Once again it is time for my Tuesday morning article recommendations:
This week's Carnival of Personal Finance is hosted by My Retirement Blog, an excellent blog that I read regularly. Our kind host did me the honor of selecting my article Rent is Not Waste as the top Editor's Pick for this weeks Carnival. Good deal.
This week's carnival included a whole bunch of articles that I read and appreciated last week here are some of my favorites:
Money, Matter and More Musings posted an article about the fact that signing the back of your credit cards is a useless security feature. Absolutely. Two of my cards are unsigned, and very few times does a sales clerk even check to see if there is a signature on the back. Even when they do check, and see that the card is unsigned, very rarely do they ask for an ID. Checking is sort of an automatic, meaningless gesture for them. The one exception to this rule: Best Buy. I always get asked to show my ID at Best Buy, and I am glad to do so.
Advanced Personal Finance has a good post about how to deal with a lousy 401K plan. The advice is all good, but he leaves out one critical piece of advice: lobby your company to change the plan. Companies are generally interested in offering a good 401K plan to their employees. The problem is that in many cases the person running the plan is someone from HR that has little or no understanding in personal finance or investment strategy. If you offer your insights or formally file your complaints regarding the plan, there is a good chance that your suggestions will at least be considered. Be aware that companies are always worried about the possibility of being sued by employees unhappy about the company's 401K plan. Each 401K plan is managed by at least one trustee who has a fiduciary responsibility to run the plan for the benefit of its participants. That’s a very big incentive to listen to employees.
For those thinking about asset allocation, the Finance Buff offers some useful advice about how to build a portfolio while limiting complexity to a level you are comfortable with. Generally speaking this is sound advice, but I have some posts coming up about other asset classes that are not adequately addressed by the proposed strategy. Stay tuned. It's going to be interesting.
Chief Family Officer has a post about how much you should stash away in your flexible medical spending accounts. Personally, I check our medical spending each year, using Quicken and follow that amount. However, I find it bizarre that the government (or employers) makes individuals guess their medical spending in advance, and penalizes them for guessing incorrectly by taking any remaining funds they haven't spent. Talk about promoting waste and creating unnecessary complexity.
Also, check out the Festival of Under 30 Finances hosted by How to Make a Million Dollars.
The Festival of Frugality this week was hosted by My Two Dollars. This week I also participated in the Carnival of Financial Planning.
Tuesday, October 02, 2007
Monday, October 01, 2007
Recession in the Cards?
The polls are closed and the votes are in: 56% of readers who responded to my latest poll voted that the economy will not be going into recession. However a large minority of 44% thinks that something is about to hit the fan.
Regardless of your own personal opinion, I think this survey shows that people that care about personal finance, and hence read personal finance blogs, are not feeling too confident about the state of the economy right now. The problem is that the economy is sort of a self fulfilling prophecy: if people feel that the economy is doing well and that they are on sound financial footing, they spend more, which actually boosts economic activity. On the flip side, if people feel that the economy is at risk for a recession, they may preemptively cut their spending to prepare for the bad times, thereby reducing economic activity and tipping the economy over the edge and into recession. If a large segment of the population think the economy is about to go into recession, chances for a recession increase.
One more interesting point about this poll. I ran this poll for the past two weeks, and have been following the way the votes were going from day one. Two weeks ago, the early votes that came in were pretty pessimistic, with most voters expecting a recession. When the Fed cut interest rates, there appeared to be a burst of optimism with positive votes quickly overtaking the nay sayers. In the past couple of days, a little bit of pessimism has returned to the vote. Of course, this survey is nowhere near scientific and no sane person can draw any conclusions from it, however I found the correlation between the votes and the Fed rate cut to be intriguing. It is either a co-incidence or an example of the type of change in investor psychology that the Fed wanted to create.
Regardless of your own personal opinion, I think this survey shows that people that care about personal finance, and hence read personal finance blogs, are not feeling too confident about the state of the economy right now. The problem is that the economy is sort of a self fulfilling prophecy: if people feel that the economy is doing well and that they are on sound financial footing, they spend more, which actually boosts economic activity. On the flip side, if people feel that the economy is at risk for a recession, they may preemptively cut their spending to prepare for the bad times, thereby reducing economic activity and tipping the economy over the edge and into recession. If a large segment of the population think the economy is about to go into recession, chances for a recession increase.
One more interesting point about this poll. I ran this poll for the past two weeks, and have been following the way the votes were going from day one. Two weeks ago, the early votes that came in were pretty pessimistic, with most voters expecting a recession. When the Fed cut interest rates, there appeared to be a burst of optimism with positive votes quickly overtaking the nay sayers. In the past couple of days, a little bit of pessimism has returned to the vote. Of course, this survey is nowhere near scientific and no sane person can draw any conclusions from it, however I found the correlation between the votes and the Fed rate cut to be intriguing. It is either a co-incidence or an example of the type of change in investor psychology that the Fed wanted to create.
Sunday, September 30, 2007
Special Thanks
Special thanks to the following excellent blogs which referred the most traffic to Money and Such in September:
Crazy Money
All Financial Matters
Get Rich Slowly
Money, Matter and More Musings
Paid Twice
Rather Be Shopping
FILAM Personal Finance
Consumerism Commentary
Also, a special thanks to The 401K Insider and to Moolanomy whose readers spent the most time on Money and Such, and to Plonkee who writes a mean blog and who regularly comments on this blog.
Crazy Money
All Financial Matters
Get Rich Slowly
Money, Matter and More Musings
Paid Twice
Rather Be Shopping
FILAM Personal Finance
Consumerism Commentary
Also, a special thanks to The 401K Insider and to Moolanomy whose readers spent the most time on Money and Such, and to Plonkee who writes a mean blog and who regularly comments on this blog.
Getting Your Annual Bonus
Bonus season is about three months away for my company, which means that there is just enough time to plan and execute my strategy for ensuring that I receive my annual bonus in full.
Last October me and my team were placed under a new boss, and come December I received a nasty shock. My new boss gave me an outstanding evaluation, but only gave me 80% of my annual bonus. She explained her decision as follows: "As far as I am concerned, only God is perfect, therefore no one on my team is getting 100% of their bonus". Last year, I decided not to protest this absurd and obnoxious position. I felt that it would be a better long term strategy to build a stronger relationship with my boss and to prove my worth to her, before getting into any major battles. However, I hated and resented that decision and even more so I hated the rationale that my boss used to justify it.
This year, I fully intend to receive 100% of my bonus. Here is my strategy for achieving this goal:
1. Review my MBOs - Management by Objective (or MBO) is a favorite HR buzz term around Silicon Valley these days. It works as follows: early on in the year you receive from your boss a list of objectives that you must achieve. If you achieve those targets you get your bonus. I received my MBO papers in May, but I believe that I am well on track to achieving or exceeding all of my goals. In the next week I will make sure. I will review my MBO document in detail and will immediately tackle any deficiencies I discover.
2. Focus on What Counts - My philosophy is that in the employer-employee relationship, money speaks louder than words. It's fine to tell me that some task is high-priority, but if it's not in my MBOs, it's probably not that important. After all, if it were that critical wouldn't it be listed as a major objective for the year?
Before I do anything else, I make sure that MBO activities are at least at 100% of where they need to be to ensure achievement of my targets.
3. Obtain Buy In - it doesn't really matter what I think that I achieved, or for that matter, it doesn't even matter what I actually achieved. All that matters for the purpose of my MBOs is what my boss believes that I achieved. For that reason, it is my intention to go through my MBO list with my boss. Understand what she thinks I have already achieved and what tasks are not complete in her mind. I will also present to her all the activities and successes that I have delivered so far this year.
It doesn't help me to find out whether my boss thinks I achieved my goals at my annual review. That is too late. The bonus decision will already have been made. Nope. If my goal is to ensure 100% bonus this year, I must understand her thoughts and feelings about my performance while there is still time to do something about them.
4. Clarify My Position - it is now time to tell my boss that I did not feel comfortable with last year's 80% bonus award. I intend to tell her that I felt bad that I did not receive my full compensation in spite of my outstanding review, and that I fully intend to get 100% of my bonus this year. I will ask her what more I need to do to obtain this target and I will explain that unless I am able to achieve 100% of my bonus this year, I will consider this to be an unfavorable rating of my performance and will plan my steps accordingly. I will not threaten to leave, but will make it evident that I view my bonus as an integral part of my compensation package and that I consider it my right to receive 100% of the agreed upon bonus, if I deliver 100% of the agreed upon targets (which thankfully are very measurable).
5. Prepare to Appeal - Should my boss resort to the "only God is perfect" logic again, I will go to my boss's boss, our division President. Luckily, he knows me well and appreciates my work. He knows that I do not turn to him directly, except for very rare cases where I feel very strongly about something. In each of the few cases in which I turned to him for assistance he came through and provided the help I was seeking.
Bonus season is only three months away. Much to do, not a lot of time. I will provide updates on my progress and my results.
Last October me and my team were placed under a new boss, and come December I received a nasty shock. My new boss gave me an outstanding evaluation, but only gave me 80% of my annual bonus. She explained her decision as follows: "As far as I am concerned, only God is perfect, therefore no one on my team is getting 100% of their bonus". Last year, I decided not to protest this absurd and obnoxious position. I felt that it would be a better long term strategy to build a stronger relationship with my boss and to prove my worth to her, before getting into any major battles. However, I hated and resented that decision and even more so I hated the rationale that my boss used to justify it.
This year, I fully intend to receive 100% of my bonus. Here is my strategy for achieving this goal:
1. Review my MBOs - Management by Objective (or MBO) is a favorite HR buzz term around Silicon Valley these days. It works as follows: early on in the year you receive from your boss a list of objectives that you must achieve. If you achieve those targets you get your bonus. I received my MBO papers in May, but I believe that I am well on track to achieving or exceeding all of my goals. In the next week I will make sure. I will review my MBO document in detail and will immediately tackle any deficiencies I discover.
2. Focus on What Counts - My philosophy is that in the employer-employee relationship, money speaks louder than words. It's fine to tell me that some task is high-priority, but if it's not in my MBOs, it's probably not that important. After all, if it were that critical wouldn't it be listed as a major objective for the year?
Before I do anything else, I make sure that MBO activities are at least at 100% of where they need to be to ensure achievement of my targets.
3. Obtain Buy In - it doesn't really matter what I think that I achieved, or for that matter, it doesn't even matter what I actually achieved. All that matters for the purpose of my MBOs is what my boss believes that I achieved. For that reason, it is my intention to go through my MBO list with my boss. Understand what she thinks I have already achieved and what tasks are not complete in her mind. I will also present to her all the activities and successes that I have delivered so far this year.
It doesn't help me to find out whether my boss thinks I achieved my goals at my annual review. That is too late. The bonus decision will already have been made. Nope. If my goal is to ensure 100% bonus this year, I must understand her thoughts and feelings about my performance while there is still time to do something about them.
4. Clarify My Position - it is now time to tell my boss that I did not feel comfortable with last year's 80% bonus award. I intend to tell her that I felt bad that I did not receive my full compensation in spite of my outstanding review, and that I fully intend to get 100% of my bonus this year. I will ask her what more I need to do to obtain this target and I will explain that unless I am able to achieve 100% of my bonus this year, I will consider this to be an unfavorable rating of my performance and will plan my steps accordingly. I will not threaten to leave, but will make it evident that I view my bonus as an integral part of my compensation package and that I consider it my right to receive 100% of the agreed upon bonus, if I deliver 100% of the agreed upon targets (which thankfully are very measurable).
5. Prepare to Appeal - Should my boss resort to the "only God is perfect" logic again, I will go to my boss's boss, our division President. Luckily, he knows me well and appreciates my work. He knows that I do not turn to him directly, except for very rare cases where I feel very strongly about something. In each of the few cases in which I turned to him for assistance he came through and provided the help I was seeking.
Bonus season is only three months away. Much to do, not a lot of time. I will provide updates on my progress and my results.
Saturday, September 29, 2007
Forget the Gym Get a Wii
Here's a thought. Want to save money? Get a Nintendo Wii. Yeah, like I needed an excuse. Well, actually I did need an excuse so I bought it for my son's birthday. He loves it, and so do I. I knew the Wii would be lots of fun for the entire family, but what I didn't know was that playing the Wii can be real physical exercise.
People who know me, know that I cannot be bothered with physical exercise, with the exception of skiing which is an expensive and unfortunately all too rare activity for me. However, yesterday evening I spent three hours straight playing tennis, boxing and baseball against my brother who is in town for a visit. Best of all I did it all on the Wii.
You know what? After two rounds of Wii boxing you work up a sweat and your heart starts pounding. After three games of Wii tennis you feel like you just finished a good 3 kilometer run. In fact, after the first few Wii tennis games with my wife, my muscles were sore for a couple of days. It's a real workout.
So here's a heretical thought. Want to save $50 a month? Drop your gym membership. You can get a great cardio work out for the one time fee of $249. All you need to do is buy a Wii. It's fun and even better, it's a bargain.
People who know me, know that I cannot be bothered with physical exercise, with the exception of skiing which is an expensive and unfortunately all too rare activity for me. However, yesterday evening I spent three hours straight playing tennis, boxing and baseball against my brother who is in town for a visit. Best of all I did it all on the Wii.
You know what? After two rounds of Wii boxing you work up a sweat and your heart starts pounding. After three games of Wii tennis you feel like you just finished a good 3 kilometer run. In fact, after the first few Wii tennis games with my wife, my muscles were sore for a couple of days. It's a real workout.
So here's a heretical thought. Want to save $50 a month? Drop your gym membership. You can get a great cardio work out for the one time fee of $249. All you need to do is buy a Wii. It's fun and even better, it's a bargain.
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