Sunk costs

As in my previous post, I talked alot about the value of time and money and the interdependence of the terms.  Both time and money are things that are spent or allocated to certain places.  You have to be judicious about where you decide to put these valuable resources but one thing you should particularly pay attention to in terms of these is the notion of "sunk costs".

In simple terms, a sunk cost is something that you have spent and should not affect your future decisions.  How many times have you said that you should keep doing something because you have already invested alot of money or time in it.  In other words, you don't wanna waste that time.  

The biggest waste would be to continue to put those resources in a place where they aren't going to be useful.  So often, we continue doing something because we don't wanna look back at what we did before as "wasted time" or "wasted money".  You can't continue to do this.  Just because you spent a ton of money in a venture if it's not gonna pan out, scrap it.  Don't put any more money into it.  Just like poker, are you going to continue to call when you know you don't have the winning hand?  Sometimes it's better to fold and put the money in the next hand.

Along with sunk costs of money, there is the sunk costs of time.  I think just about everybody I know has been in relationship where you continue to be with the person because of the amount of time you have spent with that person.  You both know it's over but the breakup doesn't come soon enough because of time.  This is just another sunk cost of time.  I may be oversimplifying this because emotions are involved but time is a valuable resource.  Spend it on things that will work and be productive.

The first step to getting rich is to stop wasting time and money because you have already wasted time and money.

Below is a picture of the fallacy of sunk costs from Thadguy.com.  Don't be that guy.

A New Plan for A New Year

So, January 1st is a couple days away and it's time to make your new year's resolutions.  You know…those things you say will do every year that are usually broken by February, March if you're noble.  Come on people, these are resolutions, not simple goals.  I challenge you this year to put more thought into them and figure out how to take the concrete steps to accomplish your goals, whatever they may be.

 

Every December I take a deep look back at the past year and look for where I did wro

ng.  I look at where I could have made better decisions and I am also thankful for where luck was good to me.  There are a lot of things I would like to do in the 2009.  Eat right, workout more, make more money, spend less, etc. But those are the same things I wanted last year.  It's the SAME plan and it's been the SAME plan for years.  It's time to develop a new plan focusing on the underlying habits that lead to the consistency and discipline that will allow you to complete your goals.  Instead of being specific, let's take a look at focusing on a few interrelated parts of your life to improve in the 2009.

 

Relationships:  "It's not what you know, it's who you know."  Maintaining resolutions are a lot easier with a partner.  But maintaining good relationships in general are an integral key to success.  Good relationships open doors that were previously closed and offer support in your worse times.  Bad relationships will suck out your energy and make you doubt the validity

 of your aspirations.  Going into 2009, eliminate the bad relationships, cut them out cold turkey. 

 

The new year is a great time, to foster new relationships and strengthen the good ones you already have.  Go places where you will have chances to talk to people and meet ne

w groups.  Any conversation can turn into more knowledge and new opportunities.  Who knows if the next person you meet will provide a great business opportunity?

But good relationships aren't found everywhere.  If you spend your evenings scouring the bars and happy hours, looking for love in the club, you may not find the relationships you are looking fo

r.  If you are looking for new business contacts, try going to trade events and joining professional societies.  Whatever you're looking for you should look at going not just to different venues, but different types of places.  Odds are that person you may need to talk to goes to places you don't go.

 

Time:  "Time is money." This upcoming year you will have 

8,760 hours in the year.  That may seem like a lot but when you take away things like your 9 to 5 (8 hours), sleep (8 hours is recommended), eating, grooming, and travel you are looking more at 2,600 hours/year or an average of 8 hours/day with obviously less on weekdays and more on weekend. 

 

That may seem like a lot of time but as we all know, it runs out really quick.  This year treat your time like the precious commodity it is.  Just like your job, bill your time for your personal production.  If you have certain goals or resolutions, commit a certain amount of hours to that task like 8 hours a week to the gym, a maximum 8 hours to the television, or only five hours to drinking a week.  When spending time doing something, ask yourself could you be doing something more productive or could you be doing two things at the same time.

 

When out with friends or business acquaintances, charge them for your time.  Charge them for your time?  Yes, figure out what you are getting out the encounter.  If it's truly beneficial, then the time was well spent;  if you aren't having any fun or not getting any useful networking, it's a waste of time that either needs to be repaid or you should try to avoid in the future.  Again, time is precious and it is your time.  Do not spend (and it is spending) your time doing things you do not want to do or will not benefit you.  I know this may seem selfish, but if you waste your time doing other things you will not have the time you need to accomplish your goals.  But using that time to create and mend relationships may be worth it.

 

Resources:  "Only give what you can afford to lose."  Anybody reading this blog, I'm sure has a limited amount of resources.  While time is one of those, it is the only major one that is fixed.  Unless you're Hiro Nakamura, you have to spend your time doing something.  Might as well find out where it's going to go first.  The rest including your income fluctuate and have to be spent more wisely.

 

Everybody needs money, or we would have to go back to the

 barter system.  Most of us have a job with some sort of fixed income eventhough some of us may have recently departed from our jobs due to this terrible economy.  Although, we may not have much money, we do need to keep track of where that money is going.  I highly recommend using Intuit's Quicken software.  Track your paycheck from the bank and download your transactions from your bank is track exactly where your money is going.  Setup a cash flow to let you know how much money you should have at certain times per month.  Maybe it will help you reach that resolution to get your spending under control. 

 

The real estate market has been a stable part of the economy for a very long time.  It is now coming under fire and we may not have a true valuation of current real estate for another 2-3 years.  But whatever real estate you are in, whether renting or owning, take good care of your residence.  Your home is your base of operations.  Keeping a neat home will improve your mood when you leave and when you come home.  It will help improve your relationships and make you more time efficient.

 

Do you have a car?  Do you need one?  If you are an urbanite like myself, you may find yourself less reliant on a car for everyday use.  I ride public transportation to work everyday and do a lot of my partying through mass transit.  But I still have a car at home, paying a car note and auto insurance that are a huge burden on my financial resources.  IF you can, cut the cord.  Sell your car and throw away the insurance payment with it.  For most people that can save you from somewhere between 300 and 600 dollars a month.  Imagine being able to use that money on cab rides or maybe zipcar if it's available. 

 

Working on the general areas above might should help you set yourself up to accomplish your other goals.  Work on the simple things first, and the other things you want should fall in line.

 

 

Never Ending Saving Money while Drinking Post Part 2

I was always one to never really appreciate the joys of happy hour mainly because bars can be so particular as to whats on sale and whats not on sale. But I found that the biggest deal at most places doesn't necessarily come on the drinks but instead on the food. At many places food is HALF off. Do you know how economic it is to use happy hour for dinner time, and yes I know its bar food that can get you fat, but understand that paying four dollars one night a week for dinner saves a lot while still letting you get the social experience.

Never Ending Saving Money while Drinking Post

Here are some drinking tips that I've learned that would save you a little change when out on the town:

1.) Double-up, or even Triple-up: You know how when your out at happy hour for the cheap prices, and then you get pretty tipsy/drunk, and then in little to no time you start ordering drinks for double the price than before. To correct this problem, simply start doubling up on drinks during happy hour, and after you finish them, order two more so you won't get caught in the after happy hour zne, and if your paying tip you'll pay tip on only one drink instead of two.

2.) Don't carry a tab: Everyone knows that once the credit card is in the bartenders hands so many things can happen, and one of them includes you either ordering too many rounds of drinks for your friends or for yourself. Then tipping can be another matter in it of itself, because with being in possession of a large tab while drunk, your math skills become less and less likely to put a correct total on the bill. So before you go out, decide on an amount that you're willing to spend, and take that amount out of the ATM and them proceed to the bar.

3.) Theoretically drink beer and not liquor: The problem with liquor is that liquor takes longer to settle in, and so your drunk later rather than sooner. Because of that, you might be encouraged to drink more to get to your eventual tipping point. In the morning you would have realized that you've drank a lot more than your friends, and because liquor cost more than beer, you would have spent more as well.

4.) Bar hop: Bar hopping for me isn't that much fun unless I'm going from a dead place to a more livelier place. Although you may not believe it, bar hopping also makes you more attentive to whats going on, and gives you the feeling that you need to save to drink at each place, and so you would never drink that much at any one place. However, at the end of the night you might be feeling it, but because you've been paying attention to the various amounts of tabs or drinks your paying for, each with a different cost.

It is never ending, so stay tuned.

A Second Job for Men Only

If your a young male, then you have to know that there are opportunities for you outside of the workplace that requires very little time. Yes, I'm talking about putting down deposits at a certain type of bank, but if you believe that this doesn't have payoffs, your wrong. Some banks are willing to put down 200 dollars a week for your future kids, and I've even heard that you can make upwards of $600. Personally I would skip the bank in general and advertise myself on Craigslist with prof of accomplishments.

[ Slate ]

My Stock Pick: Nokia

I will occasionally release information on my own personal stock portfolio because I feel its needed to maintain the integrity of this discussion on money. I will critique myself and I would perfer if you critique my picks as well. Be warned, I am not a paid financial consultant nor an everyday investor and with that being said I am not responsible for the use of the advice below. Enough with the legal stuff, it's time for me to talk about exactly what I own and what I've lost.



In the late 90's the cell phone market was utterly owned by a phone company that gave us "cute" simple phones that we could buy accesories for and make our phone just that much more cooler. That company, Nokia (NOK) , is no longer on the rise in the U.S. but instead it has taken overseas and the U.S. stock market. Nokia is the number #1 maker of cell phones in the world, and for a foreign electronics maker that is number #1 in the world, to be on the U.S. stock market is a blessing. Did you ever wanted to invest in Samsung, well you can't unless you purchase a technology fund? But with Nokia you can simply buy and trade as you please. But before we get started, we have to explain a couple of quick points that will help you understand Nokia's current business model:

1. If you thought your IPhone was the "Jesus" phone, well you've been blasted by a magnetic field drawing you into the hype. For real phone enthusiasts, the Nokia N95 is the best phone in the world hands down, and is symbolic because Nokia has always had the best phones in the world, but not in the United States.

2. The phone business is pretty difficult to master mainly because technology is forever getting better which leads to the phone that you bought last week, being obsolete tommorow. U.S. companies try to negate this effect by selling and supplementing only a few phones mainly because if every new phone that was developed was offered, then the company would have to put more money into advertising as well as supplementing the purchases of the phones. So by supplementing cheap phones there will be more profit for the carrier and this led to so many more companies making phones in the U.S.

3. After a while, Nokia told the United States wireless carriers to simply go to hell. The dutch company focused on new ideas that nobody had thought of such as developing wireless phones and services in places that have not yet scene the cell phone revolution. Secondly, Nokia decided to sell their product mainly in the Asian markets where phones and generally technology are hotter than diamonds and cell phone owners have multiple phones for different situations.

So how is Nokia as a stock? Unlike the fallen darling, Motorola (MOT), Nokia has consistently increased sales and increased its stock price. Nokia is a company that defines the UP theory.

Nokia:

1. Always adapts to competition with better phones than their competitors
2. The stock hardly ever goes down.
3. And because it owns the cell phone market

It could be reasonable to assume that Nokia goes the way of the cellphone which has a now omnipresent place in society, whether talking in the car, or ringing in the pocket, cell phones are always going to be here. In addition, Nokia also has offered a generous 50 cent plus dividends which helps make up some of the commission price, and as that stock price increases, so does the dividend price. Since I purchased NOK in early May, the stock has increased by 10 points from25 dollars a share to almost 40 dollars a share. The only bad news that could ever come for anyone holding this stock is a ban on cell phones, and although I would prefer people to stop yelling next to me while I'm having a drink at the bar, I would rather prefer to know that I'm having a good time with my boys while he's paying for my beer.

Top 5 Best Second Jobs for College Grads

Becoming Rich right after school is difficult as taxes continue week after week to take a huge chunk of your taxes, while your earning a very humble entry level salary. However, you have one thing going for you that your superiors at work don't, and that is that your young and have time on your side. Because you don't have as much responsibility you can accomplish much more than they can in the average week, and year, which would closes the economic gap with each passing day. Here is my list for top second jobs:



5. Tutor/"Can you edit my paper" guy: You just graduated from school and have so much knowledge on things that you don't even use throughout your average day. Well here is what you do with all of that textbook information, literally give it to someone else and make them pay for it. I'm an engineer and today I never once have picked up a calculus book to check out the derivative charts, but I could be teaching that same material to some college kid who was just as shocked as I was when I first entered the room. On the other hand if you an English major, use those literary skills to put red ink all over someone's paper before it goes the teacher, and the cool thing is you can setup a simple transaction through Paypal and have the student just email their paper to you. The best part is that you have so many contacts in college and hopefully you mingled with people who are still in school who can either use your services or give you free advertising through word of mouth. Even cooler is that your the one making setting up the meeting times, and with a hectic schedule can be golden when you have to meet deadlines. Hint: Advertise on Craigslist

4. Intermediate Data Entry: What exactly constitutes intermediate data entry? Simply put, Int. Data Entry is using programs like Excel and Access etc. to enter formulas to create complex spreadsheets for people needing them such as businesses with finance needs or anything involving bookkeeping. The intermediate level might sound suspect, but you already have four years of experience using Excel depending on your major. Also depending on the programs you have at home, more than likely you can do your work while watching a rerun of Friends. Hint: Advertise on Craigslist.

3. Computer Repair/Programming Much of the world seems as though it has a DIY attitude, but really and truly everyone but an expert is just a second opinion. Surely, people have problems with their computers and constantly need someone to fix them without paying Geek Squad Prices. Then there are companies and small business guys who don't want to pay top dollar to a salaried computer programmer and so they search for people to fill the void to either make websites or php code that would help their website flurish. So instead of paying for a salaried programmer, they will pay you a higher rate than normal to get the job done in a much shorter time.

2. Paid Overtime : What we often overlooked is the ability to max out our earnings at our current jobs, and the main reason why we don't do such is due to the age old saying "damn, I just want to go home." If you were spending more time at work than normal, you would be earning "time and a half" in salary which is 1.5 times your pay rate. Therefore you get paid more later than you do now. Some might say that the taxes chew up the profitability, however maybe the taxes eat up as much as .5 of the 1.5 pay rate, which leaves you with the exact payrate just slightly higher, and also higher than at most second jobs you will apply for. There is a reason why you didn't decide to choose the previous four as your day job, and that's due to the low earnings. So how exactly does one get paid overtime: by showing their importance and production at the job and simply asking. If the funds are there your boss would surely love having you do entry level work that he wouldn't want to do.

1. Entrepreneurship: Starting a new business is great, because you can set your own schedule and your own pay system. The key to becoming an entrepreneurship is utilizing your best skill and maximizing its profitability. I'll give you hints on starting a business in later posts on how to properly go about setting up your new company but here are a list of areas that I believe are the most profitable to start your new business:

1. Catering/In-Home Cook: How many people at your workplace complain about not being able to properly cook dinner for their family because they don't have the time when they get home from work or that they may have an engagement like a baby shower and don't have a caterer. Well if you have spent enough time in the kitchen, you should be able to develop a palette and using your new culnery skills you should be able to develop themed dishes that you could serve to a family or group of people. No one is asking you to learn Italian, French, or Indian cooking, but instead just make food that your great at cooking. The job maybe the most easiest to start from scratch because you can use your own kitchen or even the customers kitchen depending on the arrangement
2. Graphic Arts: I have to admit that I was in this area for quite a long time but eventually what happened was that the market began to shrink once people realized that tools like Blogger or a simple Myspace page could reach more people. However, if you managed to become at skilled in one specific genre or program, like Flash or After Effects, you can still make creative presentations for customers. What makes this job even more lucrative is that the ability to charge for maintaining a site or project.
3. Carpentry: With the house flipping revival many young people are jumping in and dramatically changing houses all in search of profit, but in this housing market it can be anything but green on the other side. Did any of these friends ask you for help because you can put together crown modeling? And did you do the work for free? Well next time, tell them to pay you because your time is just as valuable. Then bring a camera to the job site to take a picture of your work for displaying later.
   
4. Financial Consultng: If you graduated with a degree in Finances and are at a big time firm, then you know understand cost managment for major companies. Well why not take that ability and in your free time help Mom & Pop shots, or the designer down the street manage their funds. Advertise yourself and become a financial guru.