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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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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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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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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More Ways to Reduce Your Cable Bill

Almost two years ago I wrote a post advising my readers who wanted to reduce their cable TV bills to call their cable company, ask for the disconnection department and threaten to disconnect their service if their bills were not reduced. A few weeks ago I had the opportunity to use the same strategy again. Still works. I got our cable bill reduced by $30 per month for 12 months. Not bad for a 5 minute call.

But there is more interesting news. My brother-in-law recently drew my attention to the high cost of renting a DVR from the Comcast. We were paying $16 per month for the device. When I spoke to the customer service agent at Comcast I also discovered that we were paying $5 per month for our cable modem, all for a total equipment rental charge of $21 per month... that's a lot of money.

This inspired me to make a move I have been thinking about for a long time. I ditched the Comcast DVR in favor of a top of the line TiVo HD XL. While the TiVo cost us $389 (there are much cheaper TiVo models available on Amazon), on an ongoing basis the service is cheaper. The TiVo service costs $10 per month when paid annually, and the cable card needed to connect the TiVo to cable service costs $1.7 per month. At the end of the day, our cost is reduced by $4 per month compared to what we were paying for the Comcast DVR. To be honest, savings of $4 month would ordinarily not be sufficient incentive for me to take action, but I have had my eye on a TiVo for a long time. The reasons:

1. Much bigger disk - our TiVo can store 150 hours of HD recordings with its build-in drive, and the disk can be expanded using an external drive. This compared to the miserly 15 hours our Comcast DVR could store.

2. Access to Netflix Streaming - I am a big fan of streaming Netflix movies on my computer and have been thinking about a way to get that content to the TV for a long time. TiVo makes that connection for you. Hello Netflix on demand.

3. Transfer Content to your Computer - we have one TV in the house. While Alpaca watches her shows on the TV (Idol, Survivor... urgh...), I can now watch mine on the computer at the same time. Whatever is recorded by the DVD can be instantaneously viewed on the computer.

4. Stream music, home videos and picture to the TV - as easy as pie. One exception, the TiVo can't read Apple's music file format, so no luck with my iTunes bought music. As always, there is some barrier put up by some company (with Apple always a prime candidate for evil).

Alas, there is also one draw back, and it's big. If you use TiVo you lose access to Comcast's own free OnDemand content, and there is a lot of good, free content there. I asked both TiVo and Comcast representatives about this problem and they told me this would never be fixed and that the problem was the navigation system for TiVo could not be used with Comcast content. A complete crock if I ever heard one.

Still the content on Netflix is superior and the Comcast content and the other advantages offered by TiVo make the switch worth the sacrifice.

One more thing, I also got rid of our Comcast Cable Modem and bought my own on Amazon for $80. With a monthly reduction of $5 per on my Comcast bill, this transaction has a break-even time horizon of 16 months. Good enough, I guess.

Did I previously mention my gadget addiction?

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