Author: Mr. Cheap

Categories
Investing

Beginning Investment Strategies to Consider

I’ve commented before about how dangerous it is to give investment advice to friends and family.  I keep running into people who are very bright individuals in other areas of their life, but just throw up their hands in frustration and give up when it comes to managing their money.  Never one to learn from my experiences, my goal is to put together a couple of posts, one on easy to understand and set up investment strategies and the other on investing strategies to avoid unless you REALLY know what you’re doing.

Short Investing Horizon

If you had a chunk of money sitting around that will be used for something within the next 5 years, your priority should be capital preservation (not losing it!).  A post a while back on Canadian Money Forums asked about investing $15k for 2 or 3 years, and the consensus seemed to be that for this short a time frame GICs or high interest savings account are the best place to put it.  I agree wholeheartedly.

If a person with a lump sum of money to invest for 2 or 3 years has any debt (even a mortgage), I think an even better use would be to pay down the debt.  It should PROBABLY be possible to borrow it again (assuming a decent credit rating) if the money is needed after a couple of years, plus you’ll have avoided all the interest that you would have paid in that time period (which  I can guarantee will be higher than the return on a GIC or savings account).

10 Year Investing Horizon

If you won’t need the money for at least 10 years (usually this is for retirement funds) things get interesting.  Equities (stock) are more volatile (meaning they can move up and down unpredictably).  Obviously people prefer a guaranteed return, not an uncertain one (and prefer to make money, not lose it), and therefore equities offer a greater LONG TERM *AVERAGE* return than GICs or a savings account.  To capture this higher return you need to stay in the market for longer lengths of time, to catch the periods when the market does really well (to make up for the times it does very poorly).  The longer you stay invested, the closer you should be able to get to the long term expected return (which should be around 7% by some measures).

Rather than picking specific companies, these strategies focus on asset allocation.  Read over these short descriptions, pick the one that sounds most interesting.  Spend an hour or two reading the links in its description and you should be good to go!

Couch Potato Portfolio

MoneySense magazine has what they call the couch potato portfolio (based on a US version by Scott Burns).  The idea is an intensely simple portfolio that takes minimal time or thought to maintain (they estimate 15 minutes per year and no investing knowledge required).  The core idea of this is a portfolio that has very broad diversification.  It is broken into four components, and each year these are “re-balanced” so that they will be worth the same amount.

e.g. say you put $100 in A, B, C and D .  At the end of the year A is worth $120, B and D are worth $110 and C is worth $80, you would buy and sell until you had $105 in each of the components and they’re “balanced” again.

There are SLIGHT differences in what you choose for your four components, but it’s not worth getting too hung up on.  If you want to get started with retirement savings but keep putting off “figuring out investing” and never get around to it, picking a couch potato portfolio and getting started would probably be very worthwhile.

In addition to the information at the MoneySense site, the Canadian Capitalist has summarized the portfolios.

Sleepy Portfolio

The Canadian Capitalist took his inspiration from other lazy portfolios and created the sleepy portfolio (a “fire and forget” portfolio for large sums of money, if you get a surprise inheritance this might be a reasonable place to dump it) and the sleepy mini portfolio (for small sums of money on an ongoing basis).

The sleepy portfolio is targeted for young, aggressive investors (so if you only have 10 years until retirement it might not be the allocation for you).

Others

Larry MacDonald proposed the One Minute RRSP Portfolio for those who want the barest of bare bone portfolios (it consists of 2 ETFs with an optional third cash component).  Scott Burns, Ted Aronson and the Coffeehouse Portfolio each have their own version of a “lazy” portfolio that’s worth looking at if you have the time and inclination.

If you prefer to get your investing advice from a book and not from yahoos on the internet (why are you reading this blog then? 🙂 ) Unconventional Success by David Swensen, The Smartest Investment Book You’ll Ever Read by Daniel Solin (allocation overview here) and The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein each contain easy to assemble / maintain portfolios as well as the rationale behind their construction.

How to do it

Once you’ve picked one of the above strategies and read about it, summaries of the the actual asset allocations can be found here (for all except Solin’s and MacDonald’s).  Sign up for a discount brokerage account (I like iTRADE / E*TRADE, Mike uses Questrade) and buy the ETFs that make up them up.  Wait a year and rebalance.  Repeat.

If you’re working with a small amount of money (maybe under $25k), follow Canadian Capitalist’s sleepy mini portfolio (or save in a high interest savings account / GIC) until you’ve got $25K, then move to one of the others.

Keep learning.  If you develop a deeper understanding of investing and want to follow a more complicated approach (and manage to convince yourself that it will provide higher returns than passive investing in one of these flavours), then switch.

Categories
Frugal

How To Hitchhike

HitchhikeI touched on hitchhiking in a previous post, but felt that it deserved a deeper treatment than I gave it at the time.

For those not familiar with the term, hitchhiking refers to getting rides, for free, from generous motorists who have a free seat and are willing to take you to (or at least closer to) your destination.

To give a bit of personal background, I’ve hitchhiked in Canada and across Europe (throughout the UK, Holland, Germany, Italy, Scandinavia, etc).  I based my philosophy initially on Europe on 84¢ a Day, then developed my own approach after getting bit of experience under my belt.  I haven’t hitchhiked in years myself, but I do pick up hitchhikers (and keep thinking I should try hitchhiking up to my hometown at some point).

Why Hitchhike?

First and foremost hitchhiking is a way to minimize travel costs (and save money for more important things, like beer).  Whether to allow a trip that couldn’t be afforded, travel further on a set budget, or just to save money, hitchhiking lets you go further on less (in 1996 I traveled Europe for 4 months on $5000, including airfare).

Often when traveling you end up in a bubble that protects you from the locals.  You’ll spend time with other travelers, which is great for learning about the world, but somewhat sad that you’re finding out about India when you’re staying at an Amsterdam hostel.  Often the locals that you do interact with, such as hostel staff, don’t have much interest in you as a person (they’re just doing their job) and aren’t particularly keen on a cultural exchange. Hitchhiking makes it FAR more likely you’ll be talking to a typical member of the culture you’re traveling in, and it will probably be someone very interested in talking to you (as often that’s why they picked you up).

Social Contract

There’s a number of unspoken rules when hitchhiking.  Both parties are interested in safely and enjoyably spending time with one another.  The hitchhiker does this to get closer to her destination, the driver does this to have company on the road (or to feel good about himself for helping someone out).

When someone picks you up your have an obligation to be a pleasant traveling companion.  Talking to the driver and keeping the conversation friendly and enjoyable are necessary – this isn’t the time to debate religion or politics.  I still feel badly about one time I got picked up with a woman I was traveling with at the time.  We’d tried to camp out the night before, and slept VERY badly, so shortly after being picked up we both fell asleep for the next 4 hours of the drive.  The driver didn’t pick us up to listen to us snore, and was very gracious when I apologized profusely after waking up at our destination.

Small exchanges are certainly appropriate (if you’ve packed a small lunch and want to eat, certainly offer to share – standard etiquette applies).  SOME hitchhikers will offer payment (in cash or gas), but to me this kind of defeats the whole point: if I’m going to pay for transportation, why not just take a bus?  I took a small bag with Canadian pins, coins and other small gifts that I gave to drivers (especially if they picked me up with children, the kids were delighted with small trinkets).

Since drivers have been good enough to pick me up in the past, I feel obligated to pick up hitchhikers when I’m driving.

Appearances Matter

Sadly, as in many areas in life, first impressions matter.  Particularly when drivers are speeding past at 80 km / hour, often they’ll be too far down the road by the time they decide to pick you up if its a tough decision.  Everyone should be clean and decently dressed when hitchhiking.  For men, having short hair and no facial hair is probably a good idea.  For women I’d probably err on the side of modest dress (the last things you want drivers to think is that you’re offering physical affection).  Standing on the side of the road puffing a cigarette is probably not the best idea (I’ve never smoke cigarettes, so this wasn’t an issue for me, but I recently hesitated to pick a guy up because he was smoking).

If you can do something to get attention, look harmless, and look like fun it’s probably worth doing.  While traveling Europe, if I had to wait more than 5 or 10 minutes I’d pull out a Canadian flag I was traveling with and start dancing with it on the side of the road.  One time a bus full of Asian tourists slowed down, they all took pictures of me, then it sped up and disappeared (I felt so used 😉 ).  I giggled at the time thinking about the starring role I was going to have when they went home and showed their friends the European vacation pics.

Two guys will have a tough time getting picked up (most drivers would find it intimidating to be in a car with two young guys).  Traveling on your own, or with a woman, is probably the best approach.  Two women traveling together have an easier time getting rides than two men.

Location, Location, Location

Where you hitchhike is probably the biggest factor to determine how long you’ll wait for a ride.  Sometimes the country itself is a problem:  when I was in Sweden, I couldn’t get picked up to save my life.  I was told that all students in the country can take buses for free, so motorists had the feeling that no one should have to hitchhike and wouldn’t pick you up.  After spending a morning on the side of the road, I sprang for a bus ticket to Stockholm and got out of the country.

The best places to hitchhike are where drivers are traveling slowly or stopped (giving them more time to decide they want to pick you up).  A gas station is therefore a MUCH better place to find a ride than a highway on-ramp, which in turn is better than along the shoulder of the highway.  Often drivers will be happy to drop you off at a restaurant or gas station if you ask.

In some countries (and in certain areas within them) it is illegal to hitchhike.  The Dutch police pulled over and told me that they’d be back in 10 minutes and would arrest me if I was still there.  Usually I think the police will understand that you aren’t a local and hopefully give you a warning if you’re somewhere you shouldn’t be.

Safety

Hitchhiking has a higher chance of getting into a dangerous situation than many other forms of travel.  The first comment on my review of 84¢ a day was a fear of ending up in a Hostel horror movie.  If you’re worried about this to the point that it makes you uncomfortable (or worse, decide to carry a weapon to protect yourself), you’re better off just paying for travel and avoiding the hitchhiking experience entirely.  I had two bad experiences over four months (a German guy tried to talk me into letting him fondle me, and two stinking drunk Fins offered me a ride) and in both cases I just stayed polite, alert and got out of the situation as soon as I could.

I’ve met a woman was raped while hitchhiking, so bad experiences happen (although I’ve met men and women who have hitchhiked extensively and had overwhelmingly positive experiences).  Weigh your feelings of the pros and cons and decide for yourself if it’s worth hitchhiking as a form of travel.

Have you ever hitchhiked?  Have you ever picked up a hitchhiker?  What was the experience like?

Categories
Real Estate

Foreign Buyers

In real estate there is a euphemism “this property would be ideal for a foreign buyer” which means that it’s overpriced and they need a buyer who is ignorant of local market value to pay that much for it. In smaller communities in Ontario a variant on this is “I’m going to try to find a Toronto buyer” which means the same thing.

A friend of one of my relatives played the part of the ignorant Toronto buyer. His father-in-law passed away and left his wife about $1 million. They started looking at property outside of the GTA (greater Toronto area), got excited about how cheap everything was, and started buying real estate like it was going out of style.  I’ve lost touch with them but the last I heard they had gotten themselves in over their head (they hadn’t been able to rent out or resell what they’d bought).

Apparently in the 80’s Japanese developers played the role of ignorant buyers in New York. After coming to town and finding everything cheap compared to Tokyo, they started overpaying for properties. They’ve since learned their lesson and are paying market rate.

Some times it isn’t just regional variations. A while back I saw a saw a 5 bedroom property being offered for $140k in my home town, which looked like a killer deal. I’ve been watching it for the last 6 months, and it’s still available. Finally I mentioned it to my brother and said it didn’t make sense that it was sitting on the market unsold for so long. My brother had heard through the grapevine that the condo complex it is in had gotten tired of all the rentals and had gotten new rental restrictions put in place. There was a good reason why it’s selling cheap:  it’s ideally suited to a student style of rental, which is no longer allowed.   Someone who didn’t do their due diligence and jumped on the deal might be sitting on a property that is difficult to rent out (and couldn’t be easily resold for the purchase price).

One of my brother’s friends was involved in the sale of a fly-in fish camp.  Apparently the lake that the lodge was on was dead (no fish), but the buyers didn’t know to check this.  They were babes-in-the-woods moving into a new industry they didn’t understand, thought they’d found a good deal and got taken.  I was surprised my brother’s friend talked about this, as I’d find it VERY questionable to be involved in such a transaction, and I find it shocking that he’d brag about being involved in taking advantage of people (it said a lot to me about what kind of guy he is).

Market rate is market rate. Very few people will foolishly give away a property for a fraction of its value, so if a property seems to have an abnormally low price, the first question we need to ask ourselves is why? Many “get rich quick” schemes sell the idea that you have to move fast and seize opportunities. If we don’t have a compelling reason *WHY* something is cheap (and a way to inexpensively remove this roadblock and make it worth far more), then chances are we don’t understand something about the property. It’s probably not a killer deal we need to jump on.

Nancy Zimmerman (check out her blog if you haven’t read it yet, it’s good stuff) was recently considering buying a place she found at a good price (especially compared to the Vancouver market she was used to).  Myself, and a number of other commenters were concerned about jumping on a “great deal that needs to be finalized quickly”.  I think she made the right decision not buying, and look forward to hearing if she gets any more information about if it was as good a deal as she thought (or if there was some problem lurking in the background).

Categories
Business Ideas

Ramen Profitable

I was talking to a friend recently and used the term “ramen profitable”, which she found incredibly amusing.  I realized that I had never used the term on the blog or posted about it, even though it’s a very useful perspective on starting a business.

The term was coined by Paul Graham, and he discusses it in the context of technology startups and fundraising (venture capital, not professional begging).  It basically refers to a business that makes enough to cover all its costs, plus provide a meager lifestyle for its founders / operators.

When a company is spending more than it makes, the monthly deficit is sometimes known as the burn rate.  By dividing the company’s working capital by its monthly burn rate, it can be determined how long until the company will go out of business (unless it can raise more money or something changes).  This is clearly a very stressful situation to be in, and investors will be delighted to take unconscionable terms from the founders if they realize the company desperately needs the cash to stay alive.

It’s standard for companies to have their highest burn rate at the beginning.  Imagine a professional opening an office (perhaps a lawyer, accountant, dentist or therapist).  She has to pay: rent on the office space, liability insurance, salaries (for receptionists or assistants), advertising, furniture, decorations, office supplies and all the other necessary expenses before she earns a dime from a customer.  In such a situation, it would be hard to imagine that there WOULDN’T be a high burn rate for the first few months as the company grows towards profitability.  The reason why people start businesses that are losing money on the first day is they expect it to grow to the point where it becomes profitable (then hopefully earn them more per hour of labour than they would have made working for someone else).

Some companies intentionally accept a large burn rate in order to dominate their industry.  Webvan tried to do this and went out of business when they ran out of money before they became profitable (apparently they were too ambitious and analysts have speculated they might have survived if they’d expanded a little slower).  Amazon.com lost money every year from 1995 to 2001.  These years of losses were part of their original business plan, a strategy that they have effective executed.

There are a number of benefits, for people starting a company, from focusing on becoming ramen profitable as soon as possible:

  • Most founders aren’t pursuing a “billion dollar company or bust” strategy.  They’re happy to earn a comfortable living running a successful business and don’t need to take the extra risk necessary for explosive growth.
  • It gives a clear and attainable first milestone for the company to reach.  By constantly tracking the company burn rate (and working to get it to zero), it keep a young enterprise’s priorities straight:  increase revenue while keeping expenses low to become profitable.
  • There are all sorts of risks that can kill a business, but becoming ramen profitable decreases the chance of one big one (running out of money, which technically is probably always the official cause of death).

Thicken My Wallet has written a number of excellent posts on entrepreneurship.  One of the running themes in his posts is the importance of keeping costs down when starting a company.  This is clearly 1/2 the equation of getting to ramen profitability (the other half is getting people to pay you for your product or service).

Ramen profitability isn’t an ends to itself.  If someone is working hard for a student lifestyle, they’d be better off going to get a job instead of taking all the risks of running a company.  However, reaching this stage gives you breathing room to figure out how to grow your business to a level where it is more lucrative than working a 9-5 job.

Categories
Personal Finance

Movie Review: Sunshine Cleaning

200px-Sunshine_cleaningOver the weekend I watched, and enjoyed, “Sunshine Cleaning“.  It’s a new movie by the producers of “Little Miss Sunshine” (and also staring Alan Arkin, the heroin snorting grandfather from “Little Miss”).  It touches on a number of personal finances issues, such as entrepreneurship, career satisfaction and the impact of money within a family.

Like “Little Miss Sunshine”, the film examines failure from within a family (where each member has failed).  Two sisters, Rose and Norah, have been unable to get their lives on track (and gone through a series of unengaging jobs).  Their father views himself as a “businessman” but moves from one hairbrained scheme to the next, losing money as quickly as he makes it (and promises his family more than he is capable of delivering).  One of the sisters has a son, Oscar, who is incapable of functioning in public school (going through a series of misbehaviours, culminating with licking objects around the classroom and his teacher’s leg).

On the advice of a married man Rose is having an affair with, the two sisters start a company cleaning up “biohazardous waste” (that is, messy dead bodies).  In spite of the unconventional nature of the enterprise, it engages the entire family and each is able to finally transcend their failures and enact change within their lives.

Throughout the movie Rose repeats self-help mantras to herself  “You are strong. You are powerful. You can do anything. You are a winner.”  In spite of her forced positive attitude, her life is clearly not what she expected it to be graduating from high school as the head cheerleader.  Finally at the end of one of these pump herself up sessions, she looks in the mirror and admits “I’m a fucking loser”.  She gives up on the “magic of positive thought” and finally takes responsibility for changing her own life.

My generation has a complex relationship with work.  While my father was content with a steady paycheck and keeping food on the table for his family (and was willing to trudge off to the factory every day to provide that), my generation *tries* to get fulfillment, esteem and self-actualization from our work (we’re higher up on Maslow’s Hierarchy of Needs).  We’re not always successful, but we try.

An easy critism of this approach to life is that we can’t all go off and be painters and novelists.  Someone has to keep the water running if society is going to continue to function.  I think Rose’s journey in this movie is an excellent example of someone who finds work that is personally fullfilling, while is still being a service to her community.  At a baby shower friends she was embarrased to see during her previous careers ask her apprehensively if she likes cleaning up bodies.  As Rose discusses how fulfilling it is for her, she becomes noticably prouder and more confident about herself.  She leaves half-way through the shower when she realizes that she doesn’t have anything to prove to her friends: she’s proven everything that matters to herself.

From a purely narrative perspective, I found elements of this movie frustrating.  A number of storylines ended without resolution, but perhaps this was intentional:  this isn’t a neat easy drama, it’s messy like life.  The themes are fresh and interesting, the acting and characters are engaging and the story is compelling.

If you can handle a bit of colourful language and dark humour, I recommend grabbing “Sunshine Cleaning” on your next trip to the video store.

Categories
Business Ideas

Future Leaders Training

Scott Adams writes some of his business ideas on his blog, and he says people react in one of two ways, they tell him either: it’ll never work dumbass or someone’s already doing it dumbass (and they provide a link). Both are valid reactions to any of my business ideas :-) .

A few years ago MBA programs were all the rage (they’re still popular today, but the market has been flooded with MBAs).  They’ve introduced a variety of flavours (executive MBA, part-time MBA, etc)  to cater to the needs / desires of various workers.  In every case the value proposition is the same:  this program will improve your business skills (and from this improvement, make it easier to find work and move up the ranks at a company).  Businesses were convinced of the value enough that they have sometimes paid to send top employees.

One problem, for the school, is that students take the course and leave (no repeat business).  You hope that students are happy enough with what they’ve learned that they recommend the program to others (and evangelize it in their workplace), but a school is unlikely to get the same student a second time.

This idea would be a program, put together at a school offering an MBA, that runs for a pool of employees for a short period (perhaps for one week) annually.  The school would put together a variety of classes and events, designed for employees at a specific level in an organization.  Each year would have SOME tailoring to the current business climate, challenges facing the companies industry and company specific problems, but would also focus on fundamental business skills (it wouldn’t be a week of learning how to attach cover pages to TPS reports).  Kinda like summer camp for business people (with catered lunches replacing hot dogs, and lectures on how the subprime meltdown or stimulus payments will affect their industry replacing canoeing).

The value to the employee should be obvious that they’ll learn some specific skills, make them better at their current job, and potentially get some “bullet points” to add to their resume

The value to the company is, in part, that they’re strengthening their work force without losing employees for months like they would to a standard MBA (it also “protects” them from meeting people who will work at other organizations and may try to hire them away).  The other value is that a group within the organization will all be exposed to the same ideas, and ideally would then be able to reinforce each other if they tried to enact change within the company based on what they’d learned.

The real (hidden) value would be employee retention.  Such a program would be useful for identifying the future leaders within a company and making it clear who they are (the ones sent to this every year).  This would be useful for the employees themselves (to show them the company recognizes their future potential and is investing in them and grooming them for greater responsibility), for their co-workers (to learn who they might be working with after future promotions and start getting to know them) and for these people’s supervisors (the company is signalling that they’re an important resource and not to mess with them).

For a large organization, multiple groups at different levels could be sent at different times.  For a smaller company (that wouldn’t have enough employees to fill out this sort of program), they’d probably be better focusing on this type of thing in-house.

For the school itself the clear benefit would be that the programs would continue indefinitely, with potentially multiple groups going through every year if the school could convince the company of its value.  The school should be able to reuse its faculty, facilities and resources to pull together a curriculum cheaper and faster than the organization itself could do in house.

For this post, or any other of the wacky business ideas I post, obviously I’m releasing any ownership claims I may have over these ideas. If you like something I post and feel like you can make money from it, please feel free to do so! Let me know when you’re opening and we’ll do a post on it to give you some free advertising.

Categories
Personal Finance

Scams During Tough Economic Times

During tough economic times, you might hope that scammers would lay low.  Since people are having hard times, they might have a more suspicious attitude (and scammers would do something worthwhile with their time).  Sadly, the scam artists are hurting just like the rest of us and hustling to take advantage of the desperation of others.

Advance Fee Fraud

One scam that is popular during tough times is the advance fee fraud (which we’ve touched on before).  After trying to get a loan, maybe you have the “good fortune” to run into someone who has the inside track on getting all the cash you might need (and at a very attractive interest rate no less).  The details can be whatever convoluted story the scammer dreams up, but the end result is that the loan is yours if you just pay a small “application fee” or “service charge”.  This small fee is all the scammer is after, and once he’s got it, he’s gone (along with the imaginary  loan).

The famous Nigerian Bank Scam is a variant on this. Instead of a loan, a portion of a fortune is yours for the taking, just say that you’ll accept!  Without fail, a string of “roadblocks” will crop up, each requiring you to send a “relatively minor” sum of money.  They will string you along as far as possible, bleeding you dry (and trying to get you to embezzle money “temporarily” from any other sources of funds you have access to).

It’s definitely not something you want to try at home, but Silicon.com and 419 Eater have hilarious records of exchanges where they respond to Nigerian scammers and mess with them (the ULTIMATE is when they convince the scammer to send embarrassing pictures, or to send the “victim” money first, an advance fee for the advance fee if you will).

I loved a blogger’s reaction piece (unfortunately I’ve lost the link) when a scammer called him up offering him free grant money from the government.  He just had to pay them a $50 processing fee.  He tried the obvious and said, “Ok, take the $50 out of my free money” and the woman said they couldn’t do that.  He said he wasn’t interested then, and she kept pestering him why he “didn’t want free money?”  He had to tell her forcefully that it’s not free money if he has to pay for it.  There are a large number of posts detailing that there is no free money for the taking (not even stimulus money) and the books and CDs promising to tell you how to quickly and easily get it are scams.

Employment Scams

Also related to advance fee fraud, an employment scam preys on someone’s desperation to find work.  The service posts in a variety of places (newspaper classifieds, on-line job boards, etc) that they’ll help you find a job, guaranteed or your money back!!!  You go for a meeting, and the “recruiter” spends his time chatting you up and convincing you to write him a big check for the services he’s about to provide.  You’ll be told that there’s no effort on your part, just pay the money, they’ll do all the work, and you’ll have a high paying new career in the near future.  Nothing happens (of course), and they keep stalling you.  Eventually you get angry and their tune changes (NOW they say all that they offered was resume advice and career coaching, and it’s far too late to take advantage of their money back guarantee).

I actually encountered this years ago.  I was job hunting, came across a job that looked like a fit and had an appointment scheduled.  The day of the interview, I was reading up on the company ahead of time, and almost immediate found a string of complaints that had been posted that they don’t actually offer jobs, just try to talk you into paying them money for worthless services.  I called to cancel the interview, and when the woman asked why, I told her I’d done a Google search on their company and after reading about them I didn’t want to have anything to do with them.  She started saying that I couldn’t believe everything I read on the Internet, at which point I politely got off the phone with her.

A host of similar scams prey on job hunter anxiety, like resume services.  They offer a free “proof reading” of your resume, which will result in their identifying “major problems”, and selling you a brand new resume (that they’ve just plugged your information into their standard template, something that will be obvious to the hiring manager or HR department).

At the end of the day, as rough as it is job hunting, you have to do the legwork yourself.  There’s no “hidden job market” you can buy your way into.  While it’s certainly worth getting help with your resume, talking to friends who are good writers, reading resume advice online, going to an Ontario Employment Center, or going to a university’s career services (often they’re happy to help non-students) would be far more effective (in addition to being free).

Have you encountered any scams recently trying to take advantage of people’s desperation in the current economy?

Categories
Opinion

Friends and Family as a Form of Insurance

I mentioned in a recent post how stories influence public policy. Social supports are sold on the idea of a poor downtrodden individual who has a run of bad luck, and putting a system in place to catch them before they hit bottom. It may be a woman with children trying to escape a cycle of abuse at the hands of her husband, a family just scraping by when a child is diagnosed with leukemia, or an immigrant family who runs a convenience store and one of the members is shot in a robbery (and they don’t have emotional support to deal with the aftermath).

You’d have to be pretty hard-hearted to say “screw them!” to people in any of these situations, and I think it’s VERY rare that anyone actually has that reaction. Most people I’ve known, from across the political spectrum, genuinely want to help people who are in a tough place. They often just differ on the best way to help them.

I often wonder how much the reality of the populations being served by these programs match the image they are sold on. I also wonder why none of these people have friends or family that can help them.

My personal “safety net” in order of desirability is: self-insurance, insurance, friends and family, and government programs. I’m fortunate that self-insurance takes care of most of the risks in my life (I’m single, so I don’t need life insurance, and as a grubby grad student disability insurance would be close to useless). The biggest risk for me currently would be liability involving my condo, and I have insurance that covers that (with a very high deductible).

If I ran into problems in my life that neither of these would take care of (say a prolonged serious illness that depleted my savings or that prevented me from taking care of myself) friends and family would be the next place I’d look for help. I have one friend I know for sure would take me in no matter what happened, and within my family there are two homes that would also put me up. Two other friends would certainly give me a place to stay for a short period (say a couple of months) while I got back on my feet from a temporary setback. When we talked about this once Mike jokingly said I could move in with him if I was willing to change dirty diapers.

So that gives me 5 homes I could potential depend on before I’d throw myself on the mercy of the state (and one place I could exchange diaper duty for rent). If an unpleasant person like me has that many options (I’d do the same for any of them, heck maybe *I’d* start wearing diapers if Mike moved in with me to give him something to do 😉 ) who I can count on if I fell into real trouble, who are these people who don’t have anyone? What kind of a SOB would you have to be to not have anyone to help you if you were living with abuse, an illness or the consequences of a criminal attack?

The purpose of this post isn’t to argue against government programs to help people in trouble. I often wish there was more transparency about who was being helped and how. The real point I’m getting at here is that your social network is one of the most valuable safety nets most of us have (and often we don’t considered it when thinking about “worst case scenarios”).

How many people in your life could you count on to take care of you if you fell into real trouble? How many people would you be willing to take care of?