Wednesday, February 27, 2013

Rolling With the Punches

It may surprise some of you who read this blog that I too am very fallible.  I preach about learning from your mistakes and being the best you can be, but do I really ever “walk the walk”.  Let me tell you a little story about a recent failure of mine involving my local water authority.

Last week, I opened up my mail like any other day and was shocked to find a $900 water bill.  It was a past due reminder and was made up of about $300-$400 in late fees.  You can imagine how shocked and pissed off I was that this happened.  I needed to talk to someone fast!

To give you a little background on the situation, I had moved into my house back in the fall of 2011.  This was the first house my Wife and I had ever owned.  Upon moving in, I called the water authority, had my water turned on, and asked for my name to be put on the billing.  I even paid $340 of late fees and bills from the previous owner as part of my mortgage closing agreement.  OK, everything was fine, and I was set to go.  Fast forward a year and I start getting worried about the water bill.  Now, I guess I should have known something was up 4 months after I didn’t get a bill, but I know some municipalities will bill once a year, so I just figured I was one of them.  So where did the bill go all this time.  Well, apparently, the water authority never switched the name on the account, and the post office was forwarding all the previous owner’s mail to their new home, so I never even received anything. 

Friday rolls around, and I call the authority and speak with a nice customer service rep who first says there’s nothing she can do about the bill.  I’m sure she gets people telling her that all the time, but I ask her to check where she was sending the bills in the past.  She looks, notices that it’s a different person, and says that her supervisor will call me back.  I wait until the afternoon, no supervisor yet, I call back, am reassured that I will be called that day, and then nothing.  So, I was stood up.  I call back on Monday, finally get ahold of the supervisor and am called a liar on the phone and was told “too bad, and I can assure you that we never make a mistake”.  Needless to say, it was a bad day.  Defeated and feeling pretty crappy, I caved and paid the bill: time to move on with my life.

It would be easy to look back on this whole experience and lament that something went wrong somewhere.  I should have been more proactive, the previous owner should have called after receiving all these water bills, the water authority should have determined who was now living there.  Everyone was to blame.  I’m not going to do that though, because I need to avoid subtractive reasoning.  What could I have done differently?  Even though I stubbornly argue that there was nothing for me to do, I believe this whole experience at minimum was a great exercise in patience and understanding. 

I made a mistake, got crapped on, learned from this ordeal, and am ready to put it in my rear view mirror.  I make mistakes just like everyone else, and I’m sure there are things in your own life holding you back.  It’s time to learn from those errors, and move on with your life.

Wonderful Moment of the Day: Delicious, warm coffee in the morning.

Monday, February 25, 2013

Removing Subtractive Reasoning from your Life

One of the major obstacles preventing you from becoming the best person you can be is your own mental blockade.  A great example of this is whenever you fail at something; do you think “I should have done it this way”?  This type of thinking is called subtractive reasoning, and really doesn’t serve much of a purpose for your own self-improvement.
It’s understandable why we think that way.  Imagine if you were the start basketball player in high school.  On the day of the big game, it all comes down to you making one final shot.  You aim at the basket, shoot the ball, and miss by a few fractions of an inch.  This type of loss will no doubt be played over and over again in your brain.  It is inevitable to start thinking about what you did “wrong”. 
Subtractive reasoning isn’t very helpful.  Think about it, did analyzing where you went “wrong” and mentally punishing yourself for such a failure ever make you feel better or perform better in the long run.  It essentially amounts to a life of personal negative feedback.  Why become your harshest critic? 
There is an alternative way of thinking.  Instead of focusing on how you failed, instead think of the experience as a learning opportunity and say “that way didn’t work, so I’ll try another”.  This type of reasoning is not intuitive.  Our society constantly reinforces failure as not acceptable.  In reality, we all fail at some point in our lives, and so failure should just be a natural part of the learning process.  “I couldn’t accomplish my goal using this method, so I know that method doesn’t work, and I will try a new method.” 
Life and experience do not always come as big epiphanies.  Instead, think of learning as a series of little “Ah-Ha’s!” that build into an overall lesson.  Don’t be so hard on yourself.  Understand how you could have improved the situation, learn from your failure, and move on.  This is how all humans learn.
Wonderful Moment of the Day: Watching an 18 year old kid try to get the phone number of a 28 year old woman on the subway…really cute and funny.  When asked for her number, the woman replied with “How old are you”?  I gave the kid credit for trying.

Friday, February 22, 2013

Is the Stock Market Over-Valued?

As a general rule to my own investing habits, I tend to feel a little concerned when the S&P has had such a good run as it's done for the past couple years.  The reason why I get a little concerned is that throughout history, there has been times of boom and bust, and in more recent history, you had the stock market booms of the 2000-2001 dotcom and 2006-2007 home booms followed by pretty huge busts.  Booms have been around ever since there were ideas to invest in, and generally occur when new forms of technology make themselves apparent.  In the case of the dotcom boom, nobody new how to value internet stocks, and with home values, the new technology associated with specialty cuts in mortgage-backed securities presented a financial product as being more secure than it actually was.  In any event, it often pays to do some of your own financial research and so, one of the best ways to see if the market is over-bought is to check out the P/E (price to earnings value) of the S&P 500.
S&P 500 PE Ratio Chart
The P/E ratio in its most simple description is the price of the stock divided by the earnings per share.  Basically, it tells you how many times more valuable the stock is than how much money the company is actually making.  There's no set rule on what an appropriate P/E ratio is for any stock, and that's why you'll see such swings from very low to extremely high.  The important thing to note with P/E research is to see if anything has dramatically changed or if new technology/investing techniques warrant the change. 

I quick glance of the link I submitted above, you can see the historical P/E ratio of the S&P 500.  Everything looks pretty good until you get to 2001 (alright makes sense...dotcom boom), and then HOLY CRAP look t 2009!  What the heck happened here?  Well, obviously it's the fallout from the housing boom.  I think the incredible decrease in earnings relative to the stock prices of these companies played more into this high P/E ratio that people pushing up prices too much.  Either way you feel about it, the market was definitely over-bought. 

The chart tells you that the mean P/E ratio of the S&P over the life of the market is about 15.49, and it is currently pegged at just a little over 17.  This would probably start indicating over-bought territory, however I would argue that you should probably look at the past 20 years as they are more relevant historical information.  I also removed those two huge spikes as those are obviously outliers.  What you get is a new P/E ratio of about 20 which would suggest we still have some room to go in the market place. 

But what should you do even if the S&P is over 20 on a P/E basis.  If you're investing in the long term, and have a well diversified portfolio over multiple asset classes, then any sort of short term market fluctuation shouldn't bother you too much.  That said, if you start seeing the P/E shoot over 20, it might be a good time to contribute more towards bond funds or other kinds of investments.  Just my humble opinion.

Wonderful Moment of the Day: Warm sweaters.

Wednesday, February 20, 2013

Benefits of Dollar-Cost Averaging: Part II

Last month I introduced the concept of Dollar-Cost averaging with just a simple example. You can see that distributing your contributions to any sort of retirement fund will have the effect of averaging your purchasing power (and essentially your risk) over the course of time.  By making smaller monthly contributions as opposed to a once a year bigger contribution, you can take advantage of buying more share when the price is low, and less shares when the price is high.  Giving into this theory is also a humbling experience in that you are admitting that you cannot possibly know when the market will be ripe for the purchasing.

I took this example to the next step and applied a real world and "more true" example.  I did a thought experiment in which someone were to invest an inflation adjusted amount in the S&P on a monthly basis over the course of 26 years (this ended up being the data I found and was easily available).  What would their portfolio look like?  I first looked at the month end  values of the S&P going from December 2012 all the way back to 1986.  I then used the Consumer Price Index (CPI) to invest a monthly contribution of $230 in today's money.  You can do the math as to what portion of your gross income $230/month is.  It just seemed like a low enough amount to be plausible  and a high enough amount to make it worth while.  I should also note that these contributions are contingent on very low to zero commissions as found in a 401k or IRA.  The $230/month also worked out to be the value of the CPI in December 2012.  After doing the math, you can see my returns as the blue line in the graph below:
If the information looks a little small, I apologize, but the gist of it all is that an inflation adjusted contribution to an S&P pegged index fund (ignoring expense ratios) will net you a portfolio value of $109,660 over the course of 26 years.  Total dollar contributions ended up being $54,335.

The red line which correlates to the secondary axis is a calculation I did each month which determines the dollar cost average of the stock each month.  At the end of December 2012, the S&P was pegged at $1,426.19 whereas our portfolio dollar-cost averaged value was $1,037.42 which means we had capital gains of about 37% over the time span.  

The lesson learned here is that a simple index fund can really pay off over time.  Even during the dips and booms, buying an index fund as a proportion of your portfolio through a dollar-cost averaging process can really pay off.  You just need the discipline to pull this off, and you should find yourself ready for retirement.

Wonderful Moment of the Day: Coming home to a meal ready and prepared by my Wife...awesome!

Monday, February 18, 2013

Parenting Idea: Negotiated Allowances

Ted LogoI was watching a Ted talk recently by Cameron Herold who is a successful entrepreneur, father, and is a self-confessed failure in many things in life.  The whole point of this particular talk was that he thinks the current way children are taught in school and by their parents makes them more likely to just follow orders and stifle creativity.  Instead, he proposes a series of changes and parenting techniques that might allow someone to become a better parent, and foster their own child's particular set of skills.

One idea that came up in his talk was about encouraging subjects in which your child is already good at and has a desire to learn.  If your child has an A in math, but a C in Spanish, which topic would you help them and encourage them in?  Most parents would probably choose Spanish, however your child may be very gifted in Math, and so that subject needs to be explored and emphasized.  I would put the caveat that a certain amount of basic knowledge in every skill set is needed in order to pass each grade and milestone of life.

Teaching your children to think entrepreneurial can happen in many forms.  Take for example a child's allowance.  Instead of giving your child a wage each weak, why not make this a lesson?  Have them look for jobs and ways of being useful around the house, allow them to propose the job to the parent, and then negotiate with the parent for how much they will be paid.  This simple arrangement will teach opportunity finding skills, negotiating skills, and other basic business building skills.  It may end up even being cheaper for the parent :-)

Take a look at the video, and if you are not familiar with, then check out some of the other interesting talks.  There is literally a plethora of knowledge on that site, and I can easily spend a few hours there just exploring the many varied topics.

Wonderful Moment of the Day: Happy President's Day!

Friday, February 15, 2013

Resell Your Gift Cards

We've all been there, received a gift card in the mail, only to realize that it's a store not in your area or someplace you don't enjoy.  Typically in this type of situation, the card will either never be used or you re-gift it.  Another annoying scenario occurs when you have $1.25 on a gift card, want to spend it, but don't want to pony up some additional funds to buy anything worthwhile.  Well, you're in luck, because new services online will buy your unused gift cards and give you some nice cash for the option. 

New sites such as PlasticJungle, Cardpool, and Raise have tapped into a customer need to remove their unused gift cards.  How their business model works is that they will pay you up to 92% (in PlasticJungle's case) for your card and they will credit you cash to a paypal account (or other option).  This whole process takes a few days for processing, but it serves a customer need to at least get something back for an otherwise useless piece of plastic.

When I think about these companies, it makes me realize how useless gift cards really are.  You essentially dedicate funds to a particular store, give those dedications to someone else, and lock them into spending all or some fraction of that amount.  In the end, the retail stores, and these gift card re purpose marketplaces are the ones who make out in this whole transaction.  Instead, why not just give your friend or relative cold hard cash?  I am always baffled on why there is a social stigma against this; it's the definition of liquidity, you can use it for anything, and they can choose when they want to use it (i.e. no expiration). -

I personally like PlasticJungle the best, because it offers to buy your cards no matter what the balance.  I also think these exchanges have a purpose in that you can buy some really discounted cards which means some potentially free cash.  See for yourself.

Wonderful Moment of the Day: My Wife and I celebrate 9 years of dating each other today!

Wednesday, February 13, 2013

T-Slim Review

I’ve mentioned it a few times on this blog in the past, but in case you don’t know, back in October of last year I was diagnosed with type 1 diabetes.  Since then, I’ve gone through the gamut of emotions and all of it seemed very scary at first.  Luckily, with the help of my wife, family, and friends, I’ve come to accept my situation and learn to live with it the best way possible.

For the last few months, I’ve been treating my diabetes just like how each newly diagnosed person does, with multiple daily injections of insulin (sometimes 7 or more a day).  After a while this gets real old and becomes a chore and social stigma (or at least for me, it felt that way).  Fortunately for me, the last 20 years have seen great advances in diabetic medicine, and one such has been the creation of the insulin pump.  You can read more about the history of this invention here. 

I knew I wanted to go on an insulin pump since being diagnosed, but I didn’t know much about what was out there.  Like everything else I get involved in, I decided to do my research as to which one would be the “best” for my lifestyle.  Looking at all the options, I was slightly disappointed, as most of them looked like something invented in the 90’s.  And then I found Tandem and it’s Tslim….  Right off the bat, you will notice that this pump looks vastly different from its compatriots.  It’s sleek glass touchscreen and colorful digital display make the other pumps look like a Windows 95 version of insulin delivery devices.  Not wanting to buy something just for the look, I decided to do my own research.

I spoke with my medical group’s pharmacist, and she mentioned to me that I would be one of the first (I later found out I was the first) person in the area to purchase one of these pumps, so I was going into some new territory.  Reading some other reviews helped me calm my reservations, and I figured I would give the pump a shot since I had no prior experience with insulin pumps. 

A couple months went by, I received the pump in the mail (came in a nice shiny purple box), and was also trained by one of Tandem’s sales reps.  The rep flew out to my city and gave myself and the pharmacist a personal demonstration.  She also helped me learn how everything was supposed to work.  I had no problems and was immediately started on insulin.  I’ve been using the pump for over a month now, and here’s my review:

The touchscreen is the most obvious feature of this device, and I enjoy that it looks like a modern phone.  When I’m out in public and pull it out, it looks like I’m texting someone so It’s not as obvious as some other pumps.  I learned that when they originally designed the Tslim, they had swiping technology, but were threatened with a lawsuit by Apple and thus had to stick with a simple button touchscreen. 

Insulin is mainly calculated and delivered via a digital calculator that lets you input your current blood glucose level and also helps you had up the total amount of carbs you currently are consuming.  A calculation occurs which takes into consideration these two factors along with how much insulin you have onboard (insulin currently in your body).  It then suggests a dose and you can decide if you want that amount.  Delivery can then be instant of extended based on the time period you designate.  I find this feature helpful when eating high fatty foods. 

Another nice feature is the quick bolus button at the top of the insulin pump.  You can actually have the pump in your pocket, hold down the button, hear a beep letting you know you are accessing the quick bolus options, press the button again and again which increases the amount of grams of carbs you are consuming, and then hold down the button one more time to deliver.  It’s a nice feature, but I don’t really use it since I check my sugar levels before each meal. 

The pump is also nice due to its size.  It easily fits in your pocket and finds enough room with your phone or wallet.  The pump is also able to hold 300 units of insulin so you can definitely hold what you need.  The pump also has the ability to hold multiple profiles of insulin delivery and you can set many different basal rates, so the amount of customization is unlimited.  The only thing holding you back from treating your sugar levels is you.

Finally, Tandem is a nice company to deal with and they even sent me another case of insulin cartridges when it was hypothesized that the previous batch wasn’t working too well.  They are constantly updating their technology and have a bunch of exciting developments in the pipeline.

The first thing you’ll notice that’s a little annoying is the actual replacement of an insulin cartridge.  It’s a little different than other insulin pumps in which you have to replace the whole backing of the pump and inject insulin into the micro-delivery pouch.  If you don’t do this perfectly, you can mess things up and have to go through another cartridge.  I found that the first time I changed the cartridge, it was leaking out the injection site and I went through almost 300 units in a day. 

Secondly, the luer lock is outside of the pump and can be annoying for some.  The sales rep mentioned that the pump was designed this way to keep the size down, but it adds an additional 3 inches to your tubing length.  This could be annoying for some.

The touchscreen is only activated by you pushing a button sequence of 1, 2, 3, however the top “physical” button can be pushed in your pocket.  I found this happening to me frequently and it would start a quick bolus cycle.  I didn’t actually deliver insulin, but the pump would alarm and let me know that I did not finish my delivery and all insulin deliveries were stopped.  This became annoying, and I just turned off this feature.

Tandem recommends that you change the cartridge every 3 days, however someone like me who only uses 20-30 units of insulin per day total felt that this was a waste of insulin.  My alternatives would be to fill the cartridge partially or change my infusion set and not the cartridge.  I decided to go with the later option, and after day 4, the pump started giving me occlusion (or blockage) warnings, however some about 2 units of insulin were being delivered each time.  I know that the Tslim has some problems with Apidra insulin, but I was on Humalog, and didn’t think anything would cause occlusion warnings.  I actually did narrow it down to the pump itself by taking off the infusion set, and just letting the pump bolus.  It wouldn’t deliver more that 2-3 units.  Once I changed the cartridge, it wasn’t a problem anymore.  Even though I was using the pump outside the suggested tolerance levels, it was a little disappointing to know that this happened.

The biggest annoyance of all was the distributor Tandem uses to send me my supplies.  Better Living Now is the worst company I’ve ever dealt with and has caused me undue stress and anger.  It literally took my 1 month to receive my supplies, and they repeatedly get my information or order incorrect.  They have also lied to me multiple times on when a delivery was supposed to occur.  The only reason I am still with them is that they are dirt cheap.

Final Thoughts:
The Tslim is definitely a cool device that can even last for a while under water.   Tandem has software which should be approved by the FDA any day now called T-Connect, which allows you to download all the Tslim’s information to your computer.  You can even send this to your doctor or do whatever else you want with this data.  Some other pumps have the ability to wirelessly send delivery boluses through your blood glucose monitor, but the Tslim is not set up yet to do this.  The pump does have this ability when you use a Verio BGM, however the wireless feature is currently turned off on all pumps until they receive FDA approval for this too (I was told within the year). 

All told, Tandem is a newer company that has many things going for it.  That said, it is still working out the kinks, and things can still go wrong with your pump.  I would recommend this pump in a heartbeat, but you need to know what you are getting yourself into before you purchase one.  That said, I hope this humble review helped you out a little.  If you have further questions, please leave a comment.

Wonderful Moment of the Day: Grateful for medical technology that keeps me alive and healthy.  100 years ago, I would have died.

Monday, February 11, 2013

Are You Living Beyond Your Means

Piggy bank getting squeezed, care of Yahoo Finance.
I came across this article the other day on Yahoo (yes, it is still around), which summarizes some nice points on whether you are living beyond your means.  After reading it over, I think many people would be quite surprised to know that they are not preparing themselves for retirement.  I recommend reading the article, but here are my own thoughts and the main points.

1.) You couldn't financially survive without your job's income for at least six months. - Otherwise known as an emergency fund, saving 6 months worth of spending in a liquid account is just a good gauge for how much you should have.  Generally speaking, it might take someone about 6 months to find a job.  Another good use of this fund is if some sort of "emergency" occurs in your household.  For example, say your laundry machine breaks down; do you have at least $1,000 bucks on hand to take care of this.  With an emergency fund, this becomes a non-event.

2.) You are saving less then 10% of your current pay - This one scared me a little just because I don't think some people realize just how much they need to put away for retirement.  My own employment has a 401k that matches 4.5% if you put in 6%.  Most people just put in the minimum 6%.

3.) Your mortgage payment is more than one week's salary - If anything, I think this is a good gauge on how much house you can afford.  Make sure to take into consideration all the costs that go into a mortgage payment; principle, interest, property taxes, and home insurance.

4.) Your credit card balance has remained the same for the past year - you have essentially become what the credit card companies love...a source of fees and interest.  If you have an emergency fund saved up, then the need for a credit card balance becomes less, so this shouldn't even be a problem in my opinion.

5.) You buy big ticket items on low or 0% interest, because you think you'll be able to afford them next year - This type of living is too stressful for me.  Why would you want that kind of obligation hanging over your head.  Step back and think about it for a minute; do you need that huge LED TV or that new Lay-z-boy recliner.  Why?  If you absolutely must buy it, then save up for it.

6.) You use one credit card to pay off another balance - A savvy credit card person could get away with this, but then again, if you were that savvy then you wouldn't have credit card debt.

7.) You pay an overdraft fee on your checking account every 3 to 4 months - First, if this ever occurs, then you need to become better at keeping track of your account balance.  Secondly, you may need to reexamine your spending habits.

8.) Before buying something, you often think "I know I shouldn't, but..." - This goes hand-in-hand with the idea of "I'll treat myself", or "I deserve this".  These are dangerous phrases and can really mess you up down the road.

Ultimately, you have to ask yourself if you want to retire at some point in your life, or do you want to work until you drop dead?  The choice is yours, but these few rules are some good advice all around.

Wonderful Moment of the Day - The cat my Wife and I are cat sitting has finally warmed up to me and is currently sleeping in my lap as I write this.

Friday, February 8, 2013

Modern Day Muses: Pets

Whether you need a loyal companion, a listening ear, some actual task accomplished, or just something interesting to look at, pets have served mankind since the dawning of civilization.  If you’re facing a challenge in your life or possibly just need a friend, now might be the time for you to look towards your furry/feathered/scaled brethren and embrace their companionship.

I’ve hesitated to write about my life’s Muses for some time now, specifically because I’ve been on such a role with some of my other topics.  Pets however have been a conversation that creeps up in my own household for a while now.  This past Fall, our elder cat passed away and it was a very sad time for my family.  It’s really amazing how much a pet can mean to you even if you think they don’t.  I think it has much to do with their supposed “innocence”.  This death has just left us with our orange mail tabby who has sort of become the “Prince” of the house.  Consequently, my wife and I have the “pet” conversation at least once a month; should we get another cat?, a dog?, maybe something else?  The decision is still up in the air.

My point in writing this article today is that pets can often be a source of great inspiration in our lives.  Generally speaking, your pet is always there for you and even if they can’t understand, they’ll usually listen to what you have to say.  Sometimes my wife will pick up our cat, force hug it until it starts meowing a little, to which I tell her to stop and say that it is annoying him.  Her response is usually along the lines of “We feed him, so this is his job, to love me”, which is kind of true.  It’s usually this fun event that brings some light-hearted joy to the day. 

Pets can also be a great source of discipline and routine for your day.  If you have to walk your dog in the morning or evening, you’re likely to devote the same time each day to this activity which will allow your own mind to wander and ponder as you go on your little walks.  Also, dog walkers are usually much more healthy people, so that’s another perk.

Finally, pets can also be a great source of joy for your own kids.  The project and chore of training and taking care of a pet is a great learning opportunity for any kid.  It also teaches them things like compassion and friendship.

If you find yourself in a rut, why not consider a pet?  Just remember to think about your own living situation before you go out and buy that Labrador.  If you have no place for a dog to run and you don’t plan on walking them, a dog might not be the best choice.  Even a fish tank can provide much of the same joy and companionship.  You may even be inspired to continue your own writing!

Wonderful Moment of the Day:  My wife and I are actually cat sitting for some friends, so it’s a nice change of pace to have another animal in the house.

Wednesday, February 6, 2013

Returns by Polictical Regime

I often find new ways of looking at information fun and exciting and I was delighted when a sample of the "Fidelity Independent Advisor" came through the mail last week.  Everyone with a Fidelity brokerage account should have received this newsletter which generally serves as a long-winded advertisement for their other financial products.  Needless to say, I usually through these type of magazines out (although Schwab's is often pretty good).  However, one particular article captured my eye.  It shows the annualized US Stock Market returns of the S&P by political regime.  I clipped a portion of the information below:

You can see that generally speaking, the best economic times occur during a split government.  When you think about it, it makes a whole bunch of sense.  Just like the market, voters like to hedge their bets by having a variety of political views in power.  Hopefully in these situations, more opinions will be heard, and better decisions are made. 

What was even more interesting to me is that our current situation of a Democratic President and a split Congress is almost unprecedented by occurring only 1.2% of the time.  That said, I'm a little wary to believe that there has been enough information to warrant a 9.2% annualized return.  We're talking like maybe 2 years worth of data here.  Also bear in mind that this chart does not necessarily correlate a particular political opinion with prosperity.  The chart is merely just showing what has happened in the past.  Some might argue that it was Republican framework which allowed for Democrat boom times such as with Reagan/Bush 1, and Clinton. 

Either way, this type of information fascinates me, and I hope it interests you as well.

Wonderful Moment of the Day: Lunch with friends.

Monday, February 4, 2013

5 Reasons I Climbed the Corporate Ladder

Wherever you are in your career, whether you are just starting out or a seasoned veteran, it’s important to examine the steps that got you to your position.  I like to think that my own career is going pretty well, and I can’t help but wonder what has made me different that some of my other colleagues who might have not fared so well.  I spent some time thinking about my own characteristics, and the many times I’ve had the chance to receive feedback from my managers (not always good by the way).  One thing I noticed is that I am not particularly smarter or more innovative then my fellow comrades, so what makes a career?  Below are my 5 characteristics which got me to where I am.
1.)    Learn as much as you can.
When I first started out in the banking field right out of college, I quickly realized that I knew practically nothing.  Sure, I could talk your head off about enlightenment philosophes, however the intricacies of a mortgage loan being funded were beyond me.  It was a humbling experience realizing that right off the bat, I didn’t have too much to offer.  I quickly determined that I need to start my working education as soon as possible.  To accomplish this, I started asking questions and volunteering on assignments that would extend my knowledge base.  I learned basic statistical coding, picked up a book on VBA coding, and tried to educate myself as much as possible.  Soon enough, I found that I could contribute in meetings and started making a name for myself.

2.)    Find ways to demonstrate your worth.
This concept links nicely with the previous one.  While you are trying to learn as much as possible, you are actually increasing your human capital and overall worth to your organization.  Once you start developing a knowledge base, you can now start volunteering on the assignments that your manager or other important figures find important.  The caveats to all this is to make sure you can actually complete the assignment, and make sure you do a good job.  Managers will not look on you favorably if you deliver a piece of crap. 

3.)    Become dependable.
Woody Allen once said “Eighty percent of success is showing up.”  It is the great white lie in American culture to take “sick days”.  It’s true that if you are really sick, you should not come to work and spread the disease, however I find it hard to believe that you are sick enough to not come into work 8 days a year.  I’m only really sick maybe once every other year or so, and it’s pretty much assumed that I will always be at work on time.  Dependability is one of the most valuable traits in the workforce.  In fact, managers will often prefer dependability over the risk of failure.  Consider a manager looking to hire in a position that would be a promotion to you.  That manager can either hire from outside the company and risk getting either someone better than you or possibly much worse, or they know for a fact you will do a good job.  They will almost always prefer you.  Make your reputation one of dependability and excellence.  If you can’t make it into work for whatever reason, figure out a way to work from home, or make it up by coming in on a weekend.

4.)    Be pro-social
People are often classified as varying shades of introvert and extrovert.  Whereas both of these characteristics have their place in the workforce, it is often beneficial to the employee if they have a “pro-social” attitude.  Talking with your coworkers about informal topics and generally being able to carry on a conversation are much more favored traits then sitting quietly at your desk.  Reach out and talk to someone!

5.)    Have a clear vision in mind.
You’re never going to get further in your career unless you have some sort of idea on where you want to go.  Easier said than done, right?  The best way to get an idea of where you want to go is to look at where other people work.  If someone has a job that sounds interesting to you, set a goal to reach that position.  By setting goals for yourself, you’ll get a better understanding on whether you are on track or not.

Like I said earlier, I was never a source of genius or some other form of brilliant ideas, but through dependability, and general good social behavior, I was able to climb the corporate ladder.  What traits make you up, and are they the ones management will look for?

Wonderful Moment of the Day: Reliving the Super Bowl commercials.

Friday, February 1, 2013

5 Interpersonal Bases of Power

The concept and study of power is an interesting field of academic inquiry.  With today's employees increasingly relying on others not in their immediate sphere of control to get work done, it benefits the worker who studies the underlying positions of power.

Two social psychology professors named John French and Bertram Raven studied the concepts of power dynamics and categorized them into 5 bases; legitimate, reward, coercive, expert, and referent.

Legitimate Power
Legitimate power is a person's ability to influence because of position.  Your direct supervisor has legitimate power since that's how your company has arranged it.  This is essentially the most simple and basic concept of power.

Reward Power
Reward power occurs when someone has the ability to grant another something they like in return for compliance.  This kind of power can often be related to bribing.  Companies often rule with this type of power through the granting of raises, company stock, or job titles.

Coercive Power
This is the opposite of reward power, and instead implies the power to punish.  Generally, this is the weaker form of power, but still has its purpose.

Expert Power
This is the power to influence others based on some special form of experience or education.  I can still remember how intimidated I was when I first had to meet privately with one of my professors back in college.  Who was I to have a discussion with someone who was a literal expert in their field?  I felt this way, because the professor had expert power.

Referent Power
This type of power is a little harder to characterize.  Generally speaking, referent power is based on charisma due to personality or style of behavior.  Many times, good politicians have referent power in that they inspire people to follow them or believe in their concepts.  This type of power is much harder to quantify and achieve, but I believe that this has the greatest influence over people.  You are essentially giving people a "why" as in why they should be listening to you.  You inspire them, and grant them a vision they wish to emulate.  For that reason, this type of power seems the most influential to me.

Each one of the 5 types of power has their purpose, and it would significantly benefit someone to know when to use each one of these concepts.  It's also good to understand what types of power people around you wield.  If you know this, then you know whether or not you will be able to continue to grant them power.

Wonderful Moment of the Day: Going skiing tomorrow for the first time...wish me luck!