Author: Mr. Cheap

Categories
Opinion

Christian Owner

I was in Niagara Falls recently, and saw a big sign in a store window that proclaimed “Christian Owner”.  I’ve written on the topic before, but I found it unbelievable that someone would even CONSIDER putting up such a sign.

The most charitable interpretation of this sign would be that it somehow relates to the store’s purpose and serves to warn customers before they enter.  If I ran a store selling holy symbols, it might be worth letting customers know which religious denomination they’re for, before they come in (if someone is looking for a new crucifix and I only sell Stars of David, I’m not going to be able to help them).  This store was a general gift store, so while they may have had angels on some of their goods, they sold other non-religious items, so I really didn’t think this was the purpose.

Less charitably, and probably more accurately, their purpose may have been to tell Christians “Hey, I’m the same as you.  You should shop at my store instead of patronizing some atheist or Muslim!”.

The least charitable, and hopefully inaccurate, interpretation is that the owner is warning others away.  They’re posting the sign to say they only want to conduct business with Christians, and if you’re not one, they don’t want you in their store.

Penn and Teller have a proposal for world peace.  They suggest all barriers to trade be removed, and that as many different groups and people are encouraged to do business together as possible.  Their belief, and I think they’re on to something, is that if people are making money together, they’re going to do what they can to get along.  I read a quote from an Indian businessman who said that he’s too busy making money to want to fight with Pakistan.

When people start segregating and only doing business with people who believe the same things they do, we’re on a path for some real trouble.  The way to reconcile differing opinions is discussion and at a political / legal level through democracy.  Economic warfare where we don’t do business with people who don’t believe what we do is one step up from physical violence and can be just as harmful (talk to a small business owner who has gone bankrupt – he probably would have prefered a punch in the nose to losing his savings and livelihood).

Some people may say “well, I’d never boycott a business because of someone’s race or religion, I’m a good guy”.  I think what they’re doing is just as ugly if they do it to try and force their political beliefs on a person or company.  If you’re pro-life and you boycott a local cafe owner you know is pro-choice (or vice-versa) it’s just as bad.  The abortion debate has NOTHING to do with lattes.

In case it isn’t clear from the post, I would have found it just as offensive if there had been a sign in the window saying “Hindu Owner” or “Atheist Owner”.

Categories
Book Review

Book Review: Outliers by Malcolm Gladwell

I first heard about Malcolm Gladwell’s new book, “Outliers: The Story of Success” about a month ago and was delighted that he was putting out a new book. I was wildly enthusiastic about “Blink” and “The Tipping Point” and after reading an extract online I couldn’t wait. By a happy coincidence, a friend gave me an early Christmas gift, and it was Outliers!

In “Blink” Gladwell looked at very fast cognition (things your brain processes in the blink of an eye). In “The Tipping Point” he looked at what led to ideas propagating and spreading through society (why some take off and why some die). In this book he looks at incredibly successful people (they’re the outliers) and argues that there’s more behind their success than the myth society tells us about them (that they’re naturally brilliant & gifted).

As with all of Gladwell’s work, he’s a delight to read. He takes an interesting idea, chews away at it, and presents his thoughts, building a surprising, yet plausible, model around them. In “Freakanomics” they debunked one of the big ideas he argued for in “The Tipping Point”, so that’s the one danger of Gladwell’s work: he’s very persuasive, even when he’s wrong.

The idea behind this work is that people who are great at something (we’re talking world class talent) are great primarily because of the time they’ve invested, rather than an inherent ability. A certain threshold of “raw ability” is necessary (which is lower than you’d think), but beyond that it’s often luck whether they managed to accumulate the time required to become world-class. The time investment, he argues, that’s needed is 10,000 hours, and its often circumstance that determines whether someone who has the interest to invest that amount of time is also given the opportunity.

He gives examples supporting this from violinists at an elite Berlin music academy, Canadian hockey players, high-tech entrepreneurs, and the Beatles (apparently they’re some minstrels from England achieved a bit of fame a long time ago).

Following up on the lucky circumstances, he also builds the case that even a small lucky break early on compounds as someone who has shown an “early aptitude” is given more opportunities, which leads to an increase in aptitude, in a reinforcing cycle until they accumulate the hours to become good or extraordinary at something. He argues that the reason Chinese people are often good at math is because Mandarin has a cleaner, more regular syntax for naming numbers. This gives young Chinese students a leg up when they first start learning math, and they’re able to build on this lead (and have a positive first experience with the subject).

He presents counter examples of Lewis Terman’s study of high IQ students (they tracked the top 1% of the top 1%) in California, who didn’t really amount to much as a group (and even within the group, socio-economic status was a better indicator of success than their IQ). Terman’s study rejected two boys as not smart enough to participate who went on to win Nobel prizes.

The take-aways from the book were that if you want to be really good at something, you’ve got to put in the time (along with meeting SOME requirements, you’ll never play in the NBA if you 5’3). You’re fooling yourself if you think you’ll just naturally be world class at something. The trick is to keep practising, and the people who will excel are those who find the motivation to keep at it. If you want to excel in your profession, put in the time at the activities that are important to it. If you want to learn a new skill, put in the hours of study and practising. There’s no royal road to excellence.

I highly recommend putting this book on your Christmas (or Hanukkah, or winter’s solstice) list. Its a fun, fast read.

I kept wondering if he’d mention an age limit, but he didn’t, so maybe it’s still possible for me to get cracking on my 10,000 hours and win a gold metal in Olympic gymnastics!

Categories
Personal Finance

Personal Finance According to Buffy the Vampire Slayer

I usually hate “according to” posts where someone makes a tenuous connection between some show or a book then talks about all the lessons to be learned. Buffy the Vampire Slayer has been done before (see the bottom of this post), but ideas for this just kept bouncing in my head so I thought I’d write it up to get them out of there (sorry!).Buffy Logo

Buffy the Vampire Slayer was conceived of by Joss Whedon around the idea of a “perfect victim” from slasher and horror films, a young blond woman, who suddenly and unexpectedly pummels a monster that attacks her in a dark alley. The show builds on this idea of misdirection and sudden changes from the first scene of the first episode.

Rely on Your Friends

Buffy Group PictureEach of Buffy’s friends had their own specials abilities and expertise. Giles, her mentor, was a master of research, her friend Willow was a powerful witch, and both her vampire boyfriends were kick-ass fighters. Something that comes out over the course of the show, after we’ve seen other slayers in action, is that Buffy’s greatest ability isn’t a supernatural one: she’s an amazing leader. As well as planning high level strategy and raising to whatever the occasion demands, she also brings out the best in those around her, inspires loyalty and trust (and manages to return it, even though she’s betrayed by a trusted one in every season of the show).

No one can be an expert in all things. It’s invaluable to have contacts to go to for advice about how to evict a tenant, what would be a reasonable asset allocation for your stage in life or how to structure your will to be as tax efficient as possible.

Sometimes the best opportunities come from unexpected directions if we’re open to them. Job leads can come from someone you never expected to be able to help your career, and warnings about potential pitfalls with an investment you’re considering can come from the least expected source. Throughout the series, Xander is considered one of Buffy’s least useful friends (he causes more problems then he solves). His only real ability seems to be that supernatural females find him very attractive (and this mostly causes problems as well). Nevertheless, he manages to save the world at the end of one season by talking about yellow crayons. Unexpected? yes. Helpful? Definitely!

Rely on Yourself

Buffy First Season Box CoverWhen the situation calls for it, Buffy doesn’t hesitate to roll up her sleeves and get to work on her own. As the prophesy tells her, and she tells her friends: “…Into each generation a girl is born, a chosen one. She alone will wield the strength and skill needed to fight the vampires, demons, and the forces of darkness, stopping the swell of their numbers and the spread of their evil. She is the slayer…”.

We’ve written extensively about real estate agents (not that I’m calling them forces of darkness or anything…), but it applies in all venues of life. You’re asking for trouble if you blindly trust your insurance agent, lawyer, doctor, teacher, spouse or broker. No one is invested in looking out for you as much as you yourself. Trust others, but don’t turn off your brain when you do so.

Expect Changes in Your Environment

Big BadsIn each season of Buffy there’s a “big bad” she has to deal with (a powerful monster with a plan to rule the world). Usually dealing with them involves learning about them, discovering their weakness, laying a plan, then going to battle (while dealing with minor problems each week leading up to this). Each season the major villain is radically different (and in only 2 of the 7 season were they actually vampires). If we optimize our finances for the problems of the past, we’re going to get ourselves in trouble. Sub-prime might be the “big bad” of 2008, but its not going to be the “big bad” of 2009. Avoiding tech stocks in 2002 didn’t do you much good. The big changes are going to be caused by unexpected (and assumed to be improbable) events.

Build on your Expertise

Buffy didn’t try to train Willow as a slayer, and Willow didn’t try to train Buffy as a witch. As Mike has written about before, often the best thing you can do when the apocalypse is coming is invest in your career, do the best job you can and build on that as your greatest asset.

This can get away from us at times, as happened when her power over-whelmed her and Willow became dark Willow. She didn’t let that career setback finish her and she got back to doing what she does best (casting those magic spells).

Do What it Takes

When money got tight, did Buffy decide minimum wage was beneath her and go on welfare or compromise her morals and earn money illegally? Nope, she started working at a fast food joint. It wasn’t beneath her and its not beneath any of us if that’s what the occasion demands. If a superhero can do whatever it takes to put food on the table, so can we.

Life’s Not Fair

Originally Riff Regan was going to play Willow, but after seeing the unaired pilot, the studio wanted someone more attractive to play the “ugly girl”. Unfair? Totally. But life is unfair and we have to play the cards we’re given. Maybe you’re not the right gender, or the right race, or the right sexuality or have the right accent to do what you want. Maybe you’re not tall enough, thin enough, smart enough or experienced enough to land the position you’re desperately after.

It happens to everyone. And you shrug your shoulders, feel bad for a little while, then carry on with your life.

And maybe call Buffy and ask for her help.

Other posts about Buffy and finances are available from Finance Freelance Life, her Buffy themed carnival, Living Behind the Curve, Lazy Man and Money (actually about the actress, not the character), and advice to Buffy about her financial problems.

Categories
Frugal

How To Legally Pay *NO* Income Tax

Every year around tax time people get grumpy about shelling out cash to support the government. It always depresses me when people want more and more services out of the government, but don’t connect these services with their high tax bills (I like to call these people “Canadians”). Luckily there’s an easy method to reduce your income tax bill to nothing.

If you thinking about buying tax preparation software then consider software programs such as TurboTax or TurboTax Canada (formerly QuickTax).

Before getting into the how, a consideration is should you do this. Taxes pay for communal services such as hospitals, roads and schools that people are quite happy to take advantage of (and often happy to pay for). In the movie “Stranger than Fiction” Will Farrell plays an IRS auditor who is investigating Maggie Gyllenhaal because she deducts the money that would have gone to the military from her tax payment. Unfortunately we don’t have à la carte taxation, you pay your share of EVERYTHING or you go to jail.

Tax protesters are kooks who mistakenly believe they’ve found a legal loop-hole to avoid paying taxes, withhold paying taxes, then get thrown in jail. I definitely don’t recommend anything along those lines. Wesley Snipes got himself into trouble by falling in with some of these characters.  Luckily he’s half-vampire, so no one will mess with him in jail.

So, to get back to the title of this post, the easy way to pay no provincial or federal income taxes is just to earn less money than the minimum which is taxed in your country. In Canada, this would be about $9,850 (for someone living in Ontario according to Taxtips.ca), or $820 / month. Certainly you won’t be living like a king, but I think it’d be possible to live on this. You’ll have to calculate the maximum earnings for countries outside of Canada, but it’ll probably be a similar amount.

One man who’s living this lifestyle is Don Schrader. He felt strongly enough about not wanting to finance military conflict, that he has restricted his earning below an amount which would cause him to pay federal income tax (and lives the lifestyle this allows). He also drinks urine, so he might not be the ideal role model, but he does prove it’s possible.

Categories
Personal Finance

Is Desperation Required To Be An Employee?

It’s been over a month since Telly left a comment.  Knowing that she’s partial to posts about working 9-5 and employment issues, this is my humble attempt to get her to start visiting / commenting again.  If this doesn’t work, I may start posting pictures of my underwear like SquawkFox does.

In one of his books about real estate, John T. Reed advises that you should only hire resident managers who really need the income.  He recounts that he’s had people that are doing it as a side-job for a little extra cash, and without fail when a big annoyance came up they’d quit.  He found people who couldn’t make ends meet without the extra income from running his buildings were likely to stick around longer and put up with more.

I think he’s definitely on to something in terms of resident managers.  I was thinking about trying to find a small building in Waterloo that I could manage (up to 24 units maybe).  It seemed like a good way to stretch my graduate student funding further, and get more experience in an area that I hope to invest in personally in the future (multi-unit buildings).

He’s right though that if all my expenses were being covered by the university, it wouldn’t take too much of an ongoing issue before I said “forget this!” and moved back to a regular apartment.

Beyond the real estate consideration, I think this is probably true for most employment.  Lottery winners typically say they’re going to keep their jobs, but end up quitting.  There could be a number of explanations for this, but perhaps the next time they hit a “pull your hair out” moment at work, their winnings allow them to tell their employer what to do with the job.

For some time now, I’ve had enough in savings that I can live for a period of time without working.  I’ve often told friends and family that this brings me great comfort, as I’m not afraid of getting fired and am willing to push back on unreasonable employer demands.  It makes sense that this would lead to shorter employment terms than someone who isn’t in this position.

I read an article about a retired man who worked at Home Depot.  The company loved him (and other guys like him) as they worked for a reasonable amount of money, were personable and knowledgeable and had a good work ethic.  In the article he recounted telling his manager that he’d be away for a month the following summer.  When the manager told him he wasn’t sure if that would be possible, the older man respond “No, you don’t understand.  I’m telling you I won’t be here.  If you want me to keep working here once I get back, that’s fine.  If you don’t want me to, that’s ok too”.

I see all sort of signs with most companies that they count of employee desperation.  Perhaps encouraging your employees to dig themselves into debt with consumer purchases and always keep their lifestyle costs a little bit higher than their income is a good way to ensure a submissive, consistent workforce.

Have there been jobs you have kept or quit that your savings (or lack thereof) heavily influenced that decision?

Categories
Frugal

Cheap TV Entertainment

There’s a wave of frugality going through the world, as people are worried about jobs and money in light of a looming recession.  I’m amazed at how people have developed the expectation that spending $65 monthly (or far more) on a TV subscription is a “necessity”.  Possibly this attitude will be re-examined in the current environment.  I remember as a kid having 3 channels come in on the rabbit ears.  Some of my friends have only recently gotten cable, while I don’t have it myself.

A popular suggestion would probably be to get rid of the TV altogether and start reading library books. While I’m sympathetic when people like to rant about how brain-dead television is, in my opinion it provides an amazing diversity of engaging entertainment.  Wealth isn’t just dollars and cents in a bank account or a car that makes the neighbours envious.  The readily available, high-quality, inexpensive entertainment we have access to is absolutely part of the wealth of modern living.  Please watch this commercial for the Discovery Channel before slandering television.  If nothing else, it’s a chance to hear Stephen Hawking say “Boom De Ya Da!”

As a total aside, I had an idea for a science-fiction short story that would be about a war between Earth and a colony that wanted to break away.  The war would end up being a trade war where the colony withholds resources (radioactives and whatnot perhaps) that Earth needed shipped back, and Earth blocking entertainment from the colony (and driving them nuts when they couldn’t find out what happened next in serials they followed, and being unable to consume new music, movies and literature being produced by artists they liked).  The colonists would be unable to be satisfied by amateurish home-grown entertainment when they were used to the overwhelming supply of high-quality, sophisticated entertainment from Earth.

Say you really like TV, but want to get rid of the re-occurring expense.  What to do?  If we restrict ourselves to legal options, there’s still a variety of choices:

  1. Visit friends with cable on the night your shows are on.  Years ago I used to go over to a friends house to watch Sopranos.  We’d make Italian food beforehand, then all watch it on HBO (which I was too cheap to buy myself).  I like watching TV shows with people, and with the meal thrown in it became a great night out.
  2. Check out your local library.  Beyond a wide selection of movies, they probably also have seasons of older TV shows available.
  3. Look on Craigslist and Kijiji for used season of shows that you’ve heard are good but haven’t gotten around to seeing.  I can particularly recommend “The Sopranos”, “Sex in the City”, “Buffy the Vampire Slayer” (anything by Joss Whedon is good), the first couple of seasons of “24”, “The Simpsons”, and “Futurama”.  You should probably be able to resell it after watching it for about what you paid (how much more used is it going to be?).

Say you watch quite a bit of TV and you’ve already got through all the seasons of the older shows that you’re interested in.  “But Mr. Cheap,” you complain “I need fresh, new, SURPRISING entertainment!” Fair enough, you whine, I deliver.

I’m really not suppose to say anything about this (American readers might be best served surfing away from this page now), but in actual fact, unbelievably, not all entertainment is made in America!  Occasionally (very rarely I admit), other countries produce something that is watchable (if just barely) when nothing American is available.

From Canada

Pretty much all the “Degrassi” shows are decent for what they are.  If teen melodrama is your thing, check them out.  I found them quite enjoyable when I was in my late teens (watching highly dramatized versions of the issues I’d gone through a few years earlier was fun).  Kevin Smith has  said that watching Degrassi on TV was one of the high points when he was working as a convenience store clerk.  He’s since guest starred on “Degrassi:  The Next Generation”.

From England

The entire run of the original “The Office” is available and quite funny for anyone who has worked in an office environment.  Ricky Gervais is totally unique (I sometimes have to stop an episode and take a break because I get so uncomfortable watching him).

“Coupling” is another BBC series which is basically “Friends “, with the sex dial turned to maximum (one episode is about a woman finding a tape called “Lesbian Spank Inferno” in her boyfriend’s VCR).

From Australia

A friend recently introduced me to “Wilfred” which is a black comedy about a man, Adam, who moves in with a girl he meets (and her pot smoking dog).  Wilfred is played by a man in a dog costume and he and Adam have at length conversations about such things as what a nacho is (Wilfred’s contention is, if it doesn’t have cheese on it, its just a corn chip).  It’s never made clear (at least to the end of the first season which I’ve watched) whether Adam is actually communicating with Wilfred or if he’s psychotic.

From Japan

Anime are Japanese animated cartoon’s based on manga (Japanese comic books).  People think that all anime is “Sailor Moon”, but everyone in Japan reads manga and watches anime (many series target adults, not children or teens), so there’s probably a series that would be interesting to you, regardless of your “demographic”.

I’ll turn this over to our (far more knowledgable) readers now.  What non-American series would be worth tracking down for someone trying to go cold turkey off of cable television?

Categories
Frugal

Chance to Win!

One of my uncles (by marriage) loves to gamble.  He doesn’t bet the mortgage payment at the horse track or anything like that, but if there’s a possibility to win money, his eyes light up. One of the meanest presents I’ve ever given was a fake lottery ticket I put in his stocking.  After scratching it off, he stood up, held the ticket in the air and shouted “I won $50,000!!!”  Funny, but quite evil of me.  He said after I told him what it was that he felt like he’d just lost $50K.

I meet people who get a real thrill out of buying lottery tickets and taking trips to Las Vegas.  To me, when I see that over time the house is going to win (be it a casino or the Ontario Lottery and Gaming Corporation) I’d be willing to be the house but I don’t want to be a player.  As the saying goes, “Lottery:  A tax on people who are bad at math”.

I’m open to taking calculated risks, such as starting a business or investing in equities, but I’m not interested in something that I KNOW the risk/reward is against me.

More and more, I’m seeing promotions where they offer you the chance to win something to get what they want.  We bloggers do it when we run contests and reward links, signing up for newsletters or commenting.  My alma mater has been doing it recently trying to get me to sign up with their “affiliate partners” for insurance (“This is my chance to save and win!  Get a car insurance quote.  Get a home insurance quote.  Win $50,000 in cash.”), my ISP (Rogers) is badgering me to fill out a survey about their service and potentially win a $100 credit to my account and McDonald’s does this with their “Monopoly game” stuck on their food.

The argument might be made that these promotions are more “fun” than offering someone a discount or a small gift.  I think it’s more a way to sucker people by paying far less, per person, for an incentive.  I’d fill out the Roger’s survey for a guaranteed $5 credit to my account.  I wouldn’t fill it out for a $0.50 credit to my account (they say it takes 10 minutes to fill out).  Everyone sees the $100 and thinks “that sounds good, maybe I’ll win it!”, but chances are definitely against them.  Assuming 1000 people fill out the survey (a pretty conservative estimate, given Roger’s LARGE customer base), having a 1/1000 chance of winning a $100 credit is worth $0.10.  Is my time worth more than 60 cents / hour?  Yes it is.

Because these promotions have taken off in recent years, I think people must be responding to them in an irrational way.

Categories
Opinion

Financial Education in Schools

A number of personal finance bloggers and gurus have made the statement that our school systems do an awful job of providing basic financial literacy and this needs to be fixed. When “Rich Dad, Poor Dad” Robert Kiyosaki makes this statement, he means that the school system should teach people to be entrepreneurs, not employees. When Derek Foster says this he means an understanding of stocks and how to evaluate and purchase them. When Suze Orman says this, she means students should be taught about FICO scores, living within your means and avoiding credit card debt.

I think this is the first problem with teaching “financial literacy” in schools, it means different things to different people. Like the idea we should teach “spirituality” in school. Who’s spirituality? As soon as you get into any specific investment, you’re going to get people who feel strongly about the issue. Mutual fund investors will sneer at fixed income investors, passive investors will sneer at mutual fund investors, gold bugs will sneer at equity investors, ad nauseum.

There’s a core of personal finance that almost everyone will agree with, such as “spend less than you earn” so perhaps it would make sense to teach that? Again, I’m not so sure. I think everyone already knows that they should spend less than they earn. It’s like losing weight, everyone knows how to do it (eat less food, eat healthier food and exercise more) but the devil is in the details: execution is the hard part.

In computer science there’s an unusual phenomena that there’s a double bell-curve for people learning to program. A bell curve occur with most traits if you sample a population. If you measured men’s chest sizes, you’d find that there were a small number of men with thin chests, a small number with barrel chests, and a large clustering with average size chests. With programming ability in a first year computer science course there are TWO distributions. One hump is the normal distribution of the students who “get” programming, the other hump is the normal distribution of the students who don’t. Many approaches have been attempted, but this separation persists. I’m suspicious that with personal finance there’s a similar divide. Some people get it, some people don’t.

Beyond this, there seems to be a philosophy that schools are a magic machine that we can program to produce whatever type of people we want: 13 years latter they’ll start coming out as ordered. As close to a life-long student (I’ve spent about 20 years in school full-time so far) I’d say that far more than teaching me specific facts and information, I’ve learned HOW to learn. When I get interested in a subject (recently its been DRiPs), I have the tools to attack the subject and learn more about it. School tries to teach us how to write properly, but after 12 years of English courses, have a look at the blogosphere and see how poorly we’re performing.

Much like personal hygiene, morality, manners and nutrition, I think instruction about personal finance comes from our parents. Whether they explicitly teach us about these things or not, we learn from them.

Its not something we can pawn off on the educational system.