Friday, November 05, 2010

Hyper-partisanship & American Democracy

I'm not going to comment on the mid-term elections. There are more knowledgeable and eloquent commentators than me, but I do want to comment about something that is seriously wrong with our democracy: hyper-partisanship. I'll give two examples to illustrate this issue, both from the recent mid-terms.

My two examples: Alvin Greene, Democratic nominee for Senate in South Carolina soundly lost to his Republican rival. Christine O'Donnell, Republican nominee for the Senate from Delaware was defeated by her Democratic rival. What's wrong with this picture? Simply this: these two geniuses won 28% and 40% of the votes, respectively.

Why would any American in his sound mind would vote for such obviously unqualified individuals if not for hyper-partisanship? Shouldn't the representatives we send to Washington be superior individuals? Shouldn't they be creative thinkers? Excellent deal makers? Visionaries? Great executors? Instead, a sizable minority of voters base their voting decisions on a single criterion: does the nominee have a D or an R next to their name.

Until this changes the solutions to our fundamental problems will elude us, and we will continue to send to Washington unworthy individuals who are not equal to the massive challenges that we face.

In case you have not heard about these fantastic former nominees and don't know what I'm talking about read for yourself about Greene (felony charges, "stellar" military career performance, slightly worse communicator than an average turnip) and O'Donnell (financial problems, lying on taxes, holding some fantastically bizarre opinions).

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Monday, September 27, 2010

Free Renter's Insurance? Yup.

Renter's insurance is one of those things that are affordable and important. So why is it that we don't have renter's insurance? I have one word for you: "procrastination". I have no excuse whatsoever. Last weekend I finally got around to fixing this problem - OK, it was more or less a happy accident, but the end result is great. We now have renter's insurance with token coverage for our belongings, and respectable coverage against liability. How did it happen?

Recently I got a new Hyundai. Yes, one of those that's being recalled and yes, I know. I still love that car. I added it to our insurance coverage the day I got it, but it occurred to me that I forgot to remove the old car, because at the time it was still parked outside waiting to be picked up by Public Radio (where all donated good cars go). I finally remembered and called AAA to make the policy change. While the agent was revising my premiums she was reciting the various discounts I was entitled to receive: good driver, multiple cars etc. Then she told me that if I had renter's insurance with AAA my car insurance premiums would be discounted another 20%. Procrastinating is one thing, but when you actually have the agent on the phone, not following up on an obvious opening would be negligence.

So I followed up. I answered some basic questions and 5 minutes later I was the proud owner of a renter's insurance policy. The total cost? $173 a year for the coverage I selected. Now here's the punchline: the discount we got on the car insurance premium because we now also have renter's insurance with AAA is $300.

Long story short, AAA is paying us $127 a year for the privilege of insuring our home. How incredible is that? Of course, I could have done this years ago and I would have saved about a thousand dollars by now, but that's the price of procrastinating.

At the end of the call I asked the agent whether there was something else she wanted to give me for free. She laughed.


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Wednesday, September 01, 2010

Ground Zero Islamic Center - My Take

I am atheist and proud of it. I am of the firm opinion that everyone should be free to practice their religion (or lack thereof) as they see fit. This is part of who we are as Americans. It is a sacred principle enshrined in our constitution. For this reason I find the debate over the so-called "ground zero" Islamic center to be a farce and mark of shame for our country.

Islam does not equal terrorism. Would anybody think it a rational argument if Christians were prohibited from building churches next to the Oklahoma City Federal Building just because Timothy McVeigh was Christian? Obviously this would be a nonsensical position. Why is the Islamic center any different? True, the 9/11 terrorists were all Muslim, but it does not follow that all Muslim's are terrorists. In fact, many of the 9/11 victims were themselves Muslim. Why should all Muslims be asked to answer for the crimes of a small and sick minority that shares the same faith?

From my personal perspective, religions (all of them) are misguided. I recognize and respect everyone's right to worship and believe what they choose, and I make no claim to know better than anyone else the ultimate truth or the nature of reality. I am frustrated, perplexed and amazed by people's unwavering and uncompromising certainty about things they have no possible way of knowing. I feel that there is plenty of evidence to show that religion has been a force for evil in the world (case in point the 9/11 attacks themselves), which does not reduce by one bit the virtue and good done by many honest and devout religious folks of all religions.

Let's face it, the protest against the "ground zero" Islamic center is nothing short of religious fundamentalism and bigotry, dressed in the guise of political correctness and a plea for "consideration". For God's sake, let honest people worship as they will. Your religion is no better than theirs and is no more grounded in reality or morality than those of others.

That's my take, anyway.

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Tuesday, August 24, 2010

Crazy, Crazy Week!

Last week was one of the craziest ones I've had in a long time.

Start with the good:

New Car - I finally got myself a new car: a Hyundai Sonata SE.

My New Sonata
So far I love it. My favorite feature: Bluetooth, which allows me to wirelessly stream music from my iPhone to my car stereo. In fact, I can stream Internet radio from my iPhone to the car. One day last week I was actually listening to a live news program from Israel while driving at 65MPH down 101 South. Sweet.

I paid cash for the car since I don't believe in financing consumer purchases. My philosophy: unless you are talking about a house, if you can't afford to pay for it with cash, you can't afford to own it.

Old Car Donated to NPR - after 11 years of faithful service, I donated my old friend, the Geo Prizm 1997, to our local NPR affiliate. According to Kelly Blue Book it was worth somewhere in the neighborhood of $800, but since I listen to NPR all the time and am not currently a member, I thought this would be the right thing to do. Besides, I get to take an income tax deduction at the actual price NPR gets for the car AND I didn't have to deal with the headache of selling it. The donation process took a single call and a 3 minute meeting with the tow truck driver who gave me the paperwork and took the car.

A bit nostalgic seeing my old car getting towed away, but hey, I GOT A NEW CAR.

John Mayer Show - Alpaca and I went to see John Mayer perform at Shoreline last Friday. Mayer is one of my favorite artists and he gave a great show. My only concern - which is not new - is that the food at Shoreline Amphitheater is slightly worse than the most horrible food you can imagine. I paid $6 for garlic fries that stayed with me until the next morning (my nickname for them: "disgusto-fries"), and another $6 for a tiny cheese pizza that tasted like someone had pre-digested it for me.

Shoreline @ Night
If you are going to go to any entertainment event in this country, you are going to get overcharged for food and drink. That is pretty much a given. However, my plea to entertainment venue managers everywhere is a simple one: if you are going to charge us an arm and a leg for snacks, could you at least make them half way decent? Is it really so difficult to make a semi-edible pizza?


Three Days Without the Kids - My in-laws took the kids for three whole days and nights last week. This means that Alpaca and I had three whole evenings to ourselves. We got to go out three nights in a row and get together with friends. If you don't have kids, you have no idea what a big deal that was.

Much fun was had by all.

So where's the bad stuff?

Trouble at Work - Well there was really only one bad thing, but it was a big one. My company laid-off 15 people. Now only 20 remain (down from about 50 only a few months ago). The company's survival is very much up for debate. It is entirely possible that the company will be shut down by the end of the week. Yes, that's pretty depressing. Going to the office these days is a really dismal undertaking.

The situation is currently beyond my control. In fact, it is beyond the control of anyone on our company's management. Some of our investors are trying to work out a deal under which they will continue to run the company. If that works out, I have been assured by reliable sources that I have a key position with the firm. If not, well, I guess my job search will need to move into higher gear...

On the job hunt front, I have a number of leads, none of which appear very appetizing at present, however, I am encouraged by the fact that there seem to be opportunities out there. The question, which is probably a big enough topic for another post, is whether I should hold out for the right opportunity or take the first semi-decent offer that comes my way. More on that dilemma in the future.

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Friday, August 13, 2010

My Job Search is On!

My company appears to be on the brink of failure. It has been apparent for a few months that we were in trouble, but for a little while it appeared like we might be able to pull off a miraculous recovery. No more. As of today our board of directors is weighing several possibilities, none of which are likely to result in long term survival for the company as an independent organization. All is not lost though, at least not yet.

Among the options being considered is the possibility that the board will attempt to sell the company, rather than shutting it down. If that happens, I will probably be asked to stay with the company and lead the selling effort. There is also an outside chance that our investors will decide to keep us running on a semi-normal basis and try to grow the business. I am not holding my breath.

All that aside, I am not sitting around and hoping for the best. Ever since the situation turned decidedly grim earlier this week, I have been formulating my plans, and as of Wednesday I have started to quietly and discretely search for a new position.

Why quietly? I don't want to disrupt the company's few remaining chances, nor do I want to jeopardize my chances to stay with the company if it continues to exist in some form. So what have I done so far? Here's a short list:

1. Update my resume - I didn't have much to do, because I am diligent about keeping my resume more or less current. You never know when an opportunity might crop-up.

2. Call headhunters - I make it a point to always respond to headhunters that try to contact me - whether they are trying to sell me on candidates for hire or on job prospects. If I am not interested, I try to suggest someone who I think would be a good fit or is hiring. As a result, I now have some headhunter contacts that know me and are willing to work with me. One even has a couple of positions he will propose me for (although neither are terribly exciting to me at present).

3. Call trusted network members - as I mentioned, this is a quiet effort so far, so I am only calling a few, carefully selected individuals that I feel are in a position to assist me with minimal risk of disclosure. One of these has a position to offer me, but the details are not yet clear. I should know more next week.

4. Apply for some jobs online - this is mostly a fruitless exercise, no doubt, but I found a few open positions for which my qualifications are perfect. I gave it a shot - but I am not holding my breath. Online job applications are not much different from a black hole. Unfortunately, my network does not extend into the relevant companies, so during the quiet phase of my search, online applications are my only option.

5. Start a War Board - if you've ever been in sales, you might be familiar with an end of quarter "war board" that some companies have. This is a place to monitor all the expected sales and track performance to meet end of quarter sales target. Well, I started a Job Search War Board - it's an excel spread sheet where I will track all of the leads, activities and to-do items related to my job hunt.

In this economy I am preparing for a long, hard slog. I feel ready, nervous, a little worried, and actually quite excited. I feel that I am up for the challenge.

In the coming weeks, I will use this blog as part of my war board, and hope to solicit useful comments, advice  and motivation from my readers. In the mean time, if you know of senior level business development or marketing positions in the technology industry, and specifically in Silicon Valley, I would love to know about it. All leads welcome.

Keep your fingers crossed for me, and come back soon for regular updates on the search.

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Sunday, August 08, 2010

Guest Post: Easy Ways to Profit from Stocks

The following is a guest post by Jack of DGB. My policy is to post a variety of guest posts, even if they represent points of view that are very different from my own. In this specific case, I disagree with most premises in the post, however, the readers should judge for themselves. I have added some of my own opinions as an Editor's note at the bottom of the article. The guest post:

Thousands of people start to invest in the stock market with the dream of making millions overnight. But being unaware of the risks involved can cost you dearly. Many people have faced huge financial troubles after suffering overwhelming losses in the stock market. So if you are wondering how to go about making profits in this consistently fluctuating market, then read on.

It’s difficult even for the most experienced stockbroker to pick the right stock at the right time. When it comes to the stock market, you can’t actually rely on anybody’s forecast as each individual will give you a different interpretation. Here are some tips which will help you take the right decisions if you are thinking of investment in the stock market.

1) Be clear about your goal: First of all you need to determine whether you want to opt for the long term or the short term profit. This is important as it will help you decide on the method which you will choose to trade by. It will also help you to judge the type of stocks that you should buy to maximize your investment returns.

If you are going for long term investments, then it’s advisable to check on their performance over the last six months. It’s always better to check out years of data if it is available. You do not need to be an expert to do a company analysis. A good look at the performance of the company in the share market will help you take the right decision.

If your goal is short term profit, then you can opt for day trading strategy. It’s advisable to keep away from volatile markets. Experience will gradually help you to take the right decisions while you are searching for stocks. Look out for companies which do not show a volatile nature in the stock market as there is less risk of suffering losses with them. You should anyhow check out the history of these companies too, though what will really matter to you is the company’s immediate performance.

2) Learn to read charts: You must learn how to read charts. This is important as this will help you to determine the performance of the company in the future. Charts can help you in various ways so it is necessary to understand them before you invest in stocks.

3) Watch the market regularly: A common mistake that people often do is that they start keeping an eye on the market only after they have invested money. Be wise! Start watching the market even before you have invested in order to understand the market better and to boost your chances of success.

4) Begin with small investments: You should start your investment career by investing small. It’s not advisable to risk your money by making big investments until you have gained enough experience.

5) Seek a combination of investments: An effective strategy to build a long term investment plan is to diversify your portfolio in different sectors. Spreading your investments will lower the risks involved and help you in meeting your financial goals.

Making money in the stock market requires learning and experience. The most important advice is never to invest more money than you can afford to lose. Trade wisely and the stock market can prove to be a great source of income for you!


[Editor's note: I strongly disagree with the notion that non-professionals should even consider investing for short term profit in the stock market. I also disagree with the underlying concept of this post, that stock picking is a good idea - Indexing is the way to go for the vast majority of people. While I agree that diversification is a good idea, diversifying within the US stock market is nowhere near sufficient - diversifying internationally, as well as into asset classes different from stocks is a much smarter approach.]

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Wednesday, August 04, 2010

Is It OK to Over Pay?

Jerusalem Bazaar Store

We are on family vacation to Israel where my brother got married last week. Yesterday we took the kids to visit the old city of Jerusalem (one of the most beautiful places on earth, in my opinion). During a walk through the amazingly colorful bazaar, we told the kids they could each pick a small present as a keepsake from our trip. Our oldest picked a wooden necklace, and I asked the store keeper for the price, which he told me was 20 NIS (about $5). I gave him the money and thanked him.

I think that my behavior came as a shock to the store keeper. If you've ever seen the movie Life of Brian, where in one scene a shopkeeper basically forces his customer to negotiate the price ("you've got to haggle"), our shopkeeper had a similar look on his face.

I probably overpaid for the necklace by 40% to 50%. Usually at these places you have to go through a whole process where you loudly complain about the price, start to walk away, give your best and final offer, and so forth. The fact that I just took money out of my wallet and paid the man his asking price is almost scandalous and  I have no doubt my mom would have given me an earful if I had told her the story. In fact, I bet the store keeper was disappointed he did not ask for twice his original price. But here's my thing - I came out with my kids to enjoy a day in old Jerusalem. Should I really waste the precious few hours we have there by haggling with a store keeper for a savings of $2 or so? I don't think so. This way the store keeper is happy. I am out 2 bucks, and I got an extra 15 minutes to enjoy this ancient and gorgeous city.

What do you think? Am I a sucker? Is it OK to knowingly be a sucker in these cases?

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Monday, July 26, 2010

The Wonderful World of eReaders

For my birthday a few months ago, Alpaca bought me an Amazon Kindle. I guess it was not difficult for her to find out that I wanted one - it was listed in my Amazon wishlist... Being the gadget lover that I am, I have been playing with my new toy quite a bit since I got it, and here are my thoughts on the subject:

Bad Financial Decision - if you are thinking of getting an eReader because you think that this will somehow save you money, think again. Alpaca bought this device for me for $269, before Amazon reduced the price to $189. Kindle books cost a dollar or two less than a paper book, so at that price you'll have to read about 100 books before you get to the break even point. I read about 10 to 15 books a year, which means that it would take me about 7 years to re-coup Alpaca's investment in the machine. If cost savings is the goal, buying a Kindle is probably not the best move.

There are a few exceptions to this rule. I am currently on a family vacation in Israel, and before getting on my flight on the way over I bought a copy of the latest issue of the economist. The news stand price is $7 and I picked up an electronic copy - on the spot - for $5 (and, of course, no taxes). If I do that every time I fly, the savings could potentially add up.

Another important area of savings are best sellers. Amazon sells kindle editions of NY Times best sellers for $9.99. If the average book costs $15 and you read a lot of best sellers, you could probably make up your initial investment pretty quickly.

Free Samples - with the kindle you can download the first chapter of pretty much any book you want, for free. I no longer decide to buy books by reading the back cover or just on the strength of reviews or recommendations from friends. I read the first 20 or 30 pages, in the comfort of my living room, and then I decide whether the book is worth spending my hard earned money or not. Speaking of which...

The Convenience is Amazing - people rave about how awesome it is not to have to carry a lot of books around. I find that pretty amusing myself, since I rarely carry more than one book with me and I am guessing most people fall into that same category. On the other hand, the ability to buy books ON THE SPOT is incredible. The other night I was reading a book review in a magazine after 1 am at night. The book seemed really interesting. 60 seconds later I had a free sample of it on my kindle. When I was done reading the sample, I had the full book on my machine less than a minute later.

No more waiting for boxes to arrive via USPS, no more paying for shipping. Presto. Book available.

Love the Dictionary - what does "eponymous" mean? Darned if I know. With a regular book I would vow to look up the word later. Of course, I would never actually get around to doing that. Not with Kindle. I move my cursor to the word and a definition just pops up: "giving their name to something". Ahhh, now that sentence makes sense.

I Never Worry About Battery Life - unlike a computer (such as the iPad), the Kindle doesn't use a typical screen, it uses something called eInk. Essentially the Kindle only draws power when you turn the page. Once the page is presented, it just stays there without consuming electricity. This means that I typically only have to charge my kindle every 2 to 3 weeks (assuming I turn off the wireless connection when not in use). It means I can go on vacation, and never worry about chargers or access to electricity.

But, Not All is Well in the Kingdom of Kindle - just so that you don't think I am completely in love with this machine, it's not perfect. It still has many flaws and little annoyances. For one thing, the screen is only grey-scale. No color for the kindle. This is not an issue for most books, but for magazines, where pictures are part of the fun, this is not such a great thing.

Another annoyance is the ability to sort and file your old books and magazines. Magazines are simply not filable and they just linger on your home page. Clutter, clutter galore. Books can be sorted into different folders, but the process is very cumbersome.

You like lending your books? Well, you're out of luck. The books you buy are stuck on your machine. Your friends have to buy their own. From my perspective, this is not such a horrible thing given that many of the books I lend to friends never find their way back home.

Perhaps the biggest problem of all is that Kindle is a closed system. You can only buy Kindle books from Amazon. You can get plenty of free books from other sources, but if it's a paid book you are after, only Amazon can sell you one. I think that this is patently unfair. It's like only being able to buy movies from Sony on your Sony television, or only being able to buy applications for your iPhone from Apple... oh, wait a second... I am tired of every technology company intentionally crippling their products to lock me in and get more of my money.

There are many other small and large issues and annoyances, but all in all, the Kindle is a really cool device. I am sure that in a few years, when I get a newer, better version of the machine I will be amazed at the primitiveness of this one, but for now, I really like my Kindle.

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Sunday, July 18, 2010

Car Dealers Suck - Part II

Last week I wrote the first part of this article, in which I described how I got a crooked car dealer on tape explaining how he likes to bait and switch his customers (I was also stupid enough to erase that tape rather than send it to the local TV station as one of my readers suggested). Today, I'll share another installment in the series.

Last Monday, at 4PM in the afternoon, I get a voicemail from an agent named Ron at Steven's Creek Hyundai. Saying something like "I got great news for you. We have found the car you want." I call back, and sure enough, Ron goes on and on about how he's finally found the car I have been asking about. Only problem is that it's in LA, but he's willing to ship it over - for a shipping charge of about $400. Awesome. Finally, I'll get my new car. I ask for a quote and he says, not to worry, he's already emailed me a quote. I tell him I will check my email and call him back later that evening.

In my email I find the quote, which includes the following excerpt (actual font sizes & highlights):


"Please note: The following price is good for the next 2 days.

Here is your Internet Pricing on the:2011 Hyundai Sonata SE with carpeted floor mats, cargo net, cargo mat, ipod cable, auto-dimming rear mirror.

MSRP: $23,845
Your Internet Price is: $20,597*.
...

!!This is an Internet Special Price only, You MUST Bring this Ad to qualify for this Internet Special Offer!!"


OK. Something is suspicious here. How can it be that the quoted price is so much lower than the invoice price? I send Ron an email reply which includes the following language:

"Thank you for the quote. 

Can you please clarify what other charges will be added to this quote?

Since I am paying cash (via BoA cashier's check) what would be the amount that I would need the check to be for?"

He doesn't respond to the email, so I call him. Over the phone he insists that it's all legit. This is the price, he says. There are no other charges, he assures me. I am still suspicious, but I decide to check it out. We agree that I would come to meet him onsite the next morning.

The next day, I print the quote, and I print the list of government taxes and fees (doubly so, after my previous dealer incident), and I take a break in the middle of my work day to drive to the dealership.

Ron greets me with a wide and friendly smile, asks me to take a seat, and says that he's going to print out the details and will be right back. He disappears for 20 minutes, which I spend doing my email and getting progressively annoyed. When he shows up, he has 3 pieces of paper in his hand. The first he shows me is a list of 5 cars he's located in California - this, he maintains, are all the cars in the state that fit my specifications. OK. Next, he shows me a poorly printed page with the vehicle specs. All seems to be in order. "Wonderful," I say, "how do we move this forward?"

"Let's talk about the price," he says and reveals the third piece of paper. The third sheet is a white piece of paper with three hand-written lines.

Ron points to the first line and says:
"Are you a member of the US military?"
I say, "Ron, you know I'm not. We spoke at length over the phone. You know I am a business executive."
Ron, with a note of triumph in his voice, says:
"well, you are not getting THAT rebate".
He crosses off the line that says: "Military Rebate - $500".

He points to the second line and says:
"Are you a college graduate?"
"Absolutely", say I with a grim smile.
"Ahh," says he, "but did you graduate in the last 24 months?"
"No", I admit.
A triumphant grin returns to Ron's face, and he crosses off the second line on the page, which says "College Graduate Rebate - $500".

Then he point to the third and final line. "Do you own a Hyundai?"
"No. I drive the crappy, old Geo Prizm that is parked on the street right there"
The third line disappears. When it was still there it said "Hyundai Loyalty Rebate - $400".

"Let me get this straight," I say, "you are expecting me to pay $1,400 more than the price you quote me in writing yesterday? Even though I asked you in email and you confirmed to me over the phone that this was the actual price you were asking for?"

Genius Ron looks at me with an innocent and injured face and fires off a volley of explanations in quick succession: "You have to understand, those rebates are not my money, I can't give them to you" and "how could I know that you are not a military man?" and so forth.

But I have no patience left. I cut him off at the pass, and I basically lose it. I say something like "Why the F*** are you wasting my time, Ron? I spoke to you over the phone at length. I asked you if there were any other charges. I asked you repeatedly if there is anything else I should know about your quote. You chose to drag me down here knowing full well that you had no intention of honoring the quote you gave me."

I then left, never to return.

I am still searching for a single, honorable car dealer, who will negotiate with me in good faith and honor his commitments. That dealer will get my money and will get a loyal customer who will gladly tell the world that honest dealers are not yet extinct. Sadly, so far, an honorable dealer appears to be an unfounded urban myth.

Don't shop at Steven's Creek Hyundai. They're just dishonest idiots who will waste your time and money.

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Tuesday, July 13, 2010

Car Dealers Suck - Part I

I am in the process of trying to replace my 1997 Geo Prizm. Much has been written in this blog about the adventures of my wreck of a car, but it's time to move on. I have done my research and decided to buy a new  Hyundai Sonata 2011. For the past 3 months I have been trying to put this decision into practice, but to no avail. I have been doing my shopping and price comparisons primarily online, but that did not help me to avoid the antics, stupidity and plain ugly practices of Hyundai car dealers of Northern California. Below is the first of two posts on the topic.

My first incident happened about 3 months ago, and involved a quote I received from a Bay Area dealer. It looked good on paper and after comparing prices I was ready to do the deal. When the time came to close, the dealer tried to get me to pay significantly more than the price he quoted me by pretending taxes, registration and fees were higher than they were in reality. I'm not that stupid, I came prepared. I brought with me a complete list of all government taxes and fees, which I got from the California DMV website. When I confronted the dealer, he "explained" that the car he was selling me had more features and options than the one I wanted to buy and which he originally quoted to me in writing. I left, but that wasn't the end of it.

A couple of days after I walked out, one of the workers at the dealership left a voicemail on my cell phone, asking me to call back to do the deal. Thinking he hung up on the call, he continued talking to his boss, while my voicemail was still recording. In the recording the two are clearly heard discussing how it's a great strategy to give a low quote in email correspondence, only to change it later on. They called it "a hook".

Needless to say, I never called the idiots back. Incidentally, the name of that dealership is Magnussen's Hyundai, and it is located in Fremont California. I would strongly advise my readers to avoid those would be con-artists.

Now, if you can believe it, today I had an even more outrageous incident at Steven's Creek Hyundai. I would advise you right now to stay the hell away from those dishonest peddlers, but I'll tell you the details in part 2 of the story. Stay tuned.

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No "Means Testing" for Social Security

The social security system is broken. Pretty much everyone agrees on that much. In fact, even the Social Security Administration is upfront about its current fiscal prospects. From my own social security statement from earlier this year:
"Social Security is a compact between generations. Since 1935, America has kept the promise of security for its workers and their families. Now, however, the Social Security system is facing serious financial problems, and action is needed soon to make sure the system will be sound when today's younger workers are ready for retirement.
In 2016 we will begin paying more in benefits than we collect in taxes. Without changes, by 2037 the Social Security Trust Fund will be exhausted and there will be enough money to pay only about 76 cents for each dollar of scheduled benefits...."
Well there you have it. There's simply not enough money in the bank to pay for all the obligations. A solution must be found, and whatever proposal goes on the table is likely to raise serious objections from those whose financial interests will be harmed by the proposed solution.

Clearly, sacrifices need to be made, and a number of sound options have been put on the table, including raising the retirement age, indexing benefits to inflation rather than to salary increases and so forth. However, there has been one proposed solution that is really upsetting to me - the idea that Social Security benefits should be means tested.

My wife and I consistently pay the maximum annual amount in Social Security taxes - currently 6.2% of our salary, each. We make a decent living, and I am not going to apologize for it. It is already pretty clear that we can expect to receive far less in benefits than we pay out in taxes, and you know what, I am OK with that. I make more money, I will pay my fair share. This is part of the social contract - we should take care of those less fortunate in our society. However, I think that it is completely unfair to charge us hundreds of thousands of dollars over our working lives, claiming that this money will be used to guarantee us regular income in retirement, only to later take the money and run.

Alpaca and I work hard. We take take sizable chunks of our paychecks and save them - setting money aside for a rainy day and ultimately to give us the lifestyle that we want in retirement. And, yes, we also want to leave something to our kids when we are gone. The money which we save will become income generating assets. Under the means testing proposal, our hard work and propensity to save could be used to revoke or reduce our right for Social Security income. Income which we rightfully earned and paid for with our hard-earned, maxed-out taxes. We don't have to save. We could take the money and just spend it, but that would be irresponsible, wouldn't it?

Means testing is a pernicious approach that penalizes the saver compared to the spender. If instead of saving our money today we spent it all, leaving nothing for retirement, we would have no "means" that could be used as justification to reduce or eliminate our Social Security income. This policy would perversely encourage people to spend rather than save their extra income. Great for the economy today, horrible for our economic prospects as a nation.

I am willing to work a few more years before I am entitled to receive Social Security payments. I also think it's justifiable to index Social Security to inflation rather than to salary increases. I think that taking away our hard earned Social Security benefits for which we are paying over a lifetime of hard work is nothing short of robbery.

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Monday, July 12, 2010

Whale Watching in Monterey...


Spent the day whale watching in Monterey.

Not cheap, but we certainly got our money's worth. We saw at least 20 Humback and Blue whales.

Ended the day with some cotton candy and salt-water taffy. A good time was had by all.

California rocks...


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Saturday, July 10, 2010

Is It OK to Walk Away from Your Mortgage?

Absolutely.

I came across this article in the NY Times yesterday, which seemed to imply that there was something wrong with walking away from a mortgage. A complete bunch of crock, as far as I am concerned. I know this position will likely draw some fire from those who believe that there is some sort of moral obligation involved here, but that's nonsense. Just like any other business transaction, a mortgage does not carry any moral obligation with it - it is merely an agreement between two parties in which they allocate the risks and the rewards of a  given business transaction.

The two sides enter into this transaction in a very deliberate way, each knowing exactly what risks they are accepting and each hoping to get as much out of the deal as they can. The written contract between them is all that binds them, and the types of re-course they agreed upon in it are all that they have a right to expect.

In a typical non-recourse mortgage agreement, the bank is fully aware that at most they will be able to take possession of the house. No one is forcing them to enter into this relationship, they are doing so of their own volition. If they so chose, they could protect themselves by insisting that the borrower put more of his own money into the transaction to make sure that the asset is worth more than the loan amount. If they underestimated the risk, or chose to enter into a losing transaction, it is their own bad choice.

The borrower can choose to continue to pay his mortgage even though the asset securing the loan is worth less than the loan amount, but that is not a rational economic choice. The government and the banks are running a morally bankrupt campaign to portray strategic mortgage defaulters as immoral. What's immoral is trying to get people to act against their own financial best interest, and grant the banks protection from what is nothing more than a bad business decision.

Defaulting strategically is simply the exercise of a contractual right negotiated by borrowers in non-recourse loans. Indeed that is the whole point of a non-recourse loan. Your exposure is limited to the capital you put into the deal. The lender willingly accepts the remaining risk. This is why the lender gets  his own appraisal of the asset value as part of the deal.

Moreover, in mounting their campaign to discourage strategic defaulters the government and lenders are protecting the more powerful side in the deal. The banks are the sophisticated party in the financial transaction. It is they who practically dictated the deal terms to their borrowers, who are in a vast majority of cases simple homeowners. They deserve no protection from their own economic choices.

There is no shame in walking away from a mortgage. No sense in protecting a sophisticated bank from their poor business decisions, at the expense of your family's financial security. There may be reasons to avoid walking away - the most important being the credit score hit - but there is certainly no moral obligation to keep throwing money down the drain.

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Thursday, July 08, 2010

Where Our Money Goes

Quicken Premier 2010 has many faults, but it does make it exceedingly easy to figure out how you spend your money, and that's what I did this evening. I ran a quick report that shows our expenses by category over the past 12 months.

Here is the report for your perusing pleasure:


One of things that immediately strikes me when I look at this list of categories is the fact that slightly over 50% of our spending goes towards rent and childcare. Together our spending on fuel, groceries and utilities accounts for another 11% of spending. That's over 60% of our spending that we have very little control over. On the positive side, my twins are starting kindergarten in the fall, so childcare expenses are about to take a major reduction.

Our third largest category is our vacation spending. My family still lives in Israel and we go to visit them once a year. Taking a family of 5 across the ocean is not a cheap trick. In addition we also go on a real family vacation, usually somewhere in the States, but last December we went to Costa Rica for 8 days. It was a blast. We spend a lot of money on vacations, but I am very happy to spend that money. We love traveling and those memories will be there for the rest of our lives. This is exactly what we are saving our money for...

Recreation is less fun than it actually sounds - at least for the adults. Most of the amount involves all sorts of after school activities for the kids: swim lessons, soccer league and so forth, but some of it is our weekend activities - museums, mini golf, bowling, and the occasional book or visit to Chucky Cheese.

Under dining I have both Alpaca and my work-day lunches, and any family restaurant outings we have. This category used to bother me, because it seemed like an obvious place to cut expenses, but the actual numbers aren't that high and we can afford this level of spending. I also enjoy leaving the office mid-day with my work buddies to go to a restaurant. Breaks up the routine.

Under the "other" category, we have several categories that are too small to stand on their own, including insurance (which accounts for about 1%), clothing (which accounts for about 1.5%) and cash spending (which accounts for about 1.1%). Cash expenses are the only uncategorized portion of our spending, and it's tough to know where that money goes. It is such a small amount of overall expenditure, that I don't concern myself with those amounts.

What do you think?

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Wednesday, July 07, 2010

Unemployment Benefits & the Economy: A Polemic

Earlier this evening, I read this post on Weakonmics - one of my favorite personal finance blogs. In this post, The Weakonomist makes a case against unemployment benefit extensions, against the stimulus package and against Nobel Prize winning economist Paul Krugman, calling him "as crazy as Glenn Beck". I am not here to defend Krugman's honor - he doesn't need the likes of me to do so - but I disagreed with The Weakonomist's post so badly that I decided to publish a polemic against it, and let the readers make their own call about who's right.

I have many issues with the Weakonists' post, but I will focus my criticism on only a few of them - or else I will be here all night, and tomorrow is a work day, after all.

First point: in the post The Weakonomist criticizes the stimulus bill saying that "...the Obama stimulus was a bomb..." - that's opinion not fact. The stimulus bill was far from perfect, but it averted  the worst effects of the economic catastrophe. Don't take my word for it, check out this report from the Congressional Budget Office (which is a non-partisan body) about the effect of the stimulus bill. To save you some reading, here is a brief excerpt from this long and detailed document:
"[The stimulus] Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.2 percent,
Lowered the unemployment rate by between 0.7 percentage points and 1.5 percentage points,
Increased the number of people employed by between 1.2 million and 2.8 million, and
Increased the number of full-time-equivalent (FTE) jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)"
Still think that the stimulus bombed?

But forget government studies. Let's talk personal experience. I work in the wireless industry, where I have seen first hand the impact of the $7.2B allocated as part of the stimulus to increase broadband penetration in unserved and under-served areas of the country. Without these funds, many companies in my industry would have gone under.

My own company hired another person to coordinate our response to this stimulus bill, and we didn't receive a dime of government money. We also hired consultants, lawyers and took trips to visit customers applying for these funds. Just like us, hundreds of other companies around the country increased their spending in response to the stimulus. That created jobs, economic activity and brought us all back from the brink of even worse economic disaster.

The stimulus was an unqualified success! Yes, there were some inefficiencies, but ANY large project, especially one attacked with such urgency will have some of those. That's the price of action.

Second Point - The Weakonomist says "First of all, extending benefits won’t do much for demand.  People still have to pay off their demand from a few years ago, via credit cards, HELOCs, and mortgages."

This is plain wrong.

I know very talented, hard working and qualified people who have been out of work for over a year in spite of aggressive job hunts. These people have exhausted their savings, and necessarily have to reduce spending. Any unemployment benefits that they receive will be used to pay for food, rent, fuel - you know, keeping their families clothed and fed. This money will not go into savings accounts. The unemployed will spend their unemployment benefits not because they want to, but because they have no other choice. Therefore, by necessity, unemployment payments will stimulate demand.

Third Point - The Weakonomist is concerned about the deficit. Well, so am I. But stopping unemployment benefits is an asinine way to try to fix it. The US Government's debt is so large (over $13 trillion dollars), that the cost of unemployment benefit extension, a mere $33B, would add a negligible - truly negligible - fraction to it.

The Weakonomist is giving props to the imbecile Republicans and Democrats in Congress who are the very ones responsible for the deficit fiasco. These are the same idiots that authorized two wars without paying for them - the cost so far, over a TRILLION dollars. These are also the same imbeciles that have only a few years ago cut taxes repeatedly without cutting spending, leading to - hold your breath - DEFICITS.

NOW, they are thinking about deficits, when it's time to extend the benefits for unemployed Americans who are unable to find a job?! How morally bankrupt can they get?

This is not only bad for the economy, it also shows a severe lack of compassion.

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Monday, July 05, 2010

Of Fireworks, Recessions and Teachers

Like many Americans, last night we went to see the fireworks show, as we do every year. However, this year we went to a different event than the one we usually go to, since the town where we normally go to see our 4th of July fireworks eliminated the program due to budget cutbacks. At a time when state and local budgets are strained and many Americans are struggling to find a job and pay the bills, is there still justification for literally blowing up tens of thousands of dollars in the form of fireworks, while eliminating jobs and cutting programs?

Yes, there is.

Even in the best of times, there is never enough money for all the programs a city or a state would like to run. There is always a case to be made for one more teacher in the classroom, one more road paved or one more dollar allocated to a soup kitchen. If you go by that logic alone, not a cent will ever be allocated to cultural events. It's rough to vote to eliminate a job or a program to balance the budget, while also signing a purchase order for fireworks, which after all is said and done will be nothing more than memories 30 minutes after the show starts, but that's not the whole story.

While the benefits of fireworks (or local theater, parade or park) are more difficult to quantify than the value of an extra fire engine, these benefits are just as real and important. Cultural programs and events strengthen the community, help folks break out of their daily routine and, well, they are fun. Fun is important too.

We can't afford to be completely utilitarian all the time. I understand that local budgets need to be trimmed. If there is no money, there's no money, but even fireworks should have their place of honor, especially on the 4th of July.

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Saturday, July 03, 2010

Companies Making a Comeback

I want to talk today about three companies who I had very negative opinions about until recently, but who are doing dramatically better these days, as far as I am concerned:

Domino's Pizza - talk about a crappy pizza, right? That's what I thought until a few months ago. When they released that shocking commercial in which they actually admit to having a crappy pizza and pledge to change their evil ways, I figured we'd give it a shot. Whatdoyaknow? It's true. The pizza is definitely better and the price is reasonable. Nice work guys!

BusinessWeek / Bloomberg - I started reading BusinessWeek about 10 years ago and over the years the quality of that magazine fell of a cliff. It got to the point where the only time I would renew my subscription was using airline miles, to avoid having them expire... well, no more. A few months ago Bloomberg bought the magazine from McGraw-Hill, and totally revamped it. Until that time, I used to leaf through the magazine in about 15 minutes on Saturday morning, spending most of that time commenting on the shallow and crappy quality of the stories (and the particularly large font used to fill up the pages). Now, it takes me hours to go through the magazine and there are actually a bunch of well written, interesting articles for me to read. Kudos!

Ford - These guys have made quite a turn around to their car line-up, haven't they? Now that I am in the market for a new car, I took a serious look at their Fusion vehicle - which looks pretty impressive. I think I will buy a Hyundai Sonata in the end, but still, a few years ago I never would have considered Ford.

Then you have the companies going the other way. Some doing well and clearly losing their way e.g. Apple (see my post from a few days ago) and Toyota, and others that have been giving consumers the middle finger salute for years now, e.g. every major airline in the country, with special recognition to United. The wrath of the consumer be upon you!

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Wednesday, June 30, 2010

Crowdsourcing - Getting the Masses to Work for Free and Like It

I just came across Quirky - a crowdsourcing website that lets people suggest product ideas, and lets others help design, rate, improve and comment on those ideas. Purportedly, if the products you help influence are chosen for production, you get a cut of the proceeds. A very cool idea, and nicely executed too. Check it out.

Incidentally, the way I stumbled across this website was that one of my favorite websites, Engadget, where I go to get my daily gadget news fix, featured a really cool product designed on Quirky - a flexible power strip. Now that's a brilliant idea - I am amazed that no one has thought about it until now.

I signed up for Quirky, and we'll see if I can influence any cool upcoming products. I doubt that individuals can make serious money on the website, but this is clearly a bargain for Quirky itself since it's getting great design ideas for very little upfront investment. For the likes of me it's a form of entertainment, I guess.

I am really curious to see where the crowdsourcing trend will lead.

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Tuesday, June 29, 2010

Saving More as a Nation

The U.S. personal savings rate increased to 4% last month. It is shameful that the number of 4% can be described as an increase in this country. How is it possible that we are saving so little as a nation? With our social safety net in such shambles, with unemployment near 10% and with more or less guaranteed cuts to social security in the coming years, does anyone truly believe that saving 4% of their income will be sufficient to protect them from financial disaster or will be enough to meet their needs in retirement?

Alpaca and I max out our respective 401K's, which is probably still not enough, and we are trying to save as much as we can in after-tax funds. Yes - there is such a thing as saving too much, with the risk being putting your life on hold to pay for some undetermined future event, but everyone needs to have a significant amount of money set aside in case of unforeseen disaster (not to mention as insurance against spending your senior years as a Wal-Mart greeter).

I am not saying we should save 30% or 40% of our national incomes like they do in China or India - that's not even a realistic (or desirable) goal - but isn't something like 10% a target we should aim for?

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Sunday, June 27, 2010

Thoughts on iPhone 4 & Apple

I am one of the 600,000 people who pre-ordered the iPhone 4. I got it in the mail on Wednesday, a day before the retail insanity started. My verdict? It's a nice phone. The processor is blazingly fast, and the battery life is dramatically better than the one I experienced on my older iPhone 3G. Having said that, I want to share a couple of thoughts on the whole iPhone phenomenon.

Retail Insanity - what possesses people to camp out for days just to get a phone? Do these people have no jobs or families? Stranger still, why couldn't they just pre-order the damn thing online, like I did? Or else, why couldn't they wait a few weeks and just walk into any store and buy one off the shelf? I am amazed by people's impatience.

The Walled Garden - I think that this will be my last iPhone. I was seriously contemplating getting an Android based machine, but was intimidated by the hassle of prying all my music from the clutches of Apple's obnoxious music management system. There are phones out there that are just as good as the iPhone, but that don't restrict users from installing whatever the hell they please on the machines they buy with their hard-earned cash.

I hate Apple's censorship of applications. I am an adult and don't need a nanny to screen my content.

Worse still, I hate the fact that Apple is acting like a monopolist - restricting choice of carriers to AT&T's crappy network, preventing Flash from running on its platform and actively disrupting other devices from syncing with iTunes.

As monopolists go, Apple is far, far worse than Microsoft ever was.

The bottom line is that iPhone 4 is a great device and I highly recommend it, but Apple's smug and arrogant behavior makes me hope that the others guys win. Go Google Android!


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Saturday, June 26, 2010

A Brand New Look

I have been on a little bit of a posting drought, haven't I? I have been keeping in touch on Twitter every couple of days, so at least it hasn't been complete radio silence.

Well - as of today, at least Money and Such has a brand new look. I like it. Do you?

Next up, some actual posts.

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Sunday, May 16, 2010

The Most Important Class I Ever Took

Last week my CEO asked me to take his place and present at an investor conference. This was an excellent opportunity for me to stand in front of a large and influential audience and pitch my company to them. In the audience were senior investment bankers, venture capitalists, CEOs and, of course, my own company's board of directors members. It was one of those high stakes moments where you get a great deal of exposure and you have the chance to make an impression, good or bad, on many people who can influence the direction of your career.

I nailed it.

And... this take me back to the most important class I ever took: public speaking.

I was born and raised in Israel, where I also served in the military for 3 years. In my third year I served as an Air Force instructor, and to earn that privilege I had to pass a teaching class. This short, three week course, changed my life. For three weeks I was taught how to stand in front of an audience and communicate a message. I spoke, and my instructors and fellow students pointedly critiqued my performance. The first few times were unnerving. The stress of standing in front of an audience, some of which were instructed to intentionally throw off my pace, was something that I never had to face before. However, after three weeks of trial by fire, I mastered the techniques and my confidence and performance were much improved.

Almost twenty years later, I still use these same techniques. Speak slowly. Make eye contact. Move around. Modulate your voice. Use your hands for emphasis. Tell a story. Connect with the audience.

Public speaking is a skill in which very few of us receive formal training, but which is truly indispensable for one's career. While I didn't know it at the time, that three week teaching class continues to do wonders for my career decades later.

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Saturday, May 01, 2010

Just "Upgraded" to Quicken "Premier" 2010

I just upgraded my Quicken 2007 to the 2010 version of the software. I didn't have much choice - Intuit makes you buy a new copy of the software every three years if you want to use the automatic online update for your accounts. Given that this is the most important reason to use Quicken in the first place, there's not much choice but to acquiesce. So, I took the $70 hit and bought the software on Amazon, and today when my old version of the software refused to update my accounts, I made the switch.

The upgrade went smoothly and quickly. No problems of any sort. Of course, Intuit made me register the new software as a condition to using online account updates. I hope they enjoy contacting me in Azerbaijan... Of course, Intuit just feels free to use my computer desktop as its private garbage can and dumped three additional useless icons / advertisements on it, without asking me, including an ad for a credit card and a "free credit report". Assho***.

The software itself includes some cosmetic changes compared to my 2007 version, but they are really minor, and definitely not worth paying the upgrade price. There are, however, a number of annoying bugs that I suffered from in the 2007 version and that seem to have been fixed. For one, Quicken now downloads information directly from our Citibank accounts. Previously I had to do that manually, after logging into the online account myself. Second, the 2007 version suffered from a really obnoxious bug in which whatever changes I made to a graph were not saved and had to be made again and again every time I opened a report. The problem seems to have gone away [late breaking news: this bug still seems to be there, in a different and more annoying form. Idiots!]

Wouldn't it be nice if Intuit showed some innovation with this product? How about letting the user REALLY customize views (colors, graph sizes, positions etc.); how about if they let you pick what types of charts you'd like to see? Is there any particular reason why spending charts always appear as a pie chart? Why can't I choose a different look? Why can't I drag charts to reposition them and resize them on the screen - just like you can do with virtually any online customized page? How about time ranges? Why can't I choose my own preferred time period to chart? For example, when looking at my expenses, I would prefer to look at a 13 month time period which would allow me to compare the current month to the same month a year ago.

This entire platform is old and tired. Worse, Intuit doesn't even pretend to give a damn about its customers any more. It sells us the same piece of junk year after year, relying on the power of its monopoly in the space to get us all to buy its sub-par product. We need an Apple or a Google to get into the game and make things actually work! We need some real competition in this space.

All in all, Quicken is a pretty crappy product - and I should know, I have been using it since 2002. Unfortunately, it's also the only one out there and having all my financial information in one central file is valuable to me. It would be nice if there were some better products out there, but unfortunately this is all I've got.

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Sunday, April 04, 2010

Our Taxes with a Twist

Our taxes are done. Not yet filed, but at least they're done. This year I ran a little experiment. The good people at Intuit have been kind enough to give me a copy of TurboTax to play around with. However, knowing that I am not very good at doing this kind of thing, I figured I'd use TurboTax first, but then still visit our accountant to do our taxes. I could then compare the results of these two methods, and maybe even do our taxes on my own next year. What do you think happened?

Well, according to TurboTax we deserve a Federal refund of $2,878 and a California state refund of $5,392. Sweet. According to my accountant, we deserve a Federal refund of $3,042 and a state refund of only $2,313... Now that's one hell of a difference, especially on the state side...

So what's going on? I don't know and I think it's pretty complex to figure out exactly what the differences are. I plan to sit down with both of the returns and try to compare them. However, if I were to put my money on it (which I sort of have to, I guess), I would have to go with my accountant.

Our tax return is not hugely complex, but it's not a simple one either. In addition to W-2s, we had a veritable zoo of 1099s, foreign income and foreign trust distribution... I have a feeling that TurboTax is not meant for folks like us.

I will say this: if all you need to enter are some W-2s and 1099s, TurboTax makes the process simple and easy, in most cases simply downloading the information directly from our employers and financial institutions. I have never tried to do our own taxes before and (with the exception of the substantial discrepancy I pointed out above) the process was not intimidating or overly complex at all. Maybe I'll try TurboTax again next year if I can figure out what went wrong here.

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Sunday, March 28, 2010

Where I've Been & What I've Been Up To

It's been a while...

For the last month or so I found that I had no energy to write or read personal finance blogs. Sometimes I go through these blog burn-out periods, but this is not one of them. This time my low energy level was due to recent developments in my company.

I work for a technology start-up that is financed by venture capital firms. My company doesn't yet have meaningful sales, but we have just completed development of our magnificent product and are about to go to market. Almost at the same time, our funding just ran out. This was not unexpected. We knew in advance exactly how much money we had in the bank and how quickly we were draining it. So what happened? Our CEO refused to let us raise additional funding, saying that our executive team should focus on operations instead, and that our existing investors will continue to finance us. Well, someone should have told this to our investors.

For the past month I and the rest of the executive team have been waging an intensive battle for the survival of our company. Last week we had a near-death experience, where we came really close to having to shut down the company by April 15. Luckily, this was narrowly averted with a bridge loan from our investors, which should keep us alive for the next five months or so. The cost of this new cash infusion was a major lay-off we executed on Friday. We reduced our staff by 20% and cut overall expenses by more than 30%. We will now go to look for that additional financing, which I am hopeful we can secure.

So, that's where I have been.

It has been an intensely emotional and difficult time for me. I was stressed, disappointed and physically and emotionally tired. I have invested my heart into this company and the prospect of losing it to shortsightedness caused me a lot of grief.

If you have ever been on the receiving end of a pink slip and understand that pain, let me tell you that the person handing you that pink slip has been feeling that same pain weeks earlier. For weeks our executive team (minus the CEO) has been shut in a conference room, endlessly agonizing and debating which individuals we could afford to lose as a company, knowing full well the pain and suffering that we were about to cause these people. We had no choice.

Our CEO was on a month long vacation for much of that time. Yes, he was.

My writing will continue to be sporadic for a while, while I continue to battle for the life of our company, with my job and potentially my career on the line.

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Friday, February 12, 2010

Many companies that have stopped matching employees' 401(k) contributions when the economy tanked, are now thinking about renewing these matching contributions. My wife's company is one such employer, and there is talk that the company will begin matching contributions again in the coming months. In such a situation, should you stop your contributions until the company renews its matching or should you stick to your guns?

The benefit of delaying contributions is obvious: wait a few months and the same money that you would contribute now with no employer matching will yield a guaranteed return in the form of employer moola... However, there are a few arguments I can think of against this strategy. For one, unless you know for sure that your company will be renewing the match, you are delaying contributions that could be invested in the market and yielding a return (assuming the market goes up, that is). For another, if you delay your contributions, will you have the discipline to max out your retirement savings for the year when the matching actually begins, or will you leave money on the table? There is also the question of how matching is to be calculated. Many companies limit matching to a percentage of employee pay in a given pay period, meaning that stacking all your contributions may not give you the desired bump in employer matching funds.

My wife and I discussed the option of delaying her contributions, but have not yet made a decision. Any opinions or suggestions?

My company has never matched employee contributions, nor is it likely to do so in the foreseeable future. Let's just say that for now I am happy to have a steady paycheck... :-)

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Tuesday, February 09, 2010

How I Doubled the Value of My Junk Car

It's been a few months since the last time my junker car fell apart on me, so I guess it was time for it to happen again. Last Friday when I got to the office in the morning and got out of my car I was greeted by a billowing cloud of white smoke. The car was smoking like the Marlboro Man.

That's got to be the end of that ol' junker, right? Not so quickly. After the smoke cleared and the car cooled down for a while, I drove it about half a mile to the local car shop, where the problem was diagnosed. Apparently break fluid was leaking from the rear axle, and started to burn when friction from breaking created heat.

The total cost of the adventure? About $400 in repair costs. The way I look at it, the repair cost me about as much as the car is worth (maybe I'm exaggerating a tiny bit. Maybe a lot). So what do you think? Did I double the value of my car? :-)

13 years and still going (not so) strong. But with no car payments and pretty impressive gas mileage (31 MPG), I am going to keep it for a little while longer.

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Friday, January 29, 2010

What Career Security Means to Me

Earlier this week I started a long term post series to cover the topic of Career Security. Today I would like to explore my definition of Career Security in more detail. The definition I previously used (which I expect to refine over time) is:
You have career security if you feel that should you lose your job you will be able to secure a similar or better one within a reasonable amount of time, without loss of income and without unreasonable personal discomfort.
Let me me discuss each of these four elements in more detail:

Similar or Better Job - obviously, this is a matter of personal judgement and opinion. I am not satisfied with a job that simply pays the bills. I want to do something that allows me to use what I consider my skills and talents. For example, while some would consider there to be a minor difference between business development and sales, I would not be happy if I could only land a sales position in the event I lost my business development job. Many people love salesbut I am not one of them, and therefore being able to get such a position would not address my needs for career security. For others, such similarity between the two roles would satisfy the conditions for career security.

Reasonable Amount of Time - time is a critical factor in career security. Most of us would be unwilling and, more importantly, would be economically unable, to wait five years to land our dream job. The amount of time one must spend job hunting varies greatly between industries, between position types, and of course tends to increase with the seniority of the position which you are trying to land. Obviously, the economic environment at the time of your job search is also a critical factor in the amount of time you must spend to land a job. You only have career security if you can land another job that meets your criteria within the time you can afford to spend searching.

Without Loss of Income - at the end of the day, we all work to get paid. Being able to trade your job for one that pays you less would not be adequate from a career security perspective. Having career security means that if you happen to lose your job you can reasonably expect to move "sideways" or "up" in the next position you line up. Being forced to take a demotion due to job loss means that you do not have career security.

Without Unreasonable Personal Discomfort - once again, a subjective judgment call. For me, having career security means that if I lost my job, I could find another one in Northern California. Yes, I am sure I could find a job somewhere in the world, but I don't want to relocate my family. For others moving to a different state or continent is no big deal, but being required to constantly travel on business in not acceptable. Your own criteria for unreasonable personal discomfort may vary. Having career security means that you can easily find another position that suits your personal requirements.

In my next post on the topic of career security, I will examine the various reasons that job security in the US has virtually disappeared. These can provide important clues about one can achieve career security. Stay tuned.

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Wednesday, January 27, 2010

Don't Listen to Me. I Don't Listen to Me.

Earlier this week I spoke with a friend and happened to mention that I think we are due for a substantial correction in the stock market. I am one of those who was expecting a fairly strong economic recovery to take hold, but over the last month or two I have been less optimistic. For one thing, I think that the stock market rally is overdone. For another, I feel that things are getting somewhat shakier, but I can't quite place my finger on the reason for this. It feels like there is another shoe out there somewhere and it may be getting ready to drop. Sovereign debt default somewhere in the world (Greece? Iceland?); an overheated Chinese economy cooling down? Continued weakness in the US housing sector? Or is it simply the fact that the stock market bounced up too sharply and too high over the past 10 months? I have no idea. I just know that I don't feel all that well about the prospects for the economy in the short term.

I previously shared these concerns with my friend, but to my surprise he seems to have acted on my doubts. He told me that after he recently lost his job, he rolled his 401K into an IRA but is holding the money in a money market fund, waiting for whatever pull-back in the stock market to occur before putting it back to work.

I was aghast. "Are you insane?" I asked him. Why would he listen to me? I don't listen to me. Yes, I talk about my feelings regarding the economy. I speculate about investment strategies and about the state of the stock market, but I never follow my own advice. My money is invested in index funds, precisely because I don't trust my own judgment and hunches enough to put my money where my mouth is. In fact, if he were to listen to me about anything it should be about the following statement: you can't beat the market, and market timing is a particularly bad form of guessing. The investment strategy that I follow is a simple one: small, regular purchases into index funds that cover my desired asset allocation.

After our talk, my friend decided to divide the money in his newly rolled out IRA into 12 equal parts, and to move one part per month into his chosen asset allocation. Now that's a smarter decision. Seriously people, I am not qualified to give investment advice. Almost no one is.

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Monday, January 25, 2010

Job Security is Gone. Now What?

Most of us will agree that these days job security is no more. Between lay-offs and outsourcing, foreign competition and the decline of the labor unions, the typical American worker can no longer assume that his or her job will be there next year or even tomorrow. Sure, there are still small pockets of job security that exist in the economy. If you are a tenured professor, your job is safe. If you're a member of the military, you are can probably count on that paycheck to keep rolling in every month. However, for the vast majority of us, job security is no more. This doesn't mean that we are all doomed, but it does mean that we need to change our tactics to ensure that our livelihood is protected even if our jobs are not. We should strive to replace job security with career security.

I have previously written about the topic of career security, and in recent months I have been doing a lot of thinking about the subject (most recently prompted by this post from Frugal Zeitgeist). I have decided to take on a new blog project, and begin a periodic series of posts exploring the various aspects of this sizable, and important topic. I would like to start this series by explaining what I mean by the term "career security" and discuss how this concept is different from job security.

Job security is a fairly narrow concept. Having job security means that you are protected from being laid-off or fired. If broadened a bit, the concept also includes safety from demotion, re-assignment, a changing of work rules, reduction in pay, benefits and working conditions.

Anyone who has been a part of the work force in recent years knows that all of these different elements of job security have come under increasing pressure. The trend has escalated since the economic meltdown began in 2008. Layoffs are the most visible and aggressive form of loss of job security, but employees everywhere have also seen their benefits stagnate or outright reduced. Companies have eliminated 401K contribution matching (e.g. my wife's new company); have reduced medical benefits (e.g. my own company); have cut salaries across the board (e.g. my previous company) and have eliminated raises and bonuses (e.g again my own company). While some may complain that companies are taking advantage of employees, I am not going to make that statement here. I think that in many cases - although not all of them - companies are being forced into taking the steps that they are taking. In a future post I will go into detail about some of the market forces that are forcing companies into attacking job security.

Career security is a much broader term. In using the term Career Security, I am asking a simple question: given that your current job is not secure, do you feel comfortable that if you lose your job you will be able to secure a similar or better position within a reasonable amount of time and to do so without loss of income or unreasonable personal discomfort. If you answered "yes" to the above, then you have career security. If you answered "no" to some or to all of these points, then this series of posts is for you.

In a post which I will publish later this week, I will explore in more detail the four elements that I underlined above. Stay tuned.

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Friday, January 15, 2010

Smart Shopping for Auto Insurance

Unlike what many people seem to think, the purpose of auto insurance is not to reimburse your expenses next time you ding your car pulling out of a parking spot or get into a minor fender bender. The purpose of all insurance - car insurance included - is to shield you from the worst of catastrophic financial damages in the event that something goes horribly wrong.

Here is a tragic but appropriate example to illustrate this point. About three years ago one of my colleagues at work had a terrible accident while trying to drive his car across an intersection while the light changed from yellow to red. He escaped with some minor injuries but the elderly driver of the other car was not as lucky. He was severely injured, hospitalized for a long time and eventually died of his injuries. A horrible story no doubt. My colleague was understandably distraught over the incident. As if the emotional and physical toll of the accident were not enough, my colleague also had to deal with the legal and financial consequences of his mistake.

In most cases the real financial costs associated with such major accidents are not the property damage - unless you completely destroy a Lamborghini the costs of buying new cars are relatively manageable. The real costs are the medical and financial losses potentially incurred by anyone injured in the accident. These can mount into the hundreds of thousands of dollars, and sometimes even more, more than enough to bankrupt the average family.

All this leads me to the main point of this post. If you accept the proposition that the purpose of insurance is to shield you from large, catastrophic costs, the correct strategy in buying car insurance is to go with those policies that offer you high coverage limits. Of course such policies can be expensive, and a way to mitigate these costs is to accept higher deductibles which will reduce your coverage in the event of minor accidents which you can afford to handle without reimbursement from your insurance company.

If, like me, you dislike shopping for car insurance and have been using the same car insurance company for a long time (in my case it's AAA), you may want to do some shopping before you next renew your policy. If you are looking for a place to start, you can take a look at this list of car insurance companies. Safe driving to you!

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