start storing the information in public buildings so the general public could become more educated.  In the U.S., libraries started to gain track in the mid 18th Century.  One of the biggest advocates of the library system was Benjamin Franklin.  Benjamin's library operated by people paying for a subscription so that the library could buy more books.  People who had this subscription could then borrow any of the books belonging to the library.  Lets also keep in mind that this was a time in which income tax was non-existent, so there was little other choice to fund this endeavor.  Today, libraries are mostly funded through our income and property taxes.

So, how can I maximize myself and my life through the use of my public library?  I think the answer is obvious here in that you should start your own reading lessons.  Anything you could ever want to learn is located in your library and it also includes a bunch of extremely cheap (free) entertainment.  There is literally nothing cheaper to both enrich and occupy your life.  You can even request a book to be ordered by the library so that you can get some additional resources.  With all these benefits, it is almost stupid to never stop bye.  Take the time, and visit your local library soon!

Wonderful Moment of the Day: Picking up a free financial book to read at my local library.

Wednesday, July 18, 2012

Seven Wastes: Motion

Continuing with the third installment of our ever-so-popular Seven Wastes series, I now present to you the concept of wasted motion.  Traditionally, motion waste often occurs when someone is on a production line.  Imagine if you were processing widgets (this just means any generic item), and that you had to bend over, pick up the widget, turn to your left, place the widget in the machine, and then press a button.  Now doing this once may not seem like such an effort, but what if you did this 5 days a week, for 8 hours a day.  Over time, that little additional step of bending over and turning can add up to some significant time wasting.

Being a good supervisor, you see that this is in fact some wasted time and decide to have the widget at waste level so all the employee has to do is turn right, pick up the widget, turn left, and place it in the machine. You have now eliminated the step of bending over which took about 2 seconds per widget. If a normal person can perform this task 20 times a minute for seven and a half hours a day (got to keep in mind the lunch break), then you have a task that takes up about 5 hours of their day. By implementing that new turning task, you eliminate 1 second out of the step, you saved your company an additional 2 1/2 hours of work a day. You can see how these little simple tasks multiplied over hundreds of employees can add up to some significant savings.

Now how does this example apply to your life?  Consider the time you spend in your life at work/home/recreation, and think of the many tasks you perform.  At work, you might have to staple a whole bunch of documents together, or you might actually work on a factory line.  At home, you might go through a complicated orchestra of movements in your pursuit of a delicious dinner.  Think of the process you go through to complete any task, and ask yourself if this is the best method to achieve the desired outcome.  It could be that if you just move where your cutting board is located, you could save yourself a few minutes each day for something else.  These little minutes can add up and significantly impact your life.

Completing a movement more efficiently is not necessarily the goal I want you to think about.  Instead, get in the habit of always asking if you could be doing something better or more efficiently.  This is a very practical and important skill if you are to succeed in maximizing your potential.  Analyzing your motion skills is a much more tangible example to more complicated issues such as analyzing your stage in life.

For a process analyst, the key tool they use to identify their movements is called a process map.  A generic example is demonstrated in the picture.  I don't expect your to complete one for your day-to-day steps, but it's helpful to see how this works.  In the end you should always be questioning what's going on around you, and strive for better.

Wonderful Moment of the Day: Having a nice soaking rain storm after about 6 weeks of no rain.

Monday, July 16, 2012

Saving Money with Free Stuff

Not my campus but you get the idea
Let me tell you, government free stuff is amazing!!!  There is literally benefits for every citizen if you are just willing to spend the time to looking, but I'm getting ahead of myself.  Let's set the stage a little bit.

A few nights ago, I had the privilege to watch a free movie screening (prior to DVD release) of a great flick on the lawn at my local collegiate neighbor. It was one of those family movie nights complete with summer students setting up the whole system and an inflatable projector screen. The movie on show was the "Five Year Engagement", and let me tell you that things were far more enjoyable when they are free! It was an evening program that started with a free concert from 6-8pm followed by a movie night. My wife and I got there, set up some chairs, and enjoyed our adventures together.
But that's not all the free stuff I've managed to take advantage of...

While pursuing my MBA, I received a special pass that allowed me to ride the subway in my town for free.  This was perfect, because the first stop of the rail was 2 blocks from my home and dropped me off right in front of my office building.  Normal fair round trip is $4, so you figure about 220 days a year I would need this multiplied by 3 years of my discount (I attended a 3 year part time MBA program), and I saved myself a handy $2,640 in travel expense.  Putting this in terms of retirement (with a compounded inflation adjusted 4% return each year), I saved myself $7,921!!!  Not bad.

Now here is the real deal.  While getting ready to purchase my first home, my wife was technically still in her Doctor's program at said institution which put us in a lower income bracket, because we were just living on my salary.  This was perfect, because it qualified us for a first time home buyers program in my city in which it paired up with local banks.  The offer basically had the bank match $4 for every $1 I put into a savings account over a 10 month period.  The max benefit would net me $7,500 plus the $1,875 I saved personally which gave me $9,375 to put towards closing costs and a down payment.  These housing programs are located in more municipalities than you may think, and it doesn't stop at just first time home buyers.  My city is still currently offering a grant of $15,000 for someone to remodel a house within the city limits.  The only caveat is that you have to live in the house for 15 years.  In my case, my program deemed 5 years to be enough.  However, if for some reason my wife and I had to move out before that 5 years was up, we would only have to pay back the grant on a pro-rated basis.  In other words, if we only lived in the house for 3 years, we would only have to pay back 2/5ths of the loan back or $3,000.  If you take into account the time value of money and a 3% inflation rate, that $3,000 is really only $2,738.

So what am I getting at with all these savings?  Let's just say I'm no expert at finding deals, but I put in the work and check out every lead I get on potential government programs.  Checking your local town or city's website could lead you to some home buying programs that may save you big.  Simple web searches on savings in your area can also help, however the best method is getting involved in your community and asking around.

Wonderful Moment of the Day:  Seeing a free movie and my wife run up to a guy handing out free popcorn only to grab the 3rd to the last box.

Friday, July 13, 2012

The Three D's of Success

Teaching others to succeed is never an easy task; getting them to remember what you said is an even tougher one. In my ever pursuant goal of educating you towards success, and achieving that goal myself, I have dug up an old bit of advice that may give some structure towards your dreams. I refer to the Three D's of Success: Discipline, Desire, and Dedication.

The Three D's of Success
Those who have discipline usually have some sort of routine whether it be getting up in the morning every day at the same time, or putting some time aside for reading. Discipline is crucial if you are to see your ideas, inventions, or business plans come into fruition. Discipline is also very applicable to the rest of us Joe Shmoes who function in the real world. Consider what life would be like if we didn't have the discipline to budget our funds, feed our pets, or go to work everyday. Without such a characteristic, you may well end up broke and on the street. For me, discipline usually involves a day in which I set some time aside for creative purposes (such as writing on this blog), learning something new (I'm currently trying to learn German), and getting up in the morning around the same time everyday even on weekends (this has loads of health benefits and keeps your circadian rhythm in check). If you want to succeed, you need to have the discipline to make time for your future success every day.

This concept is easy to understand, and can often be the most abused. Desire is what makes you pursue your ideas in the first place. It's the driving force that will make you want to succeed. Now I mentioned that it can also be abused, and those who manifest this abuse usually become greedy or power hungry. Take a step back from your own ambitions and understand whether your desire is for success in it's intrinsic form or just for your own vanity.

The last of the three D's includes Dedication. Those who are dedicated will continue to persevere no matter what obstacles they may face. It's essentially discipline in the face of adversity. You will most likely fail at many things in your life, but to take the time to understand how you failed, learn from the situation, and get back in the game is what is going to make or break your success. I think most people find themselves most dedicated when looking for a job. An old professor of mine once said that you can have a whole file cabinet of job rejections, but it is just the 1 job that will set you on your career. I took his advice, dedicated myself to applying for at least 10 jobs a day after college, and found myself landing a great career at Fannie Mae after applying for 200+ positions around the country. If it wasn't for my own personal dedication, I wouldn't have been able to achieve this (at the time) great accomplishment.

I assembled a little 3 circle Venn diagram to illustrate the inter-linking of the Three D's, however I'd also like to point what would happen if you only had two of the three pieces. If you only had discipline and desire, you are what I like to call an incomplete goal setter. In other words, you have the desire to get things done and you are willing to put the time into accomplishing them, but as soon as you hit some adversity, you give up and move on. The second linkage is between Desire and Dedication. Someone with these characteristics is dedicated to their desires, but doesn't really have the mundane discipline to work on their life projects every day. I like to call these people the schemers, because they are prone to get rich quick schemes. The last linkage is between Discipline and Dedication. These people are content in their life and are therefore unknown. There is nothing wrong with this trait, but they will never maximize their potential due to a lack of desire.

Take a step back and analyze whether your actions fit all these traits. Know where you might have to work on something and take action to accomplish it...I know, easier said than done, but you have to practice and know yourself. Before long, success will follow.

Wonderful Moment of the Day: Taking a walk with my wife on a perfectly temperate evening.

Wednesday, July 11, 2012

Act Like A Billionaire - Give to Charity

File:Giving in the US 2009.pngIt might seem like an oxymoron for me to suggest it given the nature of this blog, but giving to charity is a necessity that everyone (no matter the income) should perform. In my "Act Like A Billionaire" series, I'm hoping to demonstrate the strategies and knowledge that billionaires act upon every day. Making money is as much a state of mind as it is anything else, and with my suggestions, you too can be on your way.

Why give to charity?
The first and most obvious question is "why should I give to charity"? If my goal is to retire early and live off my dividends, then why should I waste my money on throwing it away to some other organization. As mentioned in previous articles, think of everything you do as a form of practice. By taking the time to find the right organization (whether it be a religious institution or some other kind of non-for-profit), you are becoming more invested in your own community. When you are more invested, you tend to value your neighbors and neighborhood which could lead you to develop deeper relationships with those around you. These relationships may even help you down the road.

Even more deeper than just developing relationships, giving to charity allows you to be in control of your money so that it does not control you. By handing over your hard-earned cash, you are essentially saying "I don't need all this, and there are other people who need it more". It's this psychological exercise which will allow you to be more happy with what you have and understand that money is not everything.

Who should I give to?
This is probably the trickiest part of charity in that there are many organizations that could use your help, and only a limited supply of your money. First ask yourself what is important to you on a philosophical level. Do you care about starving people in other countries, or do you instead want to help out a local food pantry? Whatever you decide, know that you need to be passionate about the cause in order for you to truly give.

How much should I give?
I personally tend to give based on the old tithing philosophy of 10% of your gross income. This amount is very easy to calculate and you know exactly how much you have to give up each time frame. This, however, may not be the right amount for you. 10% might be way too much at this point in your life. Even if you give 1%, you are still practicing a billionaire attitude. When people like Oprah give, they do it in recognition of their power and influence, but they also donate to one cause. If you spend all your "giving fund" on one charity, you are far more likely to make an impact than putting $25 bucks in a bunch of charities. You may even be able to get more involved in the organization once they start seeing you as a reliable donor.

Other Benefits:
Finally, there are a few other benefits with giving, most notably the tax benefits you get from reducing your overall taxed income. One resource I found to provide some good advise along the tax breaks and other advantages is this article. Whatever you decide, make it part of your routine to donate at least once a month. In the long run, you may have even totally enriched someones life.

Wonderful Moment of the Day: Coming home to a perfect 72 degree day and eating my dinner in my back yard.

Monday, July 9, 2012

You Should Fear Failure

Failure is not often something we like to think about when embarking upon a new task or life adventure.  I myself, try not to think about the probability that this blog could have no readers and become an ultimate failure in my life.  Whole industries and self help books have become devoted to solving this supposed issue we all have in fearing failure.  Society has made it seem like you might have some kind of "problem" if you are terrified with a new life step for fear of it falling apart.  I'm hear to tell you that it is perfectly normal to fear failure and we should understand why we do it in the first place.

Fear of Failure has been with us ever since the dawn of humanity.  Since that primitive man stepped out of the cave in search of the day's hunt, man has struggled with the concept of his own personal failure.  But why do we do this?  My personal belief is that are brains were designed to think about these issues in order to improve our own success rate.  That may sound like an oxymoron, but hear me out.  If you are embarking upon a new task in life (say investing in some riskier stocks then you are used to), you may think of the 101 ways this investment may become an epic failure.  You start listing such things as, what if I'm not diversified enough, what if the market turns sour, what if I didn't do my research?  These "what ifs" are your brain's way of determining all possible outcomes and preparing you to take all actions possible to prevent disaster.  These fears of failure will make you do more research on the stocks you intend to buy.  You will probably start reading more on the general health of the economy, and you will most likely do some indepth research on the companies you intend to invest in.  The whole point of your fears is to motiviate you to success.

All this said, the problem with embracing your fears is that they can sometimes be debilitating and prevent you from even trying.  This type of fear is not acceptable and should be understood more throughoughly.  You need to ask yourself why I'm so afraid to pursue my dreams; is it a personal issue, financial issue, or something else?  Look introspectively and poke around at some possible reasons.  I find that making lists in these types of situations helps greatly.  Once you start writing down your reasons to panic, you can start addressing whether they are valid concerns and whether you are devoting enough fear to them.  If after all this you still have logical fears to do a particular task, then it is most likely a good idea not to pursue any further.  You just rationalized your reason not to continue which is perfectly acceptable.

I too have feared failure and uncertainty.  When I moved up to my current city from Washington DC, I realized that I would take a significant pay cut, however I knew I wanted to be close to my family and future wife.  I moved back without a job prospect and hoping my funds would last.  Don't get me wrong, I was terrified!  However, it was this fear of failure that drove me to apply to at least 10 jobs/day until I finally landed a job at a local bank. 

Just remember, it is OK to fear failure, and these nagging voices (if tamed) will drive you to future sucess.

Wonderful Moment of the Day: Having a quite family dinner consisting of fish tacos with my wife sister/brother-in-law and nieces and nephews.

Friday, July 6, 2012

The 5 Laws of Gold

The Richest Man in Babylon by George S. Clason is one of the best sources of basic sound financial advise ever written. If you haven't had the chance to read this, I highly suggest you take it upon yourself to look it up. You can actually read this online for free since the copyright has long been expired.

This book takes you back to ancient Babylon and walks you through the life of a young Babylonian as he saves and prudently spends his way from rags to riches. One of my favorite sections in this novella is the 5 laws of gold which I listed below:

1.) Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.

This section is telling you to save 10% of your earnings each year for retirement.

2,) Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.

This section is magnifying the importance of putting your money through work in investments instead of stuffing it in your mattress.

3.) Gold clingeth to the protection of the cautious owner who invests it under the advice of wise men in its handling.

If your not good at investing money, then it makes sense to hire someone who is.

4.) Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keeping.

If you don't know how your investment makes money (for example how a company in which you have stock makes its money), then you should not be investing in them. Too many complicated things could happen and you're left standing with nothing. Stick with your own comparative advantage and knowledge base.

5.) Gold flees the man who would force it to impossible earnings or who followeth the advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

Don't be naive with your money. If an investment seems too good to be true, then it most likely is. 

Needless to say, all these "Proverbs", if you will, still make completely logical sense today, and so I encourage you to read the entire tale.

Wonderful Moment of the Day: - Spending time with my nieces and nephew.

Wednesday, July 4, 2012

The Seven Wastes: Over Processing

A Fancy and Expensive Compost Box
Continuing with our Seven Wastes series...I bet you thought I forgot...I'll be diving into the next topic which is "Over Processing".  Traditionally, over processing in the manufacturing world consists of doing more work than the customer asked for.  For example, a customer orders a basic Toyota Corolla SE, but instead you make an LE model complete with power everything, leather seats, and automatic air fresher.  All this time and effort you just put into making a luxury Corolla (if there is such a thing) is now wasted, because the customer is not going to pay more for all these features.  Now the dealer might have to deal with a whole other type of waste "Inventory", but I'll save that for another post.

Needless to say, the car example was just to illustrate a point. Unfortunately, over processing can occur in our own daily lives; most typically with allocating our efforts to particular projects. Understanding how much effort to put into a particular project is very important to maximize your own potential. Here's another example in my own life to wet your palate. Recently, I had the opportunity to build a brand new composting box for my backyard. Composting is a wonderful way to dispose of organic waste, reduce trash in land fills, and improve your own gardens, but I digress. There are hundreds of different types of compost bins on the market right now, and if your not careful, you could spend a couple hundred bucks on something that is essentially making dirt. I decided to go with the, "I'm going to just build one" method and next had to figure out exactly what I was going to use to build with. I searched online and came across a number of sites that listed the best types of compost bins for construction, and the best building materials. Chicken wire, cedar boards, fancy paint, all could make a compost box look really nice, but in the back of my mind something seemed awry. Finally it hit me, this was something that was going in my backyard out of site and essentially forms an industrial function. Why would I spend any significant amount of my hard earned cash on this project.

My plans for this uber cheap compost box consisted of about 10 12 feet long pieces of pine board I bought at a local construction reuse place for a total of $5. I cut them all up, and slowly assembled them into a nice box with 1 inch gaps throughout to allow airflow. Besides my own time, the total construction costs was that measly $5 I spent on building materials. The point I'm trying to make here is that I understood that this needed to be a cheap project and the accuracy of this project was only needed to be adequate. This allowed me to finish rather quickly and move onto the next phase of my life.

Taking the counter point on this whole "how much effort should I put into things" is the idea that you should put quality work into everything you do. I'm all for this, but if your boss is asking you to do 10 different projects, you need to understand which ones are the important ones and how much effort to put into them. There are only so many hours in a day, and frankly, you'll be much happier when you fine tune this time management skill.

Remember that a few minutes of thinking through problem and proper categorization in your life could save you much more time in the future.

Wonderful Moment of the Day: Seeing the biggest bull frog I've ever seen ribbit at my Parent's house.

Monday, July 2, 2012

Modern Day Muses: The Garden

"I have never had so many good ideas day after day as when I worked in the garden." --John Erskine

The above quote is referring to the poet Erskine and not the hockey player…Anyway; the garden has always been a magical place to anyone who has had the privilege to cultivate one.  Somehow, tilling the soil, clipping some weeds, and trimming the bushes makes you feel as if you are bonding with nature.  The flippant nature of society with all its noises and distractions never quite offers the spectacle and luxury that a nice backyard can groom.

The second installment in our series of inspiration takes us to the garden and back again with a look at my own fancy and pleasure.  I grew up with a family of green thumbs and had the chance pretty much every summer to see living beings grow from mere seeds to the majestic tomatoes and zucchini they would soon become.  It was always amazing to see the many produce we could garner from our plot of land. 
One question that always boggled my mind was what makes garden so appealing?  Was it the chance to see something you have so delicately taken care of grow into a large and bountiful plant?  Is it the feeling that you are somehow improving the world through your efforts?  Or, in the case of vegetable or flower gardens, is it the fruitful harvest that demonstrates a tangible profit to your liking? 

For me, the pleasure from a hard day’s labor in the garden comes from the idea that I’m being self sufficient.  Even in my tiny bit of land, I can produce food that will benefit my family.  As a little checkup to my own efforts, I’ll list my current harvestings.  It’s currently early in the season; however here is my tally of crops harvested thus far:
Raishes: None; Pole Beans: 11; Baby Carrots: 2; Cilantro: 2 bundles; Basil: 1 bundle; Sage: 2 bundles; Marjoram: 1 bundle; Oregano: 1 bundle.
I guess that’s not too bad considering most people just planted their garden only a month ago where I live. 
Taking a financial perspective from my garden, my hope is to recoup all the expenses I incurred while constructing the raised beds.  Total expenses including plants, some soil, and lumber came to about $250.  That said, I built the bed to last, and with my additional homemade compost bin, I’m hoping to never have to buy fertilizer again. 

But enough of this side talk, and back to the topic at hand.  When you boil it down, your garden is a great place to find inspiration and discover some things about yourself.  The motion of using your hands to tend a life can really have an impact on you…no wonder why so many people have an attachment to their plants.  The most important part of the whole gardening experience is that it offers an excuse for your brain to go on autopilot and contemplate the other things you want to do with your life.  This is what I like to call the tolling bell of introspection.  By taking the time to examine where you are in life, or maybe just think about some cool new invention or idea, you will find that your life will be greatly enriched. 
That said, a garden can be as simple as a couple potted plants on a window sill.  The important thing to acknowledge is that you are bonding with both these plants and yourself.  If you don’t have some sort of garden already, then I highly recommend you doing something about it!  You will see how much your life changes by having them in your life.  Use them as food, as something that looks pretty, and most importantly a muse in your own life.

Wonderful Moment of the Day: Watching the sun set……at 9:20pm!!!