Financial Samurai » Career & Employment

Why Are The Employed So Smug About The Unemployed?

admin — Mon, 26 Jul 2010 09:00:21 +0000

Written by: admin on July 26, 2010.

Hear that? That is the sound of another self righteous employed person complaining about the unemployed sucking up resources and driving the government deficit further into the red. Who cares employed people?? You guys aren’t the ones who are struggling to find a job in this economy!

There are several tautologies here:

1) Few can live a comfortable lifestyle off of unemployment benefits which average $200-3oo a week

2) The vast majority of people who are unemployed want to make more money, find jobs, and do something meaningful with their lives.

3) Our budget is headed towards a $1.4 trillion+ deficit, so who cares if we’re going to spend another $50 billion to help millions of unemployed people survive for up to 99 weeks?

THE BUDGET DEFICIT DOES NOT MATTER WHEN YOU HAVE NO JOB

The big debate over the Republicans and Democrats on the latest unemployment benefit extension is how the government will pay for the bill? The Democrats say don’t worry, it’ll come from somewhere while the Republicans say cut spending elsewhere to not add to the deficit. Whatever the case may be, the budget deficit doesn’t matter if you’re struggling to survive, and at the margin are going to cost the economy an even bigger burden? We’ll have to provide for shelters and more public safety officers when crime creeps higher as desperation kicks in.

The ramifications of a budget deficit are only theoretical. People say the government will need to raise interest rates to attract foreigner capital to fund our greedy spending. With higher rates by government, a crowding out effect occurs where efficient capital doesn’t get directed to the private sector. Meanwhile, borrowing costs for citizens increase, also choking off investments. Last I checked, the 10-year yield is close to 3%, and foreigners are happily funding us. Meanwhile, plenty of people are smartly refinancing their mortgages and saving money.

People say budget deficits are also bad for our children. How can we live with ourselves knowing that our children are the ones who are going to fund our bad spending habits? We live with it just like we live with the fact that the older generation will happily collect their social security checks, while the younger generation continues to pay without expectations of anything in return!

Once again, all this budget deficit talk is just theoretical nonsense that carries very little weight in determining whether or not we should help our fellow needy citizens or not.

THE ONLY WEIGHT ON THE EMPLOYED

A portion of our paychecks are paid for by the employer. This expense (unemployment insurance) is effectively calculated into a working person’s total compensation. If the unemployment insurance expense is 6% per anum, one can assume that if an employer didn’t have to pay this expense due to 0% unemployment, perhaps a couple percent of the 6% may lead to a higher paycheck.

So here is the thing for those who argue it’s a bad thing to spend another $50 billion bucks extending unemployment benefits. Would you rather have the Federal Government pay or pass a bill to increase the unemployment insurance paid by employers by another several percent? If you choose the latter, prepare for MORE layoffs.

CONCLUSION

It continues to perplex me how vocal some employed people are about not helping the unemployed. Unless you’ve been unemployed yourself, you have no idea what you’re talking about! When you’re unemployed for an extended period of time you start doubting your self worth. You ask yourself what’s the point of life if nobody is willing to give you a chance. You give up looking because you can’t bare another non returned phone call or e-mail. Each rejection is like a blade jabbed and then turned in the soul.

As I come to the end of this article, I realize why so many employed people are so smug about the unemployed. The reason is they are very unhappy with their jobs. They can’t stand the fact that someone is getting $1,200 a month to “do nothing” while they have to work 40 hours at their miserable jobs to only earn $3,500. Miserable people like to make other people miserable. The next time you see someone irrational complaining why helping others is a bad idea, just know that they are going through their own torment.

UPDATE 7/27/10: The more I think about it, the more I believe the reason why people are so smug is because they are insecure with their own jobs and angry about their current situation. The smug take their contempt out on the unemployed to make themselves feel superior. If you were happy with your job and made millions of dollars, don’t you think you’d be more supportive of trying to help your brothers and sisters out? I think so!

Readers, why do you think there are so many people against helping the unemployed through federal funding?

Do you have a better idea for helping lower unemployment?

If you are a smug employed person, please share with us your reasoning why you are against the extension.

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our E-mail or RSS feed.

Senior Workers Outnumber Teenage Workers For The First Time

admin — Fri, 23 Jul 2010 09:00:44 +0000

Written by: admin on July 23, 2010.

Bloomberg highlighted an interesting chart stating that for the first time ever, working seniors outnumber teens in the labor force. Currently 6.6 million people over the age of 65 are working or are looking for work compared to 5.9 million 16 to 19-year-olds. Back in 1948, the numbers were only 2.9 million people over age 65 and 4.4 million teens, respectively.

This chart has enormous implications for the American workforce as people live longer and longer. Let’s go into the reasons why there’s been a decline in teenage workers and such a rapid increase in older workers shall we?

TREND ANALYSIS

1) Longer Lifespan. A longer life ironically means more years you need to take care of yourself financially. Can you imagine if you lived until age 1,000 how many years you’d have to work to save money? Maybe a couple hundred years!

2) Information Dissemination. The Internet has allowed people to find more jobs more efficiently. There’s always been a problem with matching skill sets with company needs. As a result, seniors have found jobs where they would otherwise have never had the opportunity.

3) Boredom. Let’s face it, playing golf all day and lounging by the beach gets boring after a certain amount of time. Retirement really isn’t what it’s cut out to be, otherwise you’d see a DECLINE in the number of 65 and older workers instead of a rapid increase.

4) Quality Of Worker. If you are an employer, wouldn’t you rather hire a clear-headed person with 40 years of experience than someone with practically none? The choice is easy and teenagers are unfortunately being crowded out.

5) Too Many Distractions. It must be exciting growing up as a teenager nowadays. The amount of gadgetry and things to distract are astounding! There seems to be the idea that anybody can get rich quick online, so nobody wants to make just $8 an hour bagging groceries anymore. It is interesting to see the media perpetuate the stereotype that Gen Y is a bunch of lazy, I want it now folks. Maybe the data serves as evidence.

KEY QUESTION: Is it fair that younger workers are being crowded out by older workers?

It’s clear there is a US unemployment issue and much of the world frankly. As more seniors re-enter or stay longer in the work force, the question becomes is this right for those who are just starting off? On the one hand, teenagers will argue that senior people have had their chance in the work force already. 40 years is a long enough time to be working, and if they are taking entry level jobs traditionally allocated to teenagers, that’s just wrong.

On the other hand, senior folks can argue that if their kids actually took care of them in their old age, they wouldn’t have to work! But then, the counter argument would be that they should have found ways to take care of themselves after 40 years of work. So it seems as if everything is rational from a financial point of view. Both sides are at “fault.”

Hence, the real reason for the rapid increase in older workers and a commensurate decline in younger workers is simply desire. Teenagers have less desire to work because the world owes them something, and older workers have a greater desire to work because they are bored out of their minds! Hence, the crossover is actually a market driven phenomena that is completely rational.

Readers, what are your thoughts about the crossover?

Why do you think there’s been a surge in older workers and a decline in younger workers over the past 20 years?

Should older workers stop working and give younger workers a chance since they had theirs already?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS feed.

Three Keys To Motivation And It Has Little To Do With Money

admin — Mon, 05 Jul 2010 09:00:41 +0000

Written by: admin on July 5, 2010.

Here’s a short 10 minute video I stumbled upon which eerily highlights several things I do and why (ie play guitar), as well as touch upon reasons why some people are willing to do things for free, and others strongly consider giving up big salaries to just work on a hobby.

NODDING MY HEAD

I find myself agreeing with pretty much everything the video has to say. Money has become a secondary motivational factor for me over the past several years. Something just happened where I’ve become satisfied in making what I make, oh my! Sure, I have a “make $1 million bucks” goal for 2010, but that’s really just one of those fun, see if I can do it goals. Autonomy, mastery, and purpose are things I look forward to now.

Progress is a wonderful feeling, which is why I try and play a musical instrument and sing in my free time. Music also helps fill the void when I’m injured due to sports. Going from not knowing the chords and the words of a song, to mastering a tune from memory that’s good enough to record is an unbelievable sense of accomplishment. I’ve been working on getting the finger picking of Pearl Jam’s “Just Breathe” for the past month, and I can’t seem to get it right. But dammit, I’m going to keep practicing because it’s such a beautiful song!

After you have a certain amount of money and experience, you definitely want autonomy. You’re no longer a fresh college grad that is constantly micro-managed by senior colleagues. A sure fire way for a company to lose a star employee is to restrict their freedom and ignore their good work. Blogging is an incredible example of autonomy. Nobody is going to tell me what to write and that’s so liberating. I’ll thrive and fade with my decisions alone.

Purpose is something that can either be questioned before you start your journey or after. You can be a high school or college student who has no freaking idea what you’re supposed to do in life. Or, you can be a 20 year veteran in the workforce who has built a great resume, as well as financial security, but realize you’re middle aged now and wonder if there’s more to life since you’ve already conquered insecurity, be it financial or otherwise.

The purpose of this site was never to make money. The purpose was to just create something tangible that serves as a creative outlet for someone who was once creative. I want to be that kid in pottery class again, molding that wet clay on a rapidly rotating swivel stick.

Readers, what are several motivating factors for you in your life or in your job? Have you noticed money increase or decrease in importance as a motivational factor?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Isner vs. Mahut: The Greatest Match In Tennis History

admin — Mon, 28 Jun 2010 09:00:18 +0000

Written by: admin on June 28, 2010.

As a tennis fanatic, it would be remiss of me not to mention the greatest match in tennis history when American John Isner beat Frenchman Nicolas Mahut 70 to 68 in the 5th set last week. That’s right 70 games to 68 games in the fifth set because one must win by two in the fifth set at Wimbledon. The 11 hour, 5 minute match spanned over 3 days and finished when John Isner hit a solid down the line two-handed backhand to seal the deal.

The previous record for longest match was at the 2004 French open, lasting now just a paltry 6 hours and 33 minutes. It is completely unfathomable that a match could last so long, simply because it is unconscionable how Nicolas Mahut could hold serve over 60 games in a row to survive! The physical endurance is one thing, but what’s most impressive is the mental fortitude both players had to never give up.

LESSONS LEARNED

1) Anything is Possible. If someone were to say that a match would go 30 all in a 5th set, I would say “NO WAY” and probably confidently bet my life savings and my lucky underwear! Even if someone asked for 20-to-1 odds ($10 to win $200) to bet that it could happen, I’d still call them crazy and happily take the other side. I’d probably bet up to $1,000 and then proceed to lose $20,000! Now I’ll think carefully when I hear impossible sounding feats. Anything is possible!

2) Standards Always Go Higher. When Roger Federer defeated Andy Roddick 5-7, 7-6 (6), 7-6 (5), 3-6, 16-14 in the 2009 Wimbledon final, we all thought that was one of the greatest finals in history and that a 16-14 score would never be breached. Fast forward to 2010, and Roger and Andy’s match sounds downright mediocre. The same goes for anything we do, be it creating a product, or being a solid employee. Standards don’t go backwards, they go forward. We’ve got to continuously innovate and try harder.

3) Everything is Mental. At some point, you know that the bodies of John and Nicolas were screaming to stop and give up. But, with the crowd of thousands cheering them on, they started to zone and battled away cramps and fatigue to last a marathon. Personal finance, physical fitness, blogging, work performance and everything is all mental. If you have the right mindset, you will likely succeed in anything you try. If for a second your mental fortitude breaks down, it’s game over. You’ve got to want it like no other.

4) Consistency is Key. John won because he hit one more ball in than Nicolas. If you workout three times a week for 52 weeks in a row, it’s pretty much a sure thing you’re going to be much more toned than if you maintained an erratic schedule. If you post 2-4 times a week on your site and get to know one new person online a week, there’s no doubt your blog will grow. If you get into the office first, and leave last every single work day, you will move ahead in your career. The list is endless. Stay consistent, and watch everything start going your way!

5) Pace Yourself For Long Term Success. A day after John’s match, he lost in just 72 minutes 0-6, 3-6, 2-6 to unknown Thiemo de Bakker. John’s serve was 20 mph slower than average, and he just didn’t have any energy left understandably. You don’t want to go from playing the longest match to the shortest match. Volatility is generally not good for your career or any venture you take. The biggest risk we can take is taking no risk at all. If we burn out before reaching our potential (See “The Dark Side Of Early Retirement“), it’ll be just one darn shame. Balance out your work and your life, but at the same time stay consistent as well.

CONCLUSION

Chances are high that we’ll never be world class athletes or CEOs of mega-cap companies. That said, we should always learn from people at the top of their game to boost our own. In “The Mental To Physical Connection For A Healthier Lifestyle“, the article recommends we use sports or general physical activity to balance out work and our creative sides. It’s important to be tethered to a counter force so that we don’t burn out. If we can stay consistent with whatever it is we are hoping to achieve, there’s no doubt progress will be made!

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

The Reply Button Is There For A Reason

admin — Fri, 18 Jun 2010 09:00:53 +0000

Written by: admin on June 18, 2010.

The following is a guest post by Hime, one of Financial Samurai’s first readers. Hime is a manager at a strategy consultant firm who likes the violin and going on unplanned adventures. Hope you enjoy!

All right everyone, how many times have you read an email and said to yourself “I don’t feel like replying now I’ll just do it later” only to have that email disappear into the deep abyss and completely forget that you left the sender hanging?

Come on, I know you’ve done that at least once. If you do that more like every third email – CLUNK! That is me hitting you over the head with an oversized rubber hammer as I resist the urge to shake the stubbornness out of you. Think I’m overreacting? Maybe a little but I am trying to save your career and relationships so please pay attention!

DON’T LEARN THE HARD WAY

I’m generally fast and consistent about replying to emails right away (24 hours at the latest), especially to friends, family, clients, and the coworkers that I like…whoops I mean all my coworkers. However one time last year I goofed up big time….

I have a difficult client that is notorious for being very impatient and demanding, often with requests that my firm can’t accommodate due to breach of contract or financial limitations. One day I got a terse email from him complaining about a project my team generated late. He was in denial that the reason the report was late stemmed from his team giving us incomplete data that we had to chase down from them on multiple occasions.

I was so irritated that he was blaming us for their incompetence that I let the email fester in my inbox while I moved on to other things. He didn’t deserve any more of time! Boy was I stupid. What I didn’t realize was that because my client was upset (justified or not), he ended up becoming furious that I ignored his email, and he ended up calling my boss’s boss to chew him out about my insolence. Ouch. All of a sudden I became the idiot for not handling the situation and having to bow my head to the man who signs my paycheck. Whoops!

Even though we all receive 100s of emails a day, it is crucial to actively watch for emails that are addressed to you specifically or to your team. There will be times when a client may be lashing out for something that wasn’t your fault but it’s your responsibility to explain that to him/her in a timely manner whether over the phone or in a non aggressive email reply. Your career will depend on it. Don’t risk losing a client, a friend, or your reputation for being known as the infamous non-responder.

Tips for taking control of your email:

Can’t respond right this minute? Use the Mark as Unread function so you’ll remember to reply later.
Create email rules to automatically sort and route email for you.
Stay organized and develop a system that works for you. My inbox only contains emails that I haven’t addressed. Everything I completed gets filed into a folder.
Create meaningful folders and subfolders. A filing system is only effective when you know where to go to retrieve something.
Prioritize and handle the most urgent emails first. Many programs like Outlook let you assign different color flags for tracking prioritization. You can even assign a category name for each color flag, very useful!
Need to do research before having an answer to a client’s email? Reply right away to the client letting them know you’re investigating the issue and will follow up in a few days.
Watch your total inbox size & empty your trash. A lot of servers will stop sending you new emails if your account has gone over the size limit.
Steer away from arguing, complaining, and snide remarks in emails. Emails leave a permanent trail that you don’t want to sneak out and haunt you later.
We’re all busy but that doesn’t mean you can ignore emails from your friends. Family will probably forgive you for being flaky but friends will hold it against you if you never respond to them.
Check your spam folder regularly. Spam filters aren’t perfect and sometimes important emails can end up in there by mistake!

CONCLUSION

If you can practice all of those tips regularly you’re actively improving your communication! Don’t down play email skills – staying on top of emails and responding in a timely and curtious manner are key skills now equally as important as face to face meetings in our current work environments. A lot of work places don’t record phone conversations but I can guarantee most of them are archiving every email you’ve ever sent! Get active with your email and avoid being known as the person with the black hole inbox!

Readers, how many e-mails do you have total in your inbox? How many of them are unread?

What would you say your average response time is over e-mail?

Is e-mail your preferred way of communication? If not, what is?

Keigu,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Folllow on Twitter @FinancialSamurai and subscribe to our RSS feed.

Overcoming The Wall

admin — Mon, 14 Jun 2010 09:00:46 +0000

Written by: admin on June 14, 2010.

If I’ve learned anything in the work place, it’s that most people simply want recognition for a good day’s work. Pay and promotion are secondary to a simple gesture of a pat on the back or a “well done.“ Yet, why is it that praise is so often lost in the shuffle? When just saying “thank you” is so easy and cost effective, silence often replaces.

I remember going through a rough stage in my career where I felt invisible. Like Ralph Ellison’s protagonist in the Invisible Man, even with 1,369 light bulbs shining brightly around his basement room, he still felt like nobody noticed.

“I am a man of substance, of flesh and bone, fiber and liquids – and I might even be said to possess a mind. I am invisible, understand, simply because people refuse to see me.” This quote has stuck with me for well over two decades since first reading Mr. Ellison’s 1952 classic in high school.

THE MYSTERY

The conundrum is that even during my most dejected times, when all I wanted to do was give up, I got promoted like clockwork. One would argue that everything is in the mind, and that if the company is promoting me then by default, they are recognizing my work. Yes, to a large extent this is very true. What people don’t realize is that with each promotion comes a higher and higher hurdle to achieve until one day, the hurdle stands 20 feet tall and becomes physically impossible to clear anymore.

The pace of progress has slowed, and I’m left wondering how to continue improving. It’s like making money. Even a multi-millionaire can make an extra buck. It never ends. The pull of other people’s success draws me to create my own. Again, a comparative issue which is hard to avoid. Once you become the manager of the first floor, you begin to wonder what it’s like to be the manager of all ten floors. Pretty soon everybody expects you to keep succeeding and peers no longer praise you because you are expected to win. Here’s when things begin to unravel.

LOOK OUT FOR OTHERS

The solution is to never stop giving. At some point in our careers we have the duty and the power to nurture others. It’s like waking up one day at 35, realizing you’re not the youngest person in the crowd anymore. There’s no novelty or glee in telling others how far you’ve come at such a young age, because you’re just not that young anymore. There’s always a new crop of people coming in, and it’s up to you as the senior person to recognize other people’s efforts openly with no concern of your own. Stop thinking about yourself.

Refuse to not see someone and all their talents. Don’t let them be invisible. Allow them to turn off all their light bulbs except one. All anyone needs is just one.

Readers, have you ever felt invisible in your career, with your friends, or family? What about in the online world if you have a website? If so, how do you cope and make sure you don’t let the feeling of irrelevance keep you down?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Being Overly Content Can Be Detrimental To Your Career

admin — Mon, 14 Jun 2010 09:00:12 +0000

Written by: admin on June 14, 2010.

Every year, there’s inevitably a headhunter or a competitor who gives me a ring to ask whether I’m interested in leaving my current firm for a hefty salary increase. And every year I turn them down because I respect the people I work with, like the camaraderie, and believe in my firm’s management and future. My 10th year anniversary is coming up, and just like how I freaked out for a couple days before turning 30, I’m starting to wonder whether I’ve become too content and also too comfortable with what I have.

Dodging bullets is a myth, but I can safely proclaim that I dodged at least one bullet by not taking an offer from a firm that inevitably went bankrupt. Phew, I sometimes remind myself. But, what about the other firms I wonder. If I joined them, would I be making more money and doing more in my career than ever before? Maybe, I don’t know. What I do know is that many who have job hopped have indeed made an incredible amount more and rocketed their careers than if they had stayed.

LOYALTY CAN BE OVERRATED

It’s sad that loyalty is often rewarded with below market pay. We call this the “loyalty discount”. The late, great John Wooden of UCLA basketball fame never made more than $36,000 a year despite winning an unprecedented 10 NCAA championships in a 12-year period because he never entertained other offers. Nick Saban on the other hand, played LSU like a fiddle. He bolted to the Miami Dolphins after winning a championship at LSU, and then bolted again to Alabama for a mega 8-year, $32 million contract! With Nick proceeding to win another championship at Alabama, it’s safe to safe Nick maximized his income and his career.

Gone are the days where people work for 30 or even 20 years at a single firm simply because people have more options, and the competitive environment is that much greater. Firms have proven in this volatile environment that they will fire at will to cut costs and appease shareholders. Being a 15 year veteran used to mean something, now it just means maybe you’re too expensive.

With the track that I’m on, if I don’t change soon, I’m pretty sure I’m going to end up being one of those 20 year-to-lifer type employees. I do think loyalty is admirable, but at what cost? If people are banging down your door, at the very least open it and let them in.

WONDERING “WHAT IF”

One of my worst fears is wondering “what if.” 10 years from now, I don’t want to obsess about wondering how my life would be different if I took this job or made this decision. It’s too bad we can’t live parallel lives. All we can do is weigh the pros and cons, ask our loved ones for their opinions, and make a decision.

We have a responsibility to be loyal to the firm that provides for us. But, we have a bigger responsibility to be loyal to ourselves and our family. If a firm is underpaying you or mistreating you, you need to speak up because they are literally taking away opportunities. Maybe you want to send your daughter to private school, but because your firm isn’t paying you a market rate for the past 10 years, you’re literally $100,000 poorer in your bank account.

The point is that loyalty goes both ways. Your firm has to be loyal to you as much as you are loyal to them. If you are too content in your career, your managers are going to sense your complacency and potentially take advantage of you. Make sure they don’t by having a heart-to-heart talk at least once a year or two, and preferably during your year end reviews. It really is great to be happy with what you have, just don’t let them take you for granted.

Readers, do you ever find yourself wondering whether you are too content with your career?

What are your experiences with head hunters and competitors who tantalize you with fantastic opportunities?

Isn’t being content the end game? If so, why do we continue to wonder?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

The NBA Finals Proves Location Matters For Success

admin — Mon, 07 Jun 2010 09:00:03 +0000

Written by: admin on June 7, 2010.

The LA Lakers and Boston Celtics have met 11 times in the finals. Combined, the two teams have won an incredible 32 championships in the NBA’s 63 seasons. Purists will note that only 10 of LA’s 15 championships came in LA, while the other 5 were in Minneapolis from 1949-954. Either way, there’s no doubt that the Lakers are one of the best teams in NBA history.

How is it that two teams alone combine for about half of all championships in league history? The answer is simply superstar cities which offer high wages, a huge fan base, and enough diversity in all things to keep one entertained. Let’s be frank. There’s no way the Cleveland Cavaliers, Dallas Mavericks, Charlotte Bobcats, and Utah Jazz will ever win an NBA championship. Not to say any of these cities aren’t nice, they just don’t match the star power of places such as New York, LA, and Boston. Eventually, the best players and staff all gravitate towards one of the major metropolitan areas to really compete for a championship.

MOVE IF YOU WANT TO RAISE YOUR STANDARDS

There’s a reason why the best and brightest flock to the big coastal cities of America. It’s where the best jobs, and therefore the best pay reside. The networking opportunities are amazing, and if you have New York City on your resume for example, it’s like a stamp of approval that you can handle anything.

Some will say that big city living is expensive. True. But, that’s because you are making so much more money it evens out in the beginning. As you progress in your career, your income starts to completely outstrip your basic living costs and real wealth starts to build. The upper limits of the income band are much higher, which is one of the key competitive advantages. A big city provides you the platform to make things happen.

CONCLUSION

By the time you retire from a superstar city, you can practically move to any other city in the world, and your living expenses will be cheaper. Whereas if you start off in Altoona, Kansas, you’re pretty much stuck. It makes sense that if you want to be the best, you should compete with, and surround yourself with the best. The Lakers have the marquee player in the West with Kobe Bryant and the best coach in Phil Jackson. Boston’s Doc Rivers and the big three aren’t too bad either. The A players want to be in the best locations, and so should you.

Readers, for the younger readers especially, what’s holding you back from moving to a bigger city if you’re looking to build greater wealth?

Do you believe superstar cities offer more career and wealth building opportunities? Or do you believe bigger cities just cause you to go broke?

Who do you think will win the NBA championship?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Who Needs A Job When You Have A Private School Degree

admin — Fri, 28 May 2010 09:00:00 +0000

Written by: admin on May 28, 2010.

Pick any private school. The cost is about $200,000 over four years. These figures don’t surprise anybody anymore given the ever rising application volume to storied institutions such as Harvard, Yale, and Princeton. That said, there have to be some who believe $200,000 for a private school is a hard pill to swallow over an excellent public school for just $40,000.

With an estimate 17% of people aged 20 through 24 unemployed, swallowing a bowling ball may be easier than finding a desirable job post graduation. Let’s say you are one of the unlucky few who can’t find a job after a $200,000 education. Does it really matter? Let’s think about why it doesn’t really matter from the eyes of several recent graduates.

THE BOY WHO WAS FORCED TO GO

Jimmy graduates from Columbia this year with a degree in History, European History to be precise. Despite his best efforts to land a summer internship last year, none were available, so he decided to go Euro-railing with his buddies for three months. What a blast, as he traversed the continent and collected bottle caps and coasters from every bar he patroned. The total cost of his trip, including airfare, food and lodging was a mere $10,000, just 1/5th what his parents pay for 9 months of school! What a bargain he reasons.

Everything is a bargain to Jimmy because he doesn’t have to pay for anything. He was happy to attend a SUNY school for a fraction of the price, but his parents pushed him to attend Columbia. In return, they would pay for everything, so long as he promised to just do well. The pressure Jimmy faced was immense. How could he live up to his parent’s expectations? He knew he couldn’t.

With Jimmy’s fancy Columbia degree, he reasons that he’s held up his end of the bargain. He didn’t drop out and instead flourished with a 3.7 GPA and a cum laude designation on his diploma. Yet, with no job waiting for him at the end of the rainbow, is all for not? Not so says Jimmy. The diploma is worth it, and if people don’t want to hire him, it’s their problem and not his.

You see, Jimmy’s parents are multi-millionaires who live in a $2.5 million dollar house in Greenwich, Connecticut. His father is the CFO of a Fortune 500 company and his mother has never worked a day in her life. In fact, the nanny who raised Jimmy since birth is still living with his parents even though they are empty nesters. Someone has to clean up the 5 bedrooms and run errands.

Like Jimmy’s mother, he never needs to work either because his trust fund can easily support him for the rest of his life. Jimmy is not unique, because all of his friends at Columbia are wealthy. Just by graduating, Jimmy and his friends legitimize themselves to the world. To think about starting at the bottom of any corporate is beneath them, when they are the sons and daughters of business leaders. Hence, who needs a job?

THE WOMAN WHO PAYS HER WAY

Now lets compare Jimmy with Allison, who paid her way through Columbia. She too, could have decided to attend a school 1/5th the price, but she did not. Instead, she chose Columbia out of the belief she would get a superior education, and land a dream job in marketing. With over $100,000 in student loans, Allison is suffocating from debt, and her repayment starts 6 months after graduation. Allison has no job offer either, and has decided to wait tables until she does.

Allison doesn’t want your pity, so don’t give her any. She made the choice to spend $200,000 on education even though her middle class parents, who earn a combined $80,000 a year couldn’t afford to offer much help. Only a small few get to attend such an elite university, and for that, she feels proud to have the opportunity. Some day, she will see the benefits of her Columbia degree, just not now.

Unless the right job offer comes a long, Allison is happy waiting tables. She won’t settle, even though it may seem like she already is. If a year goes by without finding her perfect job, she’ll just go to graduate school for another $50,000 a year. Allison knows she’s smarter than most people and has a tremendous amount of pride. Don’t pity Allison for not finding work, because she’s content with her own choices.

THE SUPERSTAR

Sandeep stands above Jimmy and Allison for his brilliance. He won the National Spelling Bee at age 9, finished multi-variable calculus by the 10th grade, and is on the US national juniors squash team. Sandeep has a full ride to Columbia and like Jimmy, doesn’t have to spend a dime.

Despite Sandeep’s achievements before and during college, he too, cannot find a job as a strategy consultant. Sandeep doesn’t care, because he had a grand old time playing squash, experiencing the NYC night life, and learning something new on the side. Besides, what’s $200,000 when none of it came out of his, or his family’s pockets? Absolutely nothing. As far as Sandeep is concerned, his dream job hasn’t found him yet.

Mentally, Sandeep figures that he can take the next four years off since he worked so hard during the past four years. Maybe he’ll go explore the world and live on a shoe-string budget. Maybe he’ll try to become a squash pro in Europe. The uncertainty of his future excites him, especially since he’s armed with a free Ivy league degree!

CONCLUSION

People who go to private schools aren’t stupid, nor are they irrational. Even under the most difficult scenario where one has to pay their way such as Allison, she doesn’t want your pity. They knew what they were getting themselves into, and took a risk with their finances in order to experience “the best” education in the world.

The reason why $50,000 a year tuition exists is because enough people believe it’s worth it. If not, tuition prices would adjust accordingly. Hence, there’s really no need for mass media schadenfreude gleefully reporting that private school kids aren’t finding jobs. There’s no need for concern either. The only people making noise about a tuition bubble are parents who probably can’t afford $50,000 a year, but who believe their kids deserve the best, whatever that is!

Readers, why do you think people make such a big deal about private school tuition? Harvard could charge $100,000 a year today, and there would be more demand than seats.

Who are the people feeling sorry for private school kids without jobs?

Do you think private schools are worth it over public schools?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Oops! The World Is Coming To An End!

admin — Wed, 26 May 2010 09:00:58 +0000

Written by: admin on May 26, 2010.

Like clockwork, I top-ticked the markets when I wrote “The Good Times Are Back Again” this past April. The markets have since fallen about 9% as the Euro Zone goes bonkers over debt problems. But, at least the message from the post is that it’s exactly during the good times where we need to be more disciplined in our finances, because we never know when the bad times will return. Now that the bad times are back, is now the time to party like it’s 1999 and spend counter-cyclically? Nope, because with the amount of volatility, by the time you finish reading this post, the markets might be surging again!

With this market correction, it’s pretty clear that everything isn’t peaches and cream. US leading indicators have turned downwards, unemployment figures have stopped improving, and people are wondering whether Europe will be like the US, but much worse. If you’re American living in America, look at the bright side of things: the US dollar is strengthening, and the 10-year yield has declined to 3.1%, which is leading to lower rates yet again! The 10 year yield and all its glory really is the most beautiful figure to watch. It can tell the story of everything and anything.

The USD will always be a global safe haven currency, no matter how hard we try and mess things up. It’s good to see that we aren’t the only basket cases as investors sell the Euro faster than they can say tapas! What’s going on now is that money is shifting towards US assets, namely the property market. Combine an asset shift with cheap debt, and rental yields above the current risk-free rate of return (3.1%), you realize why smart money is moving into the US property market again. Only a minority will agree with the attractiveness of the US property market, and therein lies the opportunity.

During bad times, it’s always good to re-evaluate your finances. I’m not convinced the bad times are back and am actually quite sanguine about the economy. All the same, here are some suggestions just in case things get ugly for longer.

TOP 5 THINGS TO DO WHEN THE BAD TIMES ARE BACK AGAIN

1) Know where your money is. It’s important to have an idea of where every single dollar of your wealth is allocated. In a bull market, perhaps suddenly you find yourself with 50% of your net worth in the stock market vs. a 35% comfortable allocation. The best way to get a snapshot of your assets is to list everything out in an excel spreadsheet manually. Re-evaluate, re-balance, re-consider.

2) Consider being contrarian and don’t confuse brains with a bull market. Was there a reason you’ve been holding 30% cash in the stock portion of your portfolio? Perhaps the reason was exactly for times like this? It’s generally never good to panic in either direction. Imagine capitulating the morning of Tues, May 25th when the Dow was down 290 points only for the market to be up 110 points the next day? Oopsie! You will immediately notice the mass media start talking about double-dips, recessions, and Armageddon scenarios when markets fall. Meanwhile, just last month the media was talking roses. Frankly, nobody knows where the markets are going in the short-run, but in the long run, the bias is generally up.

3) Get in earlier and leave later. In other words, work harder at your job and show that you are an indispensable team player. I can promise you that every manager thinks about cost cutting as soon as we have 10% downward movements in the markets. The manager’s goal is run a profitable business units and layoffs are always on the back of their minds. Your manager thinks about a future of “what ifs”, and so should you. Buckle down, be outstanding. You can’t control the markets, but you can control how great you are.

4) Prepare for the worst, but keep faith things will be OK. Preparing for the worst means ratcheting down your expenses and getting rid of inventory. Inventory can include your mountain of books, clothes and your 3rd TV with accompanying 3rd cable box. Expenses can be that $200/month gym membership you never go to or else you’d be thin. Preparing for the worst also means looking for a new job and developing side incomes just in case your main source gets expunged. If the worst comes, you’re ready, and if things are just business as usual, you’re pumped! When you prepare for the worst, there’s only upside!

5) Look around and realize today is just like yesterday, which will be just like tomorrow. If you didn’t have a media stream telling you the world is ending, you’d never let financial losses affect your well-being. Your happiness is all in your mind. You have the power to choose to be happy. It doesn’t cost much to touch base with family and friends or go for a walk in the park. Too often, we close inwards and worry about how we’re going to retire comfortably during market turmoil. Things come back. They always do.

CONCLUSION

Remember to focus on things you can control and let go of things that wiggle and squirm. If you choose to let fear enter your mind, you might as well use it to fuel new creation. Downturns are exactly the time to start something or do something better. Cherish meltdowns and embrace the challenge!

Readers, what do you do when market turmoil hits? How do you adjust, if at all? Why do you think people capitulated on May 25th and do you really think there will be a double-dip recession

Keigu,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

An Extra Seven Hours A Week

admin — Mon, 17 May 2010 09:00:34 +0000

Written by: admin on May 17, 2010.

I’ve been a little more active on Twitter recently and I noticed something quit interesting. Starting at around 10pm PST, the chatter goes silent. I tend to stay up until midnight to 1am, and because nothing is happening on Twitter, I focus my attention elsewhere. I usually wake up sometime between 5:30am-6am and spend time checking e-mail, responding to comments, stretching and seeing what’s going on online. Again, absolute silence until about 7am PST when things start coming alive. Where is everybody during the silent times? Sleeping?

There was a time where I’d sleep 7 or more hours a day, but no more. For the past 10 years, my body automatically gets up after 6 hours of sleep and never later than 6:30am on the weekdays, and 7:30am on the weekends no matter when I go to bed! Poker until 3am? Good morning sunshine at 7:30am! Actually, I wish I could sleep in until 9am, but I just can’t. Part of the reason for my automatic clock is that I eat regularly, and therefore have the desire to use the restroom regularly. Time to go, my body says and I get up. Unconsciously, there must also be a strong feeling of guilt that I’m wasting my life away sleeping.

7 HOURS A WEEK LEADS TO 30+ HOURS MORE A MONTH

Imagine if you had 30 hours more a month to do what you wish. What could you accomplish? I bet you could accomplish a whole lot of amazing things. If you read 60 pages an hour, you could read six, 300 page books a month! If it takes you one hour to burn off 500 calories, you could lose 15,000 calories or 6-8 pounds a month! Whether it’s mastering a musical instrument or building a business, an extra 30 hours a week is an incredible competitive advantage. This is where drive comes in.

It’s a ridiculous fact that we spend 1/3rd of our lives sleeping. If you live until 90 years old, doesn’t it make you sick that 30 of those years were spent sleeping? It makes me sick, because I’m so conscience about the brevity of life. To put it another way, let’s say you want to “increase” the length of your life by extending the conscience portion. By sleeping one hour less every day, you increase your conscience life by 15% (60 years to 69 years), assuming you sleep 7 hours a day! Suddenly, it’s as if the 90 year old is living until 104 years old (104 X 66% = 69 years old)! Perfect.

CONCLUSION – WORK WHEN OTHERS ARE AT PLAY

Small changes (wake up one hour earlier) leads to great changes over time (a 9 year longer conscience life span). It may be tough to wake up earlier and sleep only 5-6 hours a day at first, but trust me when I tell you that your body will get used to it and start wanting to wake up. Maybe you’ll have to cut down your late night drinking and partying, but it’ll be worth it in the end.

My mother used to tell me growing up, “Use your summer vacation wisely and work when others are playing.“ At the time, all I really wanted to do was hang out with my buddies and go skateboarding. She was right of course, because as soon as I started buckling down and focusing, I was able to exceed expectations. Yes, you might find me corresponding at 6am PST on certain days, don’t worry. It’s me, and not an automated robotic sending something out. In fact, I can’t wait to wake up every single morning and check my messages and see what’s going on in the world. There’s so much activity, I wish I didn’t have to sleep at all!

Readers, how many hours a night do you sleep?

What is the minimum amount of hours you think you can sleep and still be functionable?

What would you do with an extra 30 hours a week?

Keigu,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Hire A Financial Adviser or Lose Money All By Yourself For Free?

admin — Fri, 14 May 2010 09:00:00 +0000

Written by: admin on May 14, 2010.

The following is a guest post from @NealFrankle of Wealth Pilgrim. Neal is a Certified Financial Planner, a fellow Yakezie member, and all around good guy. Hope you guys enjoy!

During strong markets, anyone can make money. During weak markets, everyone gets hurt. For the most part, all ships rise and fall with the tide, financial adviser or not.

So what’s the point of having an adviser?

(I have my own answer to this question and it may surprise you.)

But before we get to my answer, let’s explore the wild and wonderful world of financial advisers and our clients.

1. Financial Advisers are Salespeople.

I know. I’m a financial adviser. We sell products and ideas. We sell baby….we sell.

In fact, most of our training is in sales, not financial planning and not investment management. If you read “How to Become a Financial Planner” you realize this is true. A financial adviser might have specialized training as a Certified Financial Planner (for example) and that does provide education that helps us plan. But we’re still salesmen. We gotsta make a living and that means most of us are going to sell you something if we can. Show me a financial adviser who has been in the business and survived more than 10 years, and I’ll show you a pretty sharp salesperson.

2. We don’t have a crystal ball.

If you really expect your financial adviser to beat the market year in and year out you should get a job as a stand-up comedian because you’re funny – and not in a good way. If your adviser does great is some years, she’ll do crappy in other years. It’s this risk/reward thing you’ve heard about. (Unfortunately, it is the way the world works.)

3. We have feelings.

If you cut us…do we not bleed? If you tickle us…do we not chuckle?

Yes…. we do.

However, and this is a huge one, if we’re any good, we don’t let our feelings interfere with our work.

This is one difference between us and you that explains why the best of us are worth what you pay us.

I’ve been in this business for over 25 years. Do you want to know how many times smart (I mean super smart) clients call me up with ideas that are super dangerous? How about, “all the time.”

When the market is strong, you get greedy. You want to take more risk and that’s a bad idea. And when I say “bad”, I don’t mean it in the Michael Jackson cool way either. I mean, bad as in…really dumb.

Let’s say you work out a 20 year investment plan that ends up with you sipping Sake on some sandy beach when you retire. You look at a number of 20-year periods and see that the historical worst-case is a loss of 40% for an all-equity portfolio. That’s too steep for you so you select a portfolio with less potential risk – and lower historical worst-case losses.

Everything runs great – until the market takes off. At this point, left to your own devices, you get greedy and put everything into the market. The moment you do that, your risk skyrockets and if things don’t turn out, you might get wiped out.

But if you work with a good financial adviser (and listen to her) this won’t happen. She’ll remind you of your long-term plan and bring you back down to earth. Don’t thank us….it’s our job.

4. We know what works.

I’m speaking here about long-time veterans. We’ve worked with clients for decades and we’ve seen every mistake known to man. We’ve seen what happens when people get greedy or afraid. We’ve seen what happens when people try to predict the future or ignore it. We’ve seen what happens when people don’t force their children to be financially responsible.

Tap into our knowledge and experience. You’ve got one financial life. We’ve been part of hundreds of them. No we’re not any smarter than you are. We’ve just changed more financial spark plugs than you have. We know the right wrench to use.

5. We know what’s good for you.

That’s right. You read it right. We know what’s good for you and you don’t.

How many times have you gone to the dentist for a cleaning only to find out you need a new crown? Me too. It might hurt but you’re better off by knowing the truth and taking care of it…right?

The same thing happens in financial planning. You come into the office thinking everything is “wunderbar”. We stick a financial thermometer up your……I mean…in your mouth……and we tell you what medicine you need to start taking.

We tell you:

Which retirement plan to participate in.

How to protect your beneficiaries.

How often to update your trust and what to look for.

How to balance your portfolio.

How to use Inherited IRAs.

6. We aren’t perfect.

We’re just people. The vast majority of us are honest and want to help you. But a few of us aren’t. You’ll have to use your own judgment to find the right person to work with.

As nice and honest as we are, we make mistakes. We work with a lot of people and we forget things. When we do…don’t get angry. Just remind us and be kind.

Bottom line, being a financial adviser is the best small business idea I could think of. I love being in it. Not because I think I make you more money – although I try to do that as best I can. I’m proud of what I do because I help people get what they want out of life with less risk and less cost.

I charge for what I do and I’m worth it.

Regards,

Neal

The List of Jobs I’d Do For Free Baby!

admin — Wed, 12 May 2010 09:15:48 +0000

Written by: admin on May 12, 2010.

If you feel like debating, head over to “The Dark Side Of Early Retirement” and get your fix. I stand by my main thesis that nobody quits a job they love to do. Someone who is able to find a fulfilling job is one of the luckiest people on Earth. We shouldn’t make fun of them for being a “loser” as one commenter put it. Instead, we should figure out what makes them tick!

Everybody gets bored at something after enough repetition. That’s why it’s key to have many different interests which straddle both the mental and the physical aspects of your life. No surprise that interesting people have a plethora of interests. These people also probably have a higher than normal level of commitment to their activities which make them that much more intriguing.

THE TOP 5 “I CAN’T BELIEVE THEY’RE PAYING ME TO DO THIS!” JOBS

1) Tennis instructor at the 4 Seasons in Bora Bora. Crystal blue waters and sunshine, two of the best things, which also so happen to be free in life! You can be dirt poor, but if you’re living in a place like Bora Bora, I venture to guess you can compete with any rich person in a downtrodden, polluted land. I think it’d be great to meet new travelers through tennis and keep in touch online.

2) Snowboard instructor for The Lodge at the base of Vail, Colorado. Nothing beats the back bowls of Vail! We’re talking 10 minute wide open, steep, tree-less, and massive powder runs! The Lodge is a quaint resort, and every time I go to Vail I meet some very interesting people.

3) TV sportscaster for college football and basketball. I literally could watch college football and basketball all day and night long, to the dismay of some! That said, I don’t and pick and choose so as to not over indulge. When college football and basketball season start, my excitement literally goes up a notch.

4) Food critic for Michelin. Yes, for starters I would like the Black Truffle Salad and Yellow-fin Tuna Carpaccio. Please pair with a bottle of 1974 Chateau Montelena Chardonnay. For the main course, I’ll have the Butter Poached Maine Lobster with a cup of extra melted butter on the side. I’ll pass on your selection of caviar and artisan cheeses and go straight for the Mandarin Souffle. Oh, and here’s my business card.

5) President of The United States. There’s no amount of money in the world enough to match the stress of being the Commander in Chief. Hence, I’d rather not take a salary and serve my country for free. One of the first steps as President? Institute a flat tax so we no longer have to discriminate against hard working American citizens who’ve struggled to get to where they are! I’d also reduce military spending to fund education. It’d be awesome to take Airforce I and a bunch of family and friends to Hawaii like the President does every December. Meanwhile, winning the Noble Peace Prize for being in office after one year ain’t too shabby either!

THE NEXT TOP 5 JOBS THAT COME TO MIND

6) Masseuse guinea pig. Rub me baby!

7) Blogger. Financial Samurai is so fun, thinking about monetizing just isn’t on my mind for this site. It’s just a blast learning from y’all meeting new people and gaining perspective. If someone wants to pay to advertise, great! Someone else who needs the money more will receive it. If not, that’s OK too. The next project will come out by mid August, and I’m working hard behind the scenes to make sure it gets executed.

8} Late Stage Film Critic (Academy Awards). I say late stage because I’m specifying the desire to critique only the best movies that have already passed the gauntlet! You know, movies such as Shawshank Redemption, The Matrix, The Usual Suspects, Hot Tub Time Machine and many more, which only a late stage film critic would get to review. What joy!

9) Travel writer and photographer. I don’t know how to take wonderful photographs like our friend Lyndon, but I do love to travel and write on occasion. Send me to Barcelona or Rio de Janeiro to write about their favorite foods and secret gems I’m there! Put me on a train towards Amsterdam to write about whether locals really eat special brownies after lunch, no problem!

10) English teacher in a non English speaking country. If we can’t communicate properly, we’re wasting our potential. Given English continues to become the global language standard, teaching English to those who wish to speak English is very important. Let me go see if the Maldives or somewhere in the South Pacific needs an instructor.

CONCLUSION

So there you have it. I love travel, sports, eating, and writing. Many of these jobs provide free lodging (White House anybody?) and food (4 Seasons) can literally be done for free. When it comes time to retire at 45, I’m prepared to incorporate these elements into the next stage of my life. Perhaps I can be a travel writer in Bora Bora in the morning while teaching tennis in the afternoon? Perhaps I can be a traveling food and luxury resort critic on my site, while letting the new spa staff give me full body massages before they work on paying customers. At any rate, I look forward to early retirement by 45, because I’ve got a full docket of things planned!

Readers, what are some of the jobs you’d be willing to do for free?

Keigu,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

The Dark Side Of Early Retirement

admin — Fri, 30 Apr 2010 09:08:45 +0000

Written by: admin on April 30, 2010.

If you look carefully around the web, you’ll read scores of articles about the desire to retire early. Yours truly wishes to finish up no later than 45, as I believe working for 20 or so years is a long enough time. I’ve done the math with various living and return scenarios and it can be done. But the question is whether it’s a good idea? Perhaps not.

Now that the economy is in recovery mode, it’ll be interesting to see how attitudes change towards early retirement. Will those who’ve short circuited their careers feel the pull to return to full time work and maximize their earnings potential again? I believe so. What about all our “lifestyle design” and “digital nomad” friends who had a rough time landing something stable they truly love? Possibly they’ll come back too.

Those who are able to retire early are often cherished. I certainly admire those who are able to cut down their desires to the bare bones and live a very frugal lifestyle. I also admire those who’ve been able to strike it rich very early! That said, perhaps early retirement isn’t a good idea for the large majority of people. Let’s explore several reasons as to why people want to retire early, why they exist, as well as understand why it may not be a good idea. Someone has to argue the other side, so it might as well be me.

WHY PEOPLE WANT TO RETIRE EARLY (IT ISN’T THAT OBVIOUS!)

1) Haven’t found the right job. The number one reason why people want to retire early is because people haven’t found a job that gives them enough fulfillment to do for the rest of their lives. Nobody quits a job they like. If there was a job paying $80,000 a year to hike in the mornings and get massages in the afternoon, I’d do that forever!

2) Easier way out. People give up or are sub-optimal performers at what they are doing now. Let’s say you are a research scientist who after 10 years never produces any relevant research, and finds no cures. Instead of going on with your failure, you decide to give up, and get out of the game. Early retirement is kind of like the cowards way of not having to be the best any more. Some even liken it to suicide.

3) People are lazy and want things now. Society has shifted our ideals from hard work and thinking long term, to instant gratification. Nobody has the patience to work for decades before being eligible for a pension. We all think we know more than we do, and deserve to be the rich boss now. When we don’t get our way, we quit, rather than letting people know we couldn’t reach our potential.

4) A feeling of hopelessness. During the downturn, a tremendous amount of people began writing about a location independent lifestyle, and breaking free from the 9-5 and really doing what you want. It’s because of this downturn, that many people were displaced, and had nowhere to go. If they did, perhaps they’d think differently. In an economy where everybody is losing money left and right, what’s the point of working?

5) Realization that time is precious. With the median lifespan hovering around 80 years old, you only have 15 years of retirement to enjoy your life if you retire at 65. People in this camp have a heightened awareness of time, and therefore do everything possible to make sure they are financially stable sooner, rather than later. I’m a strong believer in this thought process, but at the same time, I don’t want to cut short my potential.

THE DANGERS OF EARLY RETIREMENT

1) Oops, you change your mind. Imagine retiring at 37 after 15 years of work after undergrad. You spend the next 3 years traveling the world, living a leisure lifestyle and experiencing new things. At age 40, you realize the reason why travel and play is so fun is because of work! You have the urge to get back into the game, but who’s going to risk hiring a 40 year old with a 3 year employment gap? The employer will suspect you are rusty, and may just bolt after a year.

2) You run out of money. No matter how conservative we are in our retirement money needs, something unforeseen may happen. Maybe you have a medical disaster, or your house blows down. Maybe your investments tank due to a massive economic downturn. Who knows what the future holds. But if you partake in “normal” early retirement, without the mega-millions windfall, you may find yourself needing more one day. Again, a large employment gap is perceived as riskier by the employer and you may be un-hireable.

3) You lose touch with friends and family. It’s nice to have all the time in the world to do whatever you want. But, if your friends and loved ones are busy working all day, they can’t join you on your midday hike or adventure to Bora Bora. They may also have a family to attend to during the evenings and on weekends.

4) You may find it difficult to start your own family. Unless you have a tremendous amount of money, raising a child may be too expensive an endeavor to undertake as early retirees. If you never wanted to start a family, chances are you haven’t been saving for a family. Let’s say you’re a woman who turns 35 and suddenly realizes the safety window for having a baby is closing rapidly. May be tough to even get pregnant, let alone support a new born without the right support network.

5) You lose your own self-respect, and the respect of others. Unless you’re out there saving the world, you might start getting depressed you are contributing very little to society. Others will stop respecting you because you aren’t doing anything productive either. A great many rich early retiree friends from the Dotcom bubble have mentioned they wish they didn’t get rich so quicky work a little harder for their money.

CAREFUL WHO YOU LISTEN TO

Early retirees will croon about how great their lifestyles are. I’m sure, in some ways they are spot on. But notice how they seldom write about the hardships they face. They can’t, because it’s important they continue highlighting how awesome everything is, to justify their decision to no longer work. Can you imagine spending 16 years going to school (grade school + four years of college) only to work for 10 years? Some would surely say that’s a waste, would they not?

The worst that could happen is some aspiring scientist, musician, lawyer, or teacher decides to give up their careers because they believe traveling around the world on a shoe-string budget is so glamorous. Years later, they realize their fingers don’t remember the notes anymore and the chemical formulas are one big haze. Maybe they would have made it as a concert pianist, or helped discover the cure for seasonal allergies, ACHOO! What a shame they never reach their full potential.

EARLY RETIREMENT IS SELFISH

As I strive to fulfill my goal of retiring by 45, I’ve come to the realization there’s an unhealthy focus on self. “What do I need to amass to be comfortable?” should be replaced with “How much do I need to be comfortable while helping others?”

It’s absolutely selfish for me to even consider working less than the number of years I went to school. I think back upon my childhood years and how much effort my parents put into raising me. My mother would spend hours a week sitting down with me after dinner to explain mathematical equations. My father would read all my essays and fix all the punctuations and grammatical mistakes. I would feel like a disgrace not to at least try and do great things.

45 is just an age goal. If I haven’t achieved my potential by then, I don’t plan on retiring even if I have the money to do so. The point of having an earlier-than-normal retirement goal is to help keep someone focused to achieve whatever it is they set out to achieve. Like an exam that’s 3 months away, we don’t study until the week before. Hence, better to believe the exam is only a week away so that we are better prepared.

CONCLUSION

Early retirees sometimes like to pity those who have to work. Yet perhaps we should empathize with those who are lost and haven’t found something they truly love to do (point #1). It’s impossible to all be great humanitarians working tirelessly until the age of 65. It’s easier just to give up and tell the world how fabulous your life is, and how you’ve retired on your “own” terms.

As the economy recovers, perhaps we’ll be able to bring back our lifestyle design friends to their home countries to work again. Our early retiree friends will stop fearing failure as employers open their arms wide open and allow them to succeed. Entrepreneurial ideas flourish once again due to an abundance of capital. The more the wealth gap widens, the more the early retiree crowd will want to get back to work, and realize their full potential.

There comes a point when working isn’t about money anymore since we have enough. If we all reach this point, we’ll no longer be focusing just on ourselves, but on helping others as well. We’ll be doing something we love, that provides a sense of purpose. Here’s hoping we all get there!

Readers, do you agree or disagree that early retirement is a selfish proposition? Are we all just inherently selfish to begin with?

What is your ideal age of retirement and how do you know when is the right time?

Do you think once we’re back to a raging bull market, there will be less people who want to retire early?

Keigu,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Book Review & Giveaway: The Other 8 Hours

admin — Wed, 28 Apr 2010 09:00:06 +0000

Written by: admin on April 28, 2010.

Author: Robert Pagliarini, author of The Six-Day Financial Makeover and president of Pacifica Wealth Advisors. You may have seen him on Dr. Phil or 20/20.

Publisher & Book Info: St. Martin’s Press, hard cover, 301 pages, $25.99.

Review: The main premise for Rob’s book is that everybody’s day is split into three eight hour parts: work, sleep, and everything else. Rob’s hope is to get you motivated to do more during the everything else portion to maximize your own potential. First of all, I don’t know anybody who only works 8 hours a day. 10 hours of work a day seems more realistic. Second, who gets to sleep 8 hours a night? Sounds like elusive bliss to me. Let’s assume 6 hours of nightly sleep instead, which ironically leaves the same 8 hours of time for everything else!

The Other 8 Hours is an enjoyable read because each chapter contains not only practical advice, but real life inspirational stories to help motivate readers to action. Too many times we just come home, plop on the sofa, and do nothing. That’s no way to live. Below are Rob’s top 10 things he recommends doing with your spare time to help increase wealth and purpose.

Top 10 Creator Channels:

1) Blogging

2) Inventing

3) Writing Books, Screenplays, Music

4) Starting A Company

5) Reselling, Affiliating, and Licensing

6) Taking Advantage of Fads/Stunts

7) Working for Stock in a Company

8} Advancing or Jumping Careers

9) Freelancing

10) Turning Hobbies into Income

Blogging definitely has the potential to earn you a few shekels with enough time and dedication. I’ve daydreamed about sitting on my yacht somewhere in the south of France writing to you about saving money on champagne and caviar! Then reality sets in. However it’s always good to dream.

The item that most interests me is #2. Rob dedicates a chapter to each of his 10 creator channels, which is very useful because many don’t know where to start. Rob provides a road map, highlights the pitfalls, and ends each chapter with actual resources you can use. For inventing where do you go to develop a prototype, receive independent reviews, and hire an agent? Many answers are all addressed.

WARNING THAT NEEDS FOLLOWING

One of Rob’s key messages, which I wholeheartedly agree, is to NOT jump head first by quitting your job and investing everything you have in your business idea. I’m sure there will be plenty of those will disagree with this premise. How can you succeed if you don’t put everything you have into your idea? You can, but simply during the other 8 hours!

We always hear the tremendous entrepreneurial success stories, but we seldom ever hear of the failures. Trust me, there are tons of failed ideas, and if you were to invest everything you have in a failed idea, it’s going to take a lot for you to get back to your previous financial state. Be methodical in your approach, test out your product thoroughly, and make sure you see signs of success before you quit your full time job.

CONCLUSION

Who wouldn’t want more time, more money, and a better life? It’s simplistic to say a book will give you all that. However, The Other 8 Hours helps provide a catalyst to get you going. You won’t just read a book that tells you what to do. The Other 8 Hours helps shows you how.

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