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Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.

Future Me: Excuse me, Jason?

Me: Yes?

FMe: <Slap!>

Me: May I ask what that was for?

FMe: Of course.

Me: What was that for, jerk?

FMe: That was payback for all of the hell you have put me through.

Me: What?!? I’ve never even met you, before.

FMe: Of course you have. I am future-you, and I’m sick of getting screwed by past-me, that is, you.

Me: Huh?

FMe: Listen close. You’re not the sharpest brick in the box and I don’t want to explain this twice.

Me: ???

FMe: A long time ago, when you first met our wife, you were dumb.

Me: I don’t appreciate….

FMe: Shut up. I was dumb then, too. Remember? You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year. On top of many other expensive decisions. Do your recall?

Me: Yes, I do. So what?

FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car. Your kids wear new clothes. You’ve got a house full of new furniture. How did you pay for all of that?

Me: Naturally, I charged it. Zero payments, zero interest for a year! Pretty smart, huh?

FMe: What happens in a year?

Me: I don’t know. I’ve got a full year to figure that out.

FMe: <Slap!> I’ll tell you what happens! Future-you, that’s me, gets screwed! Your raise didn’t come through. You had a baby. The truck broke down. Your wife took maternity leave. A roommate moved out. You took a loss in the stock market. You didn’t plan! You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.

Me: How was I to know?

FMe: <Slap!> Life happens! You never know what is coming next. You need to plan and save for what might happen. Otherwise, you’ll just accumulate more debt to be serviced by yours-truly. That is not acceptable.

Me: So? What are you going to do about it?

FMe: <Slap!>

Me: Really? Again?

FMe: <Slap!> I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help. Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux. My wife, your beatiful bride, wants a vacation that I can’t afford. You’ve screwed me, dude.

Me: I’m sorry. What can I do to fix it?

FMe: Buy me dinner, first.

Me: Huh?!?!?

FMe: Stop the excess spending. Spend less than you make, for a change. No credit.

Me: None?

FMe: None. Nada. Zip. Zilch. Only spend what you can afford. Budget. Pay off those nasty bills. Don’t leave me hanging.

Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?

FMe: Exactly. That’s the path to wealth, freedom, and financial independence. Live in the real world.

Me: Gee, thanks, Future-Me! Now I know.

FMe: And knowing is half the battle.

What would your future-you have to say to you?

Book Review: Delivering Happiness

Finance, Reviews

In April, I was given an advanced reader copy of Delivering Happiness by Tony Hsieh on the condition that I give it an honest review. Delivering Happiness is being released today and here is my review.

Tony Hsieh was one of the founders of LinkExchange, which sold to Microsoft for $256 million in 1999. Shortly thereafter, he became affiliated with Zappos.com and ended up as CEO. Zappos.com was later sold to Amazon.com as a “wholly-owned subsidiary” in a stock-exchange transaction valued at $1.2 billion.

Delivering Happiness is his story and that of the creation and management of Zappos.com.

The book is divided into three sections: Profits, Passion, and Purpose.

Section 1 is largely autobiographical. It tells the story of Hsieh’s business ventures all through his life, from a failed worm farm to a failed newspaper to an abandoned greeting card business. Obviously the business of having children sell greeting cards had improved between his childhood and mine, because, when I did it, there were many more choices than just Christmas cards. I still have both the telescope and microscope I earned selling overpriced greeting cards. An important lesson imparted is that past success is not an indicator of future success. Different personalities, goals, and economics can change the result of two nearly identical activities.

Hsieh tells the story of the excitement of building LinkExchange and how he knew it was time to move on when the excitement faded, largely due to a surprising change to the corporate culture. After leaving, he spent some time just living and reviewing his past activities. He came to the conclusion that the happiest times of his life didn’t involve money. Doing things right beats strictly maximizing profits. Taking business lessons from the poker table, he reminds his readers that the Right Decision may lose sometimes, but it is still Right.

When he gets into building his business on a foundation of relationships, he is reminiscent of Keith Ferrazzi. Don’t network. Build your relationships based on friendship and let the friendship be it’s own reward. The rest will follow.

Section 2–while denying it was intended–reads heavily like marketing copy. It is almost entirely about how wonderful Zappos.com is to work for and with. I think it is fascinating to read about how successful businesses are built and how the corporate culture comes with that, but it’s not for everyone. The important points from this section include being open to necessary change without being reckless and their insistence on transparency. I don’t believe in hoarding information and it’s wonderful to hear others feel the same way. They go as far as giving all of the profitability and sales numbers to the vendors, live, which makes the vendors feel respected and gives the vendors an opportunity to suggest future orders based on past trends. That saves time and effort for the buyers at Zappos.com.

Section 3 attempts to tie the business lessons to life lessons and almost–but not quite–succeeds. After discussing differences in vision and alignment between the Zappos executives and the board, he talks about his growing speaking arrangements. When he started, he nervously memorized his presentations, resulting in mediocre speeches. When he discovered his “flow”, it all improved. His method of writing and speaking involves being passionate about his topic, telling personal stories, and being real. When he adopted that plan, his speaking became natural and popular.

In the final chapter, Hsieh actually discusses happiness. His equation is Perceived Control + Perceived Progress + Connectedness + Vision & Meaning = Happiness. He works to apply all of this as a part of the corporate culture at Zappos, giving the employees a measure of control over their advancement, duties, and culture. The employees help write the Corporate Culture book, which is given to all new hires and vendors. I intend to get a hold of a copy in the near future. It sounds like a fascinating read.

He also addresses the three types of happiness: Pleasure, Passion, and Higher Purpose, also described as Rockstar, In The Zone, and Being a Part of Something Bigger. The first is fleeting, and the last is long-lasting.

Would I recommend the book?

Yes. I found Delivering Happiness to be incredibly interesting, but, if you have no interest in how a successful-but-not-traditional company is built and run, or if you are bored by successful people, this book is not for you. The book is largely autobiographical and a case study in the success of Zappos.com. If that sounds remotely interesting, you will not regret reading this book.

Now, the fun part. I was given two copies of the book. The first one is becoming a permanent part of library. The second is being given away.

Giveaway

There are three ways to enter:

1. Twitter. Follow me and post the following: @LiveRealNow is giving away a copy of Delivering Happiness(@dhbook). Follow and RT to enter. http://bit.ly/czd31X

2. Become a fan on Facebook and post about the giveaway.

3. Post about the giveaway on your blog and link back to this post.

That’s 3 possible entries.

Next Sunday, I will throw all the entries in a hat and draw a name.

Future Reviews

If you have a book you’d like me to review, please contact me.

Credit Card Pitfalls You Have To Avoid

Business

The idea of a credit card is appealing. You don’t have to have the money to pay for things; you can just use the card. It creates instant gratification and you start to get used to the idea of getting what you want when you want it. Unfortunately, this can be a disaster waiting to happen.

If you get in over your head and begin to negatively affect your credit rating, it is not the end of the world. By looking at things like bad credit credit cards at Money Supermarket you can start to make things right again. Watch out for these pitfalls that could cause you to stumble into a bad credit card situation.

Enticing Rewards

You see the commercial or advertisement online and reward credit cards make it seem like you will be drowning in points that can be redeemed for airline miles or gift cards. Initially, you may think that this is a great reason to sign up for a card. Then, you begin to use the card often in order to earn points.

The problem comes when you start spending just to get the rewards and you can’t or don’t make payments to return to a zero balance every month. You may end up with a hefty annual fee on top of everything else. Don’t let the temptation of getting a reward create a problem with your credit score.

Maxing Out the Credit Card

When someone hands you $5,000, you will be tempted to spend it. Why not enjoy the new money? The problem is that a $5,000 credit card balance needs to be paid back. Don’t fall into the trap of spending the entire line of credit immediately.

If you do run into some financial difficulty or you really need a credit card for something, you will have nothing left to use. If you go over the limit, you can be sure that there will be some fees that come along with it. Use it wisely. Charge something and pay it off.

Skipping a Payment or Paying Late

Once you have a credit card, everything is going to affect your credit score. If you miss a payment or pay late, you can be sure that this is going to show up against you. Aside from the damage to your credit score, most credit cards come with a substantial penalty in the form of a late fee that gets tacked onto the next payment.

Always pay on time. Pay in early if possible. Keeping up to date with your credit card will show up positively on your credit rating.

When Problems Arise

Even if you do your best to avoid these pitfalls, sometimes financial problems can be unavoidable. An unexpected emergency requires you to max out the card. You run into a problem at work and lose your main source of income.

If you see that your credit is starting to decline, it is always possible to build that score back up. Start over using bad credit credit cards to make a positive impact on your credit score. With this scenario, you get an opportunity to once again avoid these pitfalls and improve your credit.

3 Habits Every Soon-to-be-Successful Debtor Needs to Cultivate

Finance

Getting out of debt is primarily a matter of changing your habits. We’ve all heard people swear by skipping your morning cup of coffee to get rich, but that’s just a small habit. Much more important are the big habits, the lifestyle habits. Here are 5 habits to cultivate for financial success.

Frugality

“Beware of little expenses; a small leak will sink a great ship”– Benjamin Franklin

As Chris Farrel wrote in “The New Frugality“, being frugal is not about being cheap, but finding the best value for your money. When my wife and I had our second baby, we couldn’t justify spending $170 on a breast pump, so we bought the $30 model. It was quite a bit slower than the expensive model, and was only a “single action”, but for $140 of savings, it seemed worth the trade. Six weeks later, it burned out so we bought a new one, still afraid to justify $170 on quality. This thing took at least 45 minutes to do its job. When it burned out 6 weeks later, we decided to go with the high-end model. This beauty had dual pumps, “baby-mouth simulation” and it was fast. The time was cut from a minimum of 45 minutes to a maximum of 15. That’s 3 hours of life reclaimed each day fro $140. Six months of breastfeeding for each of two kids means my wife regained 45 days of her life in exchange for that small amount of money. At the rate of 6 weeks per burnout, we would have gone through 8 cheap pumps, costing $240. The high-end unit was still going strong when we weaned baby #3. Buying quality saved us both time and money. I wish we would have gone with the good one from the start. Sometimes, the expensive option is also the cheap option.

Maturity

Image via Wikipedia

“Maturity is achieved when a person postpones immediate pleasures for long-term values.” -Joshua Loth Liebman

Being a mature, rational adult is hard. It means accepting delayed gratification over the more enjoyable instant variety. We save for retirement instead of charging a vacation. It takes a lot of restraint to put off buying the latest toys, clothes, gadgets, cars or whatever else is currently turning your crank until you actually have the money to actually afford it. It means planning your future instead of looking like a surprised bunny caught in a spotlight every time your property taxes come due. (Who knew that the year changed every year? Do they really expect annual payments annually? Geez! There’s so much to learn!) It means thinking about your purchases and buying what you actually need, actually want, and will actually use instead of resorting to retail therapy whenever you feel like a sad panda. The only benefit to mature, rational management of your finances is that, given time, you will have the security of knowing that, no matter what happens, you will be okay. That’s a huge benefit.

Pleasure

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“Do not bite at the bait of pleasure, till you know there is no hook beneath it.” – Thomas Jefferson

If it hurts, you won’t do it. You have to learn to take pleasure from from things that won’t make you broke and you have to learn not to hate putting off the things you can’t afford. Take pleasure in the little things. Enjoy the time with your family. Presence means so much more than presents. So many people never learn how to enjoy themselves. Take the time to experience life and enjoy doing it.

Update: This post has been included in the Carnival of Debt Reduction.

Teaching My Child about Money in a Way I Was Not Taught

Finance

When I was in high school and working 15 to 20 hours a week, my mom gave me free rein to use the money I earned as I would like. Actually, she said nothing to me about saving for college or putting some money into savings.

When I had friends who complained that they had to put away some of their earnings, I commiserated with them. How unfair of their parents to make them save some of their money! They worked hard for their money, often at crappy part-time jobs. They deserved to spend the money any way they saw fit.

The way I saw it, why save for college? According to financial aid rules, if the student has any savings, she would have to use the majority of it to pay for college. How unfair. To add insult to injury, if prospective college students have some savings, they would qualify for less financial aid, which often meant fewer student loans.

The injustice.

Yes, it was better to spend my hard earned money than save it and be penalized.

No one told me differently. In fact, many people in my family agreed with me and encouraged me to buy a used car to get to and from my job. Of course, I paid the loan payments for the car, the gas I used and my insurance out of money from my job. That was a responsible use of money, but I also went out to eat with friends, a lot. At 16, I was going out to eat with my friends twice a week at least.

However, my plan worked perfectly. When I went to college, I didn’t have to use any of my hard earned cash. No, not me, because I hadn’t saved anything. Instead, I left college with nearly $20,000 in student loan debt. I took two years off and paid down as much student loan debt as I could, getting it down to about $8,000, but then I went to graduate school and took on more student loan debt. I graduated with nearly $25,000 in debt total. I am still paying on it today, 13 years later.

Now that I am the parent, I am one of those “awful” parents who makes her kids save. My son knows when he gets his allowance, some goes to save, some goes to donate, and some goes to spend. True, it makes me cringe when he uses his spend money on little trinkets like temporary tattoos, stickers, and gum, but I keep silent. He did the work to earn the money, and he can spend it as he likes. However, I am inflexible with saving; that money must be set aside. When he goes to college, I expect that he will have to use the majority of that money. Rather than seeing it as a waste, I see it as an important component of his financial education. Spending his money to pay a portion of his college education will hopefully make him take college more seriously.

Meanwhile, I have already begun having chats with him about money, spending, and budgeting. He watches his dad and I work hard to pay down our debt with gazelle intensity. He sees me use a calculator at the grocery store to see how much our groceries will be.

Ultimately, he will make his own financial decisions as he grows up, but I plan to teach him throughout these important years so that even if he turns into a spendthrift, he will have a firm financial understanding to revert to as he ages. While my mom taught me how to stretch money further, she never taught me how to save; I hope saving is a lesson my son takes with him throughout his adulthood.

How do you teach your kids about money management?

Melissa writes at Fiscal Phoenix where she encourages people to rise from the ashes of their financial mistakes as she and her husband are doing.

Festival of Frugality #287: The Independence Day Edition

Misc

Today, it is my please to host the 287th Festival of Frugality, the Independence Day Edition. Yesterday, was Independence Day in the US. It’s the day we celebrate throwing off the yolk of high-tax, no-rights tyranny and blowing stuff up.

That’s not what this Festival is about. As much as I love this country and enjoyed celebrating, today, the theme is the Independence Day movie.

Coolest ID4 fact, ever: A promotional piece that aired in Spain for this film set off a “War of the Worlds” type of wide spread panic. The promo featured a popular Spanish news anchor and the piece ran as if there really WAS an alien attack to occur on July 4.

Editor’s Picks

The explosion of the Welcome Wagon Helicopters was actually footage of a pyrotechnics accident on set.

Miss T. gives us Seven Reasons to Avoid Penny Auction Sites. She does a great job of explaining the evil that is Penny Auctions, from outright fraud to the rip-off that is the basic business model. Some of these sites make $5000 or more on an iPad auction. They don’t even have to carry an inventory before running an auction.

Independence Day holds the record for most miniature model-work. It beat the previous record by double.

Philip submits Turn Wasted Extra Money Into a Debt Payment. I have a friend who is positive he can’t reduce his monthly expenses at all, while eating out almost every day.

The alien ship “miniature” was 65 feet across.

Boomer presents Financial Support For Your Adult Children. I love my parents. A lot. I couldn’t imagine moving back in with them, and I’m pretty sure they’d feel the same way soon enough. Although, Mom, if you’re reading this, can I have an allowance again?

This was the highest grossing film in 1996.

Suba presents Why you should not use 401k. I’ve never questioned the wisdom of maxing out a 401k. It’s good to see those assumptions challenged and the numbers crunched.

The Best of the Rest

President Whitmore: Good morning. In less than an hour, aircraft from here will join others from around the world. And you will be launching the largest aerial battle in the history of mankind. Mankind, that word should have new meaning to all of us. We cannot be consumed by our petty differences anymore. Perhaps it is fate that today is the fourth of July, and we will once again be fighting for our freedom. But not for freedom from tyrrany or oppression or persecution. We’re fighting for our right to live, to exist. And should we win the day, the Fourth of July will no longer be known as an American holiday, but as the day when the world stood up and declared in one voice that we will not go quietly into the night! We will not vanish without a fight! We’re going to live on! We’re going to survive! Today we celebrate our Independence Day!

FMF presents Save Money on Groceries by Shopping on Wednesday posted at Free Money Finance.

Harri Pierce presents Have a second hand summer posted at TotallyMoney.

Daniel presents Top 10 Reasons to Shop Online vs. Shopping In-Store posted at Sweating The Big Stuff.

President Whitmore: It’s a fine line between standing behind a principle and hiding behind one.

Philip Taylor presents The Best Time to Buy posted at PT Money Personal Finance.

Outlaw presents Pay Yourself First and Have Money in the Bank posted at Outlaw Finance.

Crystal presents Frugal Tips for the Pet Dog posted at Budgeting in the Fun Stuff.

Matt presents The Price of Water posted at Stupid Cents.

That’s right! That’s what you get! Look at you! Ship all banged up! Who’s the man? Who’s the man?! Wait until I get another plane! I am going to line up all your friends right beside you! ~ Captain Steven Hiller

Alan presents The Cost of Online Gaming: Free to Play posted at Canadian Finance Blog.

Paula @ AffordAnything.org presents Diets and Debt: Managing Money and Your Weight posted at AffordAnything.org.

Kay Lynn presents Summer Fun for the Frugal Family posted at Bucksome Boomer.

Jacob @ My Personal Finance Journey presents Top 10 Money Saving Tips posted at My Personal Finance Journey.

If you’re so smart, tell me something, how come you go to M.I.T. for 8 years to become a cable repairman?~ Julius Levinson

Glen Craig presents The Cost of Clutter on Your Finances and Life posted at Free From Broke.

Eddie presents 55 Suggestions To Save $1000 posted at Finance Fox.

Darwin presents Are You Better Off Than Your Parents? posted at Darwin’s Money.

Sustainable PF presents Sustainability Tip #179: Loose Cap Lose Gas posted at Sustainable Personal Finance.

WHOOOOO!!!!!!!!! Elvis has left the building! ~ Captain Steven Hiller

I hope you enjoyed the carnival. Please take a moment to subscribe to Live Real, Now.

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