Today I would like to follow up on two stories I wrote recently.
The first, is a story I wrote last week, titled How Much is Your House Worth? The article discusses a website called Zillow, which I just discovered last week but that apparently has been around for a while. The site purports to provide free estimates of real-estate values, however one of the things that I was concerned about was the accuracy of the data on the site. Well, it turns out that the Wall Street Journal went and took a sample of data from Zillow and tested it against some real world sales. The verdict? In most cases Zillow is pretty darn accurate, however there is the occasional spectacular flame-out. It's an interesting article and worth a quick read.
The second story on which I want to follow-up is one that I wrote last month titled A Payday Loan Dilemma. The company that originally contacted me and asked to advertise on my blog contacted me again last week. This time they actually left a comment in response to my original article. Here is the full text of the comment:
"It is true that cash advances and payday loans are high risk loans – for both the borrower and the lender. However, sometimes, these types of payday loans are unavoidable. Some people are unable to set up there [Sic] own emergency fund, and while responsible and making decent money, find themselves in a real bind from time to time. If these types of loans are understood and used for their intended purpose, they can be helpful and can give a person a “shot in the arm” financially to help keep up. Of course there are risks involved, which is why any borrower should always read through the site and loan agreement before taking the loan. Always ask questions. Additionally, if they do get the loan, it is best to pay it off in full or in as few payments as possible because of the interest rates."
As I mentioned in my original post, I agree that Payday loan companies do fill some sort of necessary economic niche, but 968% per year? Come on! I am sure that they could make do with a modest interest rate in the low 200s. I don't expect capitalists to be altruists. A company is in business to make money and does not really need to justify the price it is charging for its services, so long as it is facing real competition and its customers are willing to pay the price. However, I dislike companies that try to dress up their own economic interest in the guise of a public service. I also dislike companies that pretend to tell consumers to not buy their goods and services. Those always remind me of the tobacco industry. Seriously, if you don't want people to buy your product... don't sell it. Don't like this solution? I didn't think so.
Specifically, while the comment above suggests that users of payday loans should use them for their "intended purpose" and pay them off as quickly as possible. However, the company in question, like all others in this industry, profits when people do not take this sort of advice. So why the pretense?
Sunday, August 12, 2007
Friday, August 10, 2007
Asking for (Another) Raise
Last week I wrote a post about the raise that I recently received and the interesting circumstances surrounding that raise. If you read that post, you know that I did not receive the full raise I was asking for. This created an interesting challenge for me: how do I communicate the fact that I am not entirely satisfied with my raise, without coming off as greedy, ungrateful or selfish. Here is the strategy that I came up with, which I think is applicable in many similar cases:
1. Thank the Boss - as someone who runs a team, I know that if I make an effort for one of my team members, it is personally important to me that the employee acknowledge my efforts on his behalf. Even though I did not get everything I was asking for, it is clear to me that my boss went to bat for me, pushed for my interests and essentially put her credibility behind my request. Therefore, when my boss officially told me of the amount of the raise and gave me the paperwork (about a week after I received the actual raise in my paycheck), I thanked her warmly and shook her hand. I candidly told her that I appreciated her hard work on my behalf and thanked her for what she was able to obtain for me. Bosses are humans too and like every other person on the planet, they appreciate it when their work is recognized.
2. Do Not Immediately Ask for Another Raise - I strongly feel that it is not appropriate to express outright dissatisfaction with a raise you just received when speaking with your boss. That would send the wrong message. Even worse, it would be counter-productive since your boss would get the feeling that you do not appreciate his or her efforts on your behalf. Why try do to more for you if all they get is a sour face?
3. Setting Expectations is OK - although it is not a good idea to ask for another increase as you are receiving news of your raise, it is very much OK to set the correct expectations, as long as you do so professionally, courteously and in a positive manner. When my boss gave me the raise document, I thanked her for her efforts, and commented that I am very happy with my raise and did not expect that we would be able to get to my market compensation level all at once. By doing that, I believe that I both created good will with my boss and set the expectation that I do not consider my new compensation level to be satisfactory in the long run. In asking for an increase, you want your boss as an ally, not an adversary.
4. Support Your Claims - providing detailed documentation as to your market value makes salary negotiations a whole lot easier. If you provided such documentation prior to being told about your raise, you can always use those materials later down the road to support your new bid for a raise. Every professional should develop an understanding of his true market value, whether or not he is re-negotiating his compensation package. To find out more information about how to achieve this, take a look at my previous post on the subject.
Since I provided a written raise request to my boss, and supported it with extensive market salary data that I carefully obtained over several months, nobody will be surprised when I bring up the issue of compensation again.
5. Make a Plan - it is a generally correct statement that the act of making a plan substantially increases your chances for achieving your goal. Salary negotiations are no exception. I strongly recommend making a plan for where you think your compensation should be, what process you will follow to achieve this goal and when you would like to achieve it. My goal is to obtain another 15% raise within the next 12 months, and my plan? You've just read it.
Stay tuned. The next battle in the compensation war is scheduled for December, and reports from the battlefield will be broadcast on this station, with the briefest of delays.
In my next post, I will look at compensation negotiations from the other side. One of my employees has been re-negotiating his compensation package with me. I'll tell you about some of the errors I think he is making and how to avoid them when negotiating your own compensation.
1. Thank the Boss - as someone who runs a team, I know that if I make an effort for one of my team members, it is personally important to me that the employee acknowledge my efforts on his behalf. Even though I did not get everything I was asking for, it is clear to me that my boss went to bat for me, pushed for my interests and essentially put her credibility behind my request. Therefore, when my boss officially told me of the amount of the raise and gave me the paperwork (about a week after I received the actual raise in my paycheck), I thanked her warmly and shook her hand. I candidly told her that I appreciated her hard work on my behalf and thanked her for what she was able to obtain for me. Bosses are humans too and like every other person on the planet, they appreciate it when their work is recognized.
2. Do Not Immediately Ask for Another Raise - I strongly feel that it is not appropriate to express outright dissatisfaction with a raise you just received when speaking with your boss. That would send the wrong message. Even worse, it would be counter-productive since your boss would get the feeling that you do not appreciate his or her efforts on your behalf. Why try do to more for you if all they get is a sour face?
3. Setting Expectations is OK - although it is not a good idea to ask for another increase as you are receiving news of your raise, it is very much OK to set the correct expectations, as long as you do so professionally, courteously and in a positive manner. When my boss gave me the raise document, I thanked her for her efforts, and commented that I am very happy with my raise and did not expect that we would be able to get to my market compensation level all at once. By doing that, I believe that I both created good will with my boss and set the expectation that I do not consider my new compensation level to be satisfactory in the long run. In asking for an increase, you want your boss as an ally, not an adversary.
4. Support Your Claims - providing detailed documentation as to your market value makes salary negotiations a whole lot easier. If you provided such documentation prior to being told about your raise, you can always use those materials later down the road to support your new bid for a raise. Every professional should develop an understanding of his true market value, whether or not he is re-negotiating his compensation package. To find out more information about how to achieve this, take a look at my previous post on the subject.
Since I provided a written raise request to my boss, and supported it with extensive market salary data that I carefully obtained over several months, nobody will be surprised when I bring up the issue of compensation again.
5. Make a Plan - it is a generally correct statement that the act of making a plan substantially increases your chances for achieving your goal. Salary negotiations are no exception. I strongly recommend making a plan for where you think your compensation should be, what process you will follow to achieve this goal and when you would like to achieve it. My goal is to obtain another 15% raise within the next 12 months, and my plan? You've just read it.
Stay tuned. The next battle in the compensation war is scheduled for December, and reports from the battlefield will be broadcast on this station, with the briefest of delays.
In my next post, I will look at compensation negotiations from the other side. One of my employees has been re-negotiating his compensation package with me. I'll tell you about some of the errors I think he is making and how to avoid them when negotiating your own compensation.
Thursday, August 09, 2007
Your Career Crystal Ball
Several months ago I wrote a post about how to find out your market value prior to salary negotiations. One of the resources I recommended in that article was a website called Payscale.com. In this post I would like to re-visit Payscale to discuss a really cool feature that they recently introduced (or that I recently noticed). The feature is called: GigZig.
GigZig is essentially a crystal ball that allows you to gaze into your career future. To use the tool you are asked for your current job title, and in return the system gives you a list of titles that you may find yourself holding five years down the road. The titles are ranked from most likely to least likely. The website also tells you the average salary that comes with each of your possible titles. So here are a couple of interesting examples of likely career tracks according GigZig:
A Hotel Waiter (avg. salary $27,400) is likely to be an Administrative Assistant (avg. salary $30,000);
An Auto Service Technician (avg. salary $39,540) is likely to be an Auto Service Manager (avg. salary $53,000);
A Marketing Manager (avg. salary $60,000) is likely to be a Marketing Director (avg. salary $87,000);
My personal favorite: an Actor (avg. salary of $41,000) is likely to be a... Receptionist (avg. salary of $24,000) or an Art Teacher (avg. salary $40,000);
GigZig is a fun tool to play around with and it may be an interesting tool to use if you are just starting your career, considering a move to a new industry, or are just trying to figure out what your salary prospects look like. If you try GigZig and get an interesting result, leave a comment and let me know.
GigZig is essentially a crystal ball that allows you to gaze into your career future. To use the tool you are asked for your current job title, and in return the system gives you a list of titles that you may find yourself holding five years down the road. The titles are ranked from most likely to least likely. The website also tells you the average salary that comes with each of your possible titles. So here are a couple of interesting examples of likely career tracks according GigZig:
A Hotel Waiter (avg. salary $27,400) is likely to be an Administrative Assistant (avg. salary $30,000);
An Auto Service Technician (avg. salary $39,540) is likely to be an Auto Service Manager (avg. salary $53,000);
A Marketing Manager (avg. salary $60,000) is likely to be a Marketing Director (avg. salary $87,000);
My personal favorite: an Actor (avg. salary of $41,000) is likely to be a... Receptionist (avg. salary of $24,000) or an Art Teacher (avg. salary $40,000);
GigZig is a fun tool to play around with and it may be an interesting tool to use if you are just starting your career, considering a move to a new industry, or are just trying to figure out what your salary prospects look like. If you try GigZig and get an interesting result, leave a comment and let me know.
Wednesday, August 08, 2007
The Real Price of Cheap Books
I am a big fan of Amazon.com. It is a great resource for finding recommendations, obscure books, and of course, for getting substantial discounts on the books you buy. Yes, yes, many PF bloggers out there recommend borrowing books from the library rather than buying them, as a method of saving cash, but what can I say? I just love books and don't mind spending the cash to buy them. I keep my books and don't sell them. It gives me pleasure to look at my book shelves and see all the books that I have read over the years. You could call it a hobby, I guess.
Anyway, on with the story. I live on the Peninsula in the San Francisco Bay Area. In my town there are several independently owned bookstores, all within walking distance from each other. On weekends I often find myself spending a couple of hours in one of these stores, leafing through magazines, browsing the book shelves and generally enjoying the atmosphere. Periodically, I buy something, but more often than not, if I find a book I like I write down its name and later purchase it on Amazon.
A couple of years ago, completely out of the blue, the largest and most established of these independent book stores suddenly announced that it was closing down after 50 years in business. This took the whole community by surprise, since the store is known throughout the area. The reason that was given for the shut down was that owners could simply not make ends meet. Pressed by the large book sellers - such as Barnes and Noble and Borders - on the one hand; discounters such as Wal-Mart, Target and Costco on the other; and of course facing a massive number of customers defecting to Internet book stores such as Amazon, it turns out that there was just not enough business to make things work for an independent book seller.
Getting a book online or at Costco may be substantially cheaper than buying it at your neighborhood independent book store, but I realized that by enjoying my visits to my local store while giving my business to lower cost competitors, I was essentially free-riding. I was enjoying the experience of the independent book store, but not paying for it. When you buy a book at a small neighborhood store there are essentially two elements to the price you are paying. One of them is the cost of the book - that is the price you would pay at Wal-Mart or at Amazon. The other component is the price you pay for the "book store experience". That experience comes at a cost to your neighborhood store, and since the discounters don't offer you that pleasure they can afford to reduce the price of the book.
Let's take this example one step further. Do you know how everybody is complaining that there is no longer such a thing as customer service in America? For example, when you go to Best Buy to buy a computer or a television and ask for advice, typically you get a know-nothing sales person that can barely read the product description from the sticker next to the product. If you need more information, tough luck for you. Well, it turns out that we have only ourselves to blame for this lack of service. Since we always choose the lowest cost product, and choose to not give our business to those retailers that invest in service, those high-service retailers are going the way of the Dodo. Hooray for us, we've saved a couple of more Dollars. Welcome to the desert of no-service. Think about that next time you are on the phone holding for some call center in India for 30 minutes while hearing a recording saying that "your service is very important to us".
Thankfully, in this specific case, there is a happy ending. When the book store announced it was shutting down, the whole community came to help. Private donors and investors quickly stepped-in, and after only a couple of weeks out of business, the store came back from the dead. It is still open and now appears to be doing brisk business. As for me, I have decided to not try to save any more money on my books. I enjoy my Sunday afternoon visits to this store, and am very willing to pay for the pleasure I am getting. I still buy the occasional book on Amazon, but I no longer look for books in the store only to buy them online. You could say that I realized the error of my ways, and have decided to jump off that free ride to no-service land.
This post was inspired by an article I read on MoneyNing yesterday, and although MoneyNing was basically recommending the lowest cost places to get books, I don't hold that againt them... soon they too shall see the light... :-) Seriously, check out MoneyNing, it's a really cool blog.
Anyway, on with the story. I live on the Peninsula in the San Francisco Bay Area. In my town there are several independently owned bookstores, all within walking distance from each other. On weekends I often find myself spending a couple of hours in one of these stores, leafing through magazines, browsing the book shelves and generally enjoying the atmosphere. Periodically, I buy something, but more often than not, if I find a book I like I write down its name and later purchase it on Amazon.
A couple of years ago, completely out of the blue, the largest and most established of these independent book stores suddenly announced that it was closing down after 50 years in business. This took the whole community by surprise, since the store is known throughout the area. The reason that was given for the shut down was that owners could simply not make ends meet. Pressed by the large book sellers - such as Barnes and Noble and Borders - on the one hand; discounters such as Wal-Mart, Target and Costco on the other; and of course facing a massive number of customers defecting to Internet book stores such as Amazon, it turns out that there was just not enough business to make things work for an independent book seller.
Getting a book online or at Costco may be substantially cheaper than buying it at your neighborhood independent book store, but I realized that by enjoying my visits to my local store while giving my business to lower cost competitors, I was essentially free-riding. I was enjoying the experience of the independent book store, but not paying for it. When you buy a book at a small neighborhood store there are essentially two elements to the price you are paying. One of them is the cost of the book - that is the price you would pay at Wal-Mart or at Amazon. The other component is the price you pay for the "book store experience". That experience comes at a cost to your neighborhood store, and since the discounters don't offer you that pleasure they can afford to reduce the price of the book.
Let's take this example one step further. Do you know how everybody is complaining that there is no longer such a thing as customer service in America? For example, when you go to Best Buy to buy a computer or a television and ask for advice, typically you get a know-nothing sales person that can barely read the product description from the sticker next to the product. If you need more information, tough luck for you. Well, it turns out that we have only ourselves to blame for this lack of service. Since we always choose the lowest cost product, and choose to not give our business to those retailers that invest in service, those high-service retailers are going the way of the Dodo. Hooray for us, we've saved a couple of more Dollars. Welcome to the desert of no-service. Think about that next time you are on the phone holding for some call center in India for 30 minutes while hearing a recording saying that "your service is very important to us".
Thankfully, in this specific case, there is a happy ending. When the book store announced it was shutting down, the whole community came to help. Private donors and investors quickly stepped-in, and after only a couple of weeks out of business, the store came back from the dead. It is still open and now appears to be doing brisk business. As for me, I have decided to not try to save any more money on my books. I enjoy my Sunday afternoon visits to this store, and am very willing to pay for the pleasure I am getting. I still buy the occasional book on Amazon, but I no longer look for books in the store only to buy them online. You could say that I realized the error of my ways, and have decided to jump off that free ride to no-service land.
This post was inspired by an article I read on MoneyNing yesterday, and although MoneyNing was basically recommending the lowest cost places to get books, I don't hold that againt them... soon they too shall see the light... :-) Seriously, check out MoneyNing, it's a really cool blog.
Tuesday, August 07, 2007
Recommended Articles
Here's my dilemma. I only have time to write one post per day. Some days I can't even get that done. In my one post I like to write original content about personal finance matters that interest me, and hopefully my readers. However, since I do submit articles to some of the regular carnivals out there, common courtesy requires that I link back to those carnivals, and since I am already doing that, I might as well recommend some of the fine articles that I find on those carnivals. My solution to this dilemma is this: from this point forward I will dedicate one post per week to recommend some articles. Typically, that post will be the one I post on Tuesday. So, without further delay, here are the recommendations for this week:
First up, this week's Carnival of Personal Finance is hosted by the Frugal Law Student, the carnival includes my post about the Allure of Lifestyle Funds. Here are some of the other articles in the carnival that caught my eye:
Don't Mess with Taxes pays tribute to the Simpsons with an article about the D'OH moments of personal finance. The article makes some good points, but for me it's all about the Simpsons. Cowabanga Dude!
Everyday Finance has a post about the easiest $1,000 tax-free he makes every year. It's all about those cash back credit cards. I am a big advocate of reward cards, for those of us that do not carry a balance and do not miss their credit card payments, that is. In fact, late last week I got a $344 cash-back reward from American Express on my Blue card. That's serious cash, right there.
Financial Dominance offers an excellent article about teaching your kids the value of money. The oldest of my three boys has just turned five, and my wife and I have started to teach him some financial concepts. He is a smart kid and gets most of what we talk about but the concept of saving is easier to understand when you are sitting at home than when you see something you want in the store. Teaching financial responsibility to kids is a long term proposition, but it is a very important subject that is better taught by parents than by the credit card companies, if you know what I mean.
The Festival of Frugality this week is hosted by Frugal for Life. It contains my article about Things I Don't Skimp On. Here are the articles I found most interesting:
Fire Finance has an article about a new way to sell your old cell phones. That's a great idea. Selling my old cell phones has never crossed my mind. I give my old cell phones to my kids, which enjoy them like no other toy on the planet. They walk around the house pretending to talk, just like they see daddy do.
Money Ning is a PF blog that I only recently found and that I really enjoy. The article they contributed is about the best places to find cheaper books and magazines. I used to buy all my books online, since this truly is a lower cost way of buying books. However, recently our local book store was shut down because they could not make ends meet. The community all came together and contributed to get this store back on its feet, and since it re-opened I began buying all my books there. I will probably write about this subject later this week, it's an interesting topic.
Finally, the Happy Rock has an article about a topic I have never heard of before: Hypermilling. Supposedly there is a whole bunch of people trying to drag a few more miles per gallon from their cars by doing some pretty ludicrous things. Does that stuff even work?
You should also check out the Carnival of Money Stories, right here.
First up, this week's Carnival of Personal Finance is hosted by the Frugal Law Student, the carnival includes my post about the Allure of Lifestyle Funds. Here are some of the other articles in the carnival that caught my eye:
Don't Mess with Taxes pays tribute to the Simpsons with an article about the D'OH moments of personal finance. The article makes some good points, but for me it's all about the Simpsons. Cowabanga Dude!
Everyday Finance has a post about the easiest $1,000 tax-free he makes every year. It's all about those cash back credit cards. I am a big advocate of reward cards, for those of us that do not carry a balance and do not miss their credit card payments, that is. In fact, late last week I got a $344 cash-back reward from American Express on my Blue card. That's serious cash, right there.
Financial Dominance offers an excellent article about teaching your kids the value of money. The oldest of my three boys has just turned five, and my wife and I have started to teach him some financial concepts. He is a smart kid and gets most of what we talk about but the concept of saving is easier to understand when you are sitting at home than when you see something you want in the store. Teaching financial responsibility to kids is a long term proposition, but it is a very important subject that is better taught by parents than by the credit card companies, if you know what I mean.
The Festival of Frugality this week is hosted by Frugal for Life. It contains my article about Things I Don't Skimp On. Here are the articles I found most interesting:
Fire Finance has an article about a new way to sell your old cell phones. That's a great idea. Selling my old cell phones has never crossed my mind. I give my old cell phones to my kids, which enjoy them like no other toy on the planet. They walk around the house pretending to talk, just like they see daddy do.
Money Ning is a PF blog that I only recently found and that I really enjoy. The article they contributed is about the best places to find cheaper books and magazines. I used to buy all my books online, since this truly is a lower cost way of buying books. However, recently our local book store was shut down because they could not make ends meet. The community all came together and contributed to get this store back on its feet, and since it re-opened I began buying all my books there. I will probably write about this subject later this week, it's an interesting topic.
Finally, the Happy Rock has an article about a topic I have never heard of before: Hypermilling. Supposedly there is a whole bunch of people trying to drag a few more miles per gallon from their cars by doing some pretty ludicrous things. Does that stuff even work?
You should also check out the Carnival of Money Stories, right here.
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