Personal Finance Wisom from My Grandfather

When I was a kid, my grandfather - may he rest in peace - always wanted to give me money. Not a lot. Maybe $10 or $15 whenever I would come to visit - about once or twice a week. I wouldn't want to accept those gifts and politely refused them on a number of occasions. I just felt these gifts were too much like charity - I did not want his money and I didn't want him to think that I came to visit him and my grandmother so that I could get a gift. The money would have been nice, but I felt it was too similar to getting paid for visiting my family. It just didn't sit right.

Anyway, one day my grandfather told me a story which stuck with me since. Here it is:

A man goes to visit his good friend on Friday and asks: "can I borrow $100? I will pay you back on Sunday night." The friend is intrigued, but nonetheless lends his friend the money without any questions. As agreed the friend comes back on Sunday night and repays the loan. The same thing occurs again and again for several weeks and the loan is always re-paid on time and in full on Sunday night. Until one day when the man comes to ask for the weekend loan, the friend finally breaks down and asks "I'll lend you the money, no problem, but can you tell me why you need this money and how you always return in full when the weekend is over?" The man smiles and says "I don't actually use the money you lend me. I just keep it in my pocket. You walk differently and have more fun when you have money in your pocket..."

My grandfather simply wanted me to enjoy life and have fun. From that point on, I always accepted his generous gifts, happily. I loved my grandfather deeply, and his life story remains an inspiration and a lesson to me.

Even though it's a bout a completely different topic, I reminded of this story by the title of this post on blunt money.

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Pandering to New Recruits

Fortune ran an article yesterday titled How to Work Better with Gen Y. I read the thing and I felt as if I was reading a piece of science fiction. It's not that all of the advice in this article is wrong, some of it is probably pretty valid, it is simply that the underlying premise of this article is ridiculous. The article gives managers advice on how to work better with Gen Y employees, as if these creative geniuses were god's true gift to business.

Here is one particular quote from the article which made me groan:

"Managers often tell Tulgan that Gen Yers make a lot of requests and demands. "I tell them, 'They're doing you a favor by asking for things. Once you know what they want from you, you have the key to getting what you want from them.' "

I am OK if other managers want to take this route of coddling, asking nicely and pandering to problem employees, but I am not going to waste my time doing that. I am guessing most managers would not stand for that either. Here's something you need to understand about the work place - whether or not you are of Gen Y age:

We don't give a damn.

Yeah, it would be nice if every hire we made was a good one, but most of us experienced managers realize that a certain percentage of our hires simply don't work out. When we hire someone, we explain what we want and set expectations. We expect that there will be a learning curve. We also expect a lot of questions and some settling into a work rhythm. What we don't expect is attitude. We really don't. We expect new hires to be responsive, aggressive, eager to work hard, eager to succeed. If you come in, act high and mighty, make demands and think that I need to please you, you are going to be out on your ass pretty quickly. 

Business is not about being nice and making every hire a successful hire. It's about achieving results. My boss expects me to deliver on my targets and that's the only thing I care about. If you can help me do that, excellent. You have a job and I will help you build a career, grow your skills and I will fight for you tooth and nail within the organization. If you can't, I will simply cut my losses and hire someone else to do the job that needs to be done.

If the writers at Fortune wanted to write a useful article they would write something titled "How to Work Better with Gex X and Boomer Managers". Do you think that I am wrong?

Here are some other career related PF posts:

A great post by Cash Money Life talks about resigning your job on good terms. 

Hundred Goals has a post titled why social networking doesn't work. Boy, I am clear on the other side of that specific argument.

Wealth from the Bible has an insightful post titled Staff Meeting with God. It's a pun. It's a good post, even though I am a professed atheist. 

Bob's Occasional Musings posts about 7 reasons to make a career in the military. I served, and view it as an important part of my career.

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It's Just a Credit Card, Stupid!

The reactions I get from people when I pull out my American Express Blue credit card never cease to amaze me. Folks really like the way it looks and often people ask if they can see it up close. See, I don't get that - it's just a credit card. We use the Blue card because of the cash back rewards, and I couldn't care less about what it looks like. Anyway, a few weeks ago in the Wall Street Journal, I stumbled across a full page add for a new card: a black VISA card - I am not going to add a link to this page, because I don't want to encourage the lunacy I am about to tell you about. If you are really interested, look it up on Google.

The card, marketed as the "World's Most Prestigious Credit Card", is supposedly made of carbon graphite (WTF?), but wait, it gets better. Here is a quote from the card's website:

Black Card is not just another piece of plastic. Made with carbon,  it is the ultimate buying tool. The Black Card is not for everyone. In fact, it is limited to only 1% of U.S. residents to ensure the highest caliber of personal service is provided to every Card member.

What?! The ultimate buying tool?! Look, using a credit card is not brain surgery. It does not require specialized tools, any old piece of plastic will do just fine. You know, I think some stores even accept cash if you insist. Also notice the blatant attempt to market a credit card as a status symbol... you can only get it if you are in the top 1% of the US population... Give me a break...

The best part? An annual membership fee of $495... 

Here's my take: if you apply for the card you are a member of a very distinct group, but I don't think it's the same group you set out to join...

I think I'll stick with my no-fee 5% cash back Blue card, thank you very much...

Here are a few other credit card related posts from around the PF blogosphere:

Consumerism Commentary had a couple of posts recently about the new credit card bill going through congress.

American Consumer News published a post about the right ways to use credit cards.

The Dough Roller reviewed a new credit card by Citibank.

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The Economy: What to Expect

Everyone is wondering these days: are we done with this crazy downturn yet? Back in late December I wrote a post suggesting that the worst may be over for the economy. I think I may have been a month or two too early, but I think at this point it's clear that the economic world is not coming to an end. Nevertheless, things are still pretty darn bad. So what do I make of the economy? I am no economist, however, I am seeing a number of economic indicators finally turning positive. Let me share a few with you:

The Stock Market - this is obviously the most visible sign. As of April 25, the S&P 500 is up about 26% from its low of 676, which it hit on March 9. It may very well be that the stock market will return to a downward trend - in fact, after the amazing upward run over the past weeks, it would not surprise me to see short term declines, but I think that investors are realizing that the current valuations offer an amazing opportunity for anyone willing to take the volatility. 

More importantly, the stock market is a forward looking indicator - valuations are a function of what investors think corporate earnings are going to look like in the future. The recent run-up suggests that collectively market watchers are expecting earnings to improve, and that can only happen with an economic recovery.

The fear factor, as measured by the VIX Index, is also dramatically down. While still very elevated compared to historical levels, the VIX index is now around 37 compared to around 80 as recently as November. Sure, this could turn pretty quickly, but clearly, while agitated, investors are no longer terrified that the end is nigh...

International Trade - in the fall, international trade came to a screeching halt. In fact, there were stories in the press about container ships being sent to dry storage for the long term. International trade is nowhere near where it was in recent years, but the Baltic Dry Goods Index which tracks the cost of international shipping has been recovering recently. Once again, the world is not ending.

Lending Rates - it is now crystal clear that governments around the world will not let major banks fail. Bail out funds have been flowing like cheap wine and consequently, inter bank lending rates have dropped dramatically. Clearly, confidence in the banking system is much, much improved. Remember in October we were worried about the money markets? We have come far indeed. 

At the same time, mortgage rates are dirt cheap and folks have been re-financing their loans like there is no tomorrow. This in effect acts like a tax cut - lower monthly payments mean more disposable income for the long term.

Inventories - if you believe the stories in the financial press, companies have been slashing their inventories at remarkable rates to deal with expected consumer demand falling off a cliff. Well, for now at least, consumer demand has dropped less than expected, which means that inventories are pretty lean. If there is any uptick in demand, companies will need to increase production to service it. Unfortunately, I know of no public data source that would let me view this data directly.

Unemployment - yeah, well, that's where things get really painful. Take a look at this chart of US unemployment over the past 3 years. It's nasty out there. What's more, it's clearly going to get worse in the near term. However, from an economic perspective, unemployment is a lagging indicator. It typically starts to improve long after the economy itself is back on the mend.

In summary, I am a short and medium term optimist. I think that the government stimulus activities and aggressive handling of financial institutions is working. I think we can expect a recovery to begin sooner rather than later. My bet is on Q3 or Q4 this year. Still a few months away, but not that far in the future. In the long term, I am less optimistic - I think that the debt load and deficit are likely to wreak havoc on the US economy and on the stability of the Dollar. I have not quite formulated my strategy against this scenario, but I am seriously thinking about it.

I think we may be close to the end of this economic nightmare. Hang tough.

Here are some other posts about the economy from other PF bloggers:

Canadian Capitalist reviews a book that takes the exact opposite position to the one I voice above...

Weakonomics has a post about what happens when financial firms pay back TARP funds. He doesn't trust the government much...

My Two Dollars links to an interactive map of bail-out fund recepients.  California is well represented at #4...

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Emergency Room Visit Abroad...

Last week my family returned from a two week vacation in Israel. We had a nice time, but one night we had to rush to the emergency room with our three year old son who woke up and had difficulty breathing (all is well now, not to worry). What I want to share with you is this: although we had no local insurance, the entire visit cost us $140 and took less than two hours. Compare this to a similar trip we made about 4 years ago when my older son - two years old at the time -  fell in the bath and hit his head (again, all is wellnow). During that visit, we had full insurance coverage, and visited a well respected hospital - Stanford University Hospital, to be exact. That visit cost us hundreds of dollars out of pocket... and let me clarify, during both visits our sons received nothing more than an examination by an emergency room doctor.

I think something is very wrong here. Our health care system is plainly not working.

Israel has a national health care system, which is funded by a 5% employment tax. Health care services are provided by a number of privately owned health care groups, which compete amongst themselves for patients. Each citizen chooses one of these organizations and can then receive service only from his chosen group. Government mandates which services, drugs and treatments are covered by the national insurance and each provider must provide these as a minimum. Folks can also purchase supplementary insurance to cover items that are not covered by the main program. 

I don't know if this is a perfect system (probably not), but I think that there may be something for us to learn from this system.

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