Category: Opinion

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.

Some time back Ben Stein, who I think is great for the most part, wrote an article on “How to have a business conversation“.  I’ve had this post bouncing around in my head for a while and after a weekend where I got rammed from *behind* by a woman with a stroller (who then muttered “watch where you’re walking” at me) and sat through a dinner party with some boorish socialists, it seemed like the time for a post about civil interactions.

Obviously learning how to politely interact with those around you is a necessary skill for urban living in general, but even more so for anyone who cares about their career or who is investing in anything that requires working with other people.

An apocryphal quote (attributed to everyone from ancient Babylonians to Socrates) I’ve always found amusing is:

“The children now love luxury. They have bad manners, contempt for authority, they show disrespect to their elders…. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and are tyrants over their teachers.”

My favourite version ended with “The world shall surely end soon.”  Part of why I enjoy it is that, much like rants about manners, everyone seems to think that TODAY’S children are unruly, and TODAY’S manners are horrid, but the truth of the matter is probably that children are as they’ve always been, and manners are as they’ve always been (we probably have nostalgia for a past that never existed).

With respect to Mr. Stein, I’d love to elaborate on a few of his points, then add a few of my own.

2. Establish common ground & 3. Say kind, generous things to your conversation partner.

At the university I often meet people from all walks of life (especially other cultures).  Having something polite to say about their culture, even if its superficial like how much you like Pad Thai, is a great way to get the ball rolling, put them at ease and open the conversation for other topics.

Its a VERY dangerous area to make criticisms of their culture.  If you tend to be a negative person and this is what you’re most comfortable doing, criticize your OWN culture.  I met an Iranian man a while back. who since we’ve become very friendly but he opened with telling me everything bad about Canada.  I was able to agree with him on most issues (and throw in a few shots at Canada myself), but I walked away thinking he’s got to annoy some people if that’s his opening line.

4. Keep your comments brief & 10. Make whatever points you need to make in a hurry, and then leave.

I’ve had fellow students come to my office and ask me really inane questions about a class we’re both in.  I often get the feeling they’re just looking for an excuse to chat and be my friend.  While I love someone wanting to be my friend (clearly they have great taste in people), it gets awkward when they just stand around smiling after I tell them I don’t know what the marking scheme is going to be for the next assignment.  This may be more common in computer science departments than elsewhere…

11.  No one needs to “earn” your respect.

I don’t encounter this as much as when I was younger, so hopefully people outgrow this attitude.  I’ve had a number of people behave quite rudely to me, with the outlook that I have to “prove” to them I’m worth being polite to.  At one job interview, the guy who ran the place was behaving very badly towards me.  Once his head techie and I got bantering about editors and software development methodologies his demeanor clearly started to change.  By that point I had seen how rude he was and didn’t want to spend my days with the S.O.B.

Similarly, don’t count on an age difference or a perceived status difference to talk down to people.  The time for that is far in the past, and its going to bite you if you try to pull it these days.

12.  Interested is interesting

This is related to a few of Mr. Stein’s points, but I honestly find people fascinating.  Often when I meet someone, I’ll find something about them quite interesting (their job, where they’re from, or an unusual experience they’ve recently had) and pump them for information.  Luckily I must come across as sincere since people seem to like being interviewed rather than finding it creepy.

This weekend I met a guy who had backpacked around Iceland and talked to him extensively about that trip, met another guy from Iran who had spent his high school years growing up in the Canadian prairies (we violated a couple of Ben Stein’s rules by discussing different view on religion within a family, how the climate has changed for Canadian immigrants from the middle east since 9/11 and overt vs. covert racism) and talked to a lesbian couple about raising a son with 4 mothers (the original couple broke up and both of his mom’s now have new partners).  I figure he’s going to have a few sessions worth of things to say if he’s ever in therapy and get’s asked to “tell me about your mother” :-).

I think the people around us all have interesting things going on in their lives, and they usually love to tell you about it.

13. Have a conversation, don’t look for a 1 person audience

I struggle with this myself sometimes.  My friends assure me that I include other people in conversations, but I can certainly be a chatterbox if a topic comes up I’m interested in.  If you’ve been talking for a couple of minutes and the other person hasn’t said anything meaningful, its well worth getting them involved in the conversation again.  Ask an open ended question (“So what were the biggest difference between Iceland and Canada?”) and let them talk for a couple of minutes.

14.  In a group setting, avoid “in jokes” or topics that are only interesting to a subset of the group

A good friend of mine and I constantly make obscure Star Wars references to each other.  The best was when a friend of ours was talking about her younger sister not being able to handle babysitting, he said (in perfect Yoda inflections):  “Not ready for the burden was she” (to which I laughed hysterically for about 15 seconds).  This is pretty rude of us, and we should knock it off.

At the dinner party I heard a 10 minute story which basically amounted to getting better seats at a Madonna concert.  Wow, thanks for stealing a bit of my life that I’ll never get back.

What tips would you have for connecting with people you’re meeting for the first time, in a business or personal setting?

A recent Toronto Life article takes a look at a popular Toronto public school and the efforts that some parents will make to get their kids enrolled in it.  Since I don’t live to far from this school, the name (Jackman) is very familiar to me.  Anyone who has looked at any real estate listing in the Danforth/Broadview area will have undoubtedly noticed the plethora of listings with the words “Jackman School District” listed.  That area ended up being too expensive for us but we still looked at some houses there.

In Canada, most schools are part of the public school system.  There are private schools available but they are not very common.  The vast majority of students are in public schools.  It’s a common pursuit among parents of young children to find out the “rankings” of various schools and make sure there child is in the “best” school available.  For some schools such as Jackman, the only way to get your child in the school is to live in the area which has caused a mini-real estate boom in the school district.

My opinion is that these rankings are complete garbage.

1) It’s the kids that result in the test scores – not the teachers or the facilities.  Getting your average (or lower) intelligence child into a better school will not result in higher test scores for your kid – if anything they will be further behind if have to go to school with a bunch of brainiacs.

2)  It only takes one charismatic school leader to raise the profile of a school.  Let’s face it – most of us want to be sold something and when someone repeatedly insists that a certain school is better than the others, then given the absense of any real evidence to the contrary, it’s easy to go along with that.

3) Things can change.  I heard a story of someone who had very young kids decided they would move to a different area because the school the kids would be attending was ranked quite highly in contrast to their previous school.  Only problem was that by the time the kids started attending school – their new school had dropped in the rankings and the old school had risen to become much higher rated.  I think the moral of that story is that you should wait until the kids are ready to go to school before moving to a better area.  🙂

4) Public school is partly daycare.  One of the things that I learned from this article was that Jackman is only goes from grade 1 to grade 6.  I was quite amazed because I had assumed that it would only be for high school that people would really differentiate between different schools.  I think grades 1-6 are part daycare/part learning basic skills.  I would be willing to bet that a child could start school in grade 5 and catch up very easily.  I can’t understand why parents would be willing to pay a couple hundred thousand dollars more for a house just so their child can use a superior type of easel for finger painting.

5)  How much of a difference is there in Toronto schools?  In the US, it appears that there is a large gap between different public schools and private schools (which are more common in the US) which is why there might be some validity in trying to school a good school.  In Canada, the funding for all public school is the same so the only differentiator is the amount of fund raising that takes place.  According to the article Jackman raised $80,000 in 2006 which is a very high amount.  It also mentioned that a lot of that money is spent on landscaping and last year they spent $76k on a green roof.  A green roof might be a notable entry in the celebre de jour bragging rights but it probably doesn’t much for your child’s education.

Some other interesting items that came out of the article:

One of the concerns with school hunting is that some people are looking for schools where all the parents/kids are the same (ie same race and language) – a comment from one father when talking about a nearby school “There seems to be a lot of Yugoslavians, we couldn’t relate to the other parents”.  Hmmm…good thing that father is not home-schooling the kids since Yugoslavia hasn’t existed as a country for quite a while.

Portables – because Jackman school has to accept any kids in their area – they are now at 106% capacity and are projecting to be at 120% in the near future.  As a result they have portables and will probably add more.  Portables and a top school?  Seems to me that portables are what you want to get away from – not gravitate towards.

Both of my uncles (by marriage thankfully) are huge bullshitters (as defined by “To attempt to mislead or deceive by talking nonsense“). I found it bizarre when they’d say things, I’d look it up later, and without fail it would be incorrect. With one of them, it’s so consistent that I can rely on what he says being wrong (if he says something I previously believed to be true, I’ll look it up just to make sure). I have no idea what the women in my family find attractive about them.

Throughout our lives we are fed information that isn’t true, and I think two important questions are “why would people do this to us?” and “what is the harm in it?”

Some people just aren’t very bright and a subset of these people are highly opinionated. I’d love it if they were self-aware enough to realize that a number of the opinions they spout are garbage and do a bit more research. However, I’m sympathetic to this group as I don’t think they mean harm and usually they’re pretty easy to spot. I’ll also humour people who clearly have a mental problem. I’ve known at least one genuine compulsive liar: people realized soon after meeting her that she wasn’t quite right and treated her with compassion and sympathy for the most part.

There are also people who spread misinformation because someone deceived them and they think its true. I don’t blame people in this situation, as long as they sincerely believe that what they’re saying is true. I hope that people in this position are willing to revise their beliefs when / if they come across evidence that they’re wrong.

I used to (naively) try to offer an alternative rationale to people if they were telling me something I knew was false. A while back a friend started talking about how a great stock buying strategy was buying companies before the stock split (“then you get twice as many shares!”). I tried to explain this was like saying you made money by exchanging a dollar for 4 quarters, that the underlying company hasn’t changed and you had twice as many shares, each worth half the previous value. He got upset with me. I’ve given up on this most of the time, and just nod my head and sadly say “good luck with that” when I see people making big bets on misinformation.

People making a career out of tricking us, like demagogues or scammers, obviously do their best to confuse us with misinformation (but I think we usually know its coming after a few bad experiences).

The motivation that really bugs me (and what I think is behind my uncles), is people who like to be in the position of knowing more than the people around them. I don’t think this is a terrible desire (although it certainly isn’t very noble), but it turns really ugly when people are too lazy to learn things and just make stuff up (guaranteed you’ll know more than everyone else if you’re talking about stuff you invented).

After listening to my uncles for a few years, I found myself in the disturbing situation that sometimes a topic would come up that they’d babbled about and I’d remember the garbage they’d said (instead of valid facts about it). Even worse, on a few occasions I used the information they’d provided (forgetting the source) and realized I was propagating the misinformation.

This is why I think spreading misinformation is incredibly harmful, it gets mistaken as valid info, and people use it to make decisions. Decisions made on the basis of things that aren’t true aren’t going to be very useful in achieving whatever we’re after.

Some people defend Rich Dad, Poor Dad saying that the book has major problems, but that there’s interesting motivational ideas about starting your own business (or whatever). I think there are real problems when you have to dig through a source of information and separate out the good and bad yourself. What if you get it wrong and lump in some bad info with the good, or dismiss good info with bad?

Thinking for yourself is important, but wading through a minefield of misinformation to try to find truths is a bad approach to learning. I already do this living my life! When I read a book, I’m counting on the author to have already separated out the good stuff for me. If he is unable (or can’t be bothered) to do so, why should I waste my time on his book?

How do you deal with people who try to feed you misinformation? How about when its a friend or a family member?

There are definitely times when it pays to buy quality.

I used to really like BiWay (a chain of el-cheapo Canadian discount apparel and general goods stores – think half-way between K-mart and a dollar store).  I used to proudly tell my friends “BiWay is *my* way!”  Surprisingly I’ve never gotten a job offer from any advertising agencies…

I gave up on them when I bought a pair of hiking boots and they had a gaping hole within 2 weeks of purchase.  A $120 pair of hiking boots that lasts a few years is a much better deal than a $25 pair that lasts two weeks.

I think people go too far with this and buy things that they *THINK* are higher quality, but actually just cost more.

Consumer Reports has done studies on wrinkle creams and found that the cheap ones work better than products that cost more than 10 times as much.  Apparently a number of ground coffees, pops (soda for Americans or “Cokes” for Texans), and potato chips available on the market are the same, except for the packaging and price.

I keep wanting to set up a taste test for friends and see if they can actually tell the difference between store brand cola and Coke or Pepsi.

One of my aunts claims that when she first started buying household products she experimented with what was available, found the products that work the best, and has been loyal to them ever since.  I’m not 100% sure I believe that she was extensive as she claims, but if she was that’s a good way to actually find things that work for you – certainly much better than assuming “higher price = better product”.

In “Influence: The Psychology of Persuasion” (an excellent book by Robert B. Cialdini), he relates the amusing anecdote of a friend who runs a store and was having trouble selling some gemstones.  Going on vacation, she got frustrated and told an employee to cut the price in half.  She was delighted to come back and find they’d sold out, but the employee had misunderstood and doubled the price.  She couldn’t figure out why customers wouldn’t buy them at one price, then grabbed them up at double that price.  The author explains that the customers were using the price as a shorthand for the quality, and figured they must be valuable gemstones if they were being sold at such a high price.

Knowing when quality matters and justifies a higher price, and when we’re just being fooled by a meaningless brand name seems to be one of the most valuable distinction for shoppers.  The most irritating part of the whole process is there is a limit to the value of time spent investigating the difference.  If it takes you 10 hours of time to figure out that a product that’s $0.25 cheaper is just as good, its going to take you a long time to recoup your time investment.

What products have you found that quality matters and which is it meaningless for?

As much as it can be uncomfortable to be the “odd man out”, I think it actually leads to benefits in many situations.

When I was at university for my undergrad, I found it quite cosmopolitan (and it was compared to the small town in Northern Ontario I grew up in). Next door to me were students from Afghanistan, Hong Kong and Bangladesh. Some students from Toronto would laugh at me and say they looked around campus and saw nothing but white faces, but I delighted in the exposure to new ideas and cuisines.

I really noticed that all the people from overseas could date as much as they wanted to. When you have a campus full of Canadians, I guarantee there are going to be a certain number of people interested in Afghani, Chinese or Bengali people, and then you have a lock on the market!

I experienced this personally when I was teaching in Taiwan. Any Taiwanese woman who liked white guys had slim pickings (so they even had to consider ugly guys like me).

I’m sympathetic to people who are uncomfortable being the object of attraction based on their race, but a date is a date. As they sing on Avenue Q: “Everyone’s a Little Bit Racist“.

John Reed writes about this topic in a broader context than race or dating. He makes the wise observation that none of your co-workers will be impressed that you’re a doctor when you’re working at a hospital (there are lots of doctors running around). Other university professors won’t be amazed at how smart you are (there are a large number of smart people drinking coffee on any university campus) and none of the other mechanics working at the garage will be singing your praises because you can change an oil filter by yourself.

He suggests that you work in a field where your abilities are valued, but rare. I had this experience where I worked at a couple of publishing companies on short term contracts (doing web development). Their staff could barely use office and were wildly impressed by anything we created. The downside was they wanted to pay wages closer to publishing industry wages instead of computer industry wages and it could be annoying having to explain things over and over to people who clearly didn’t get it (some of whom were making big decisions that would impact the project).

I think a good way for a techie to slip up the ranks to upper management would be to focus on a non-software or hardware industry. Keep getting experiences in that industry, and keep looking for promotions (even if you have to move companies to get it). There won’t be as many people competing for the CTO position (compared to people gunning for the COO or CEO positions). Your blend of industry experience and technical knowledge will be rare and valuable.

Conversely, I certainly was never the star at software companies I’ve worked at. However, I’m able to present ideas in written or verbal form better than the average computer nerd. After I went to a conference at a startup I worked at years ago, I wrote up a brief overview of the sessions I attended and the vendors I talked to and sent it out to everyone at the company (with the idea that it would give them a feel for the “buzz” at the conference). I got compliments on it from the receptionist up to the CEO (who told me that even if my programming skills were no good, there’d be a place at the company for me given that I could write something like that).

At the time I was perplexed. Long term readers are probably just as confused that anyone would compliment me on my writing skills. It wasn’t that the writing was particularly gifted, it was the blend of being able to understand the nuances of the technology industry, and convey those in writing that was rare, and therefore valuable.

Do you work in an area where your talents are rare? Could you move to an area where they’d be valued but scarce?

When people get indoctrinated into MLM (multi-level marketing, where you make money by getting other people to join and pass you a share of their earnings – the people who start it make all the money and the people who join later pay all the money) they’re warned to beware of dreamkillers.  What’s a dreamkiller?  Someone who tries to talk sense into them.

Much like abusive spouses and cults, MLM networks know its important to separate victims from the people in their lives who love them and will try to help them.  The abuser gives a reason why the person’s social network isn’t to be trusted, isolates them, which makes it easier to continue harming the person.  MLM networks label a person’s social supports as “dreamkillers” and warn inductees that the dreamkillers in their lives just want to keep the inductee as a boring ordinary person and are trying to sabotage the inductee’s efforts to improve their life.

I came across a heartbreaking letter (linked to the google cache, the original site, Writers Manifesto, seems to have exceeded its bandwidth). The woman writes a letter dripping with venom to her parents, who’s primary insult to her seems to have been warning her off of MLM, suggesting that a restaurant might be a good business to start in Australia, and wanting to talk about family instead of the author’s latest schemes.

‘How sharper than a serpent’s tooth it is to have a thankless child.’

Reading between the lines, I’m sympathetic to the parents’ perspective, they worry about their child, tried to warn her away from businesses they knew were bad news, try to help channel her entrepreneurial spirit to more productive ventures (or encourage her to build on the stability of a traditional career) and get depressed when they hear their daughter getting worked up about a new scheme (and perhaps getting angry at them when they won’t get dragged into it).

Paul Graham gave what I think is the best explanation on why parents are risk-adverse:

One is that parents tend to be more conservative for their kids than they would be for themselves. This is actually a rational response to their situation. Parent’s end up sharing more of their kids’ ill fortune than good fortune. Most parents don’t mind this; it’s part of the job; but it does tend to make them excessively conservative.

Our author goes on to iterate that she resents everything she’s done for her parents over the years, moved to another country to get away from them, and plans to become a millionaire and then spite them for not supporting her (I assume by not giving them money).  Charming to the end.

I DESPISE people and organizations which willfully and systematically introduce this kind of discord into families.  And in the case of the MLM, its just to make a fast buck.

If someone is trying to prepare you to ignore advice from your friends or family, please be very, very careful.  Whatever their rationale, when someone tells you to stop listening to all the people who love you, you’re getting out on thin ice.

Having known people who survived abusive relationships, cults and MLM networks, sadly the only thing we can do from the outside is keep telling them we think they’re in danger until they get angry at us, then we need to shut up.  After that just let them know how much we love them and we’re there when and if they need help.