- Up at 5 two days in a row. Sleepy. #
- May your…year be filled w/ magic and dreams and good madness. I hope you…kiss someone who thinks you’re wonderful. @neilhimself #
- Woo! First all-cash grocery trip ever. Felt neat. #
- I accidentally took a 3 hour nap yesterday, so I had a hard time sleeping. 5am is difficult. #
- Wee! Got included in the Carnival of Personal Finance, again. http://su.pr/2AKnDB #
- Son’s wrestling season starts in two days. My next 3 months just got hectic. #
- RT @Moneymonk: A real emergency is something that threatens your survival, not just your desire to be comfortable -David Bach # [Read more…] about Twitter Weekly Updates for 2010-01-09
How Banks Work
On the first and the fifteenth of every month, my paycheck is deposited into my bank account. Some fraction of it is saved, while another(larger) fraction is spent. They put the money in a vault and protect it from being stolen. Anything I manage to save and anything I haven’t managed to spend yet, will build interest. The bank pays me to keep my money there, even if it’s just for a short time. Why would they do that? If I asked you to hold on to $100 for me, in exchange for giving me $10 next week, you’d laugh at me. Right? If I told you that I was expecting you to keep that $100 heavily guarded in a locked room that requires a staff and utilities, you’d try to have me committed, yet that’s what banks do every day.
What’s in it for the bank?
Let’s start at the beginning. In the financial world, there are fundamentally two types of people: those who have money and those who need it.
The people who have money get it by producing something or otherwise providing value to someone for something. They then spend less than they made, leading to an accumulation of money. Woo! Rich people! Naturally, this money gets stuffed in a mattress for safe-keeping. Their money does nothing except collect dust and, occasionally, hungry insects. It is also used to soften a hard mattress.
People who need money have a few choices. They can beg for it, work for it, or steal it. The third option leads to perforation or imprisonment, so we won’t address that one. Now, you can work for your paycheck, like most adults, or you can go, hat in hand, to a charity and ask for money. But what if you want to start a business? You’ve invented the super-widget, a device guaranteed to revolutionize the world more than anything since sliced bread or the USB-powered pet rock. You got a concept and a prototype, you just don’t have the tooling or manpower to produce the millions of super-widgets the world will soon be beating a path to your door to own. You also lack a marketing budget to tell the world to stock up on path-beaters to make it to your door. What do you do?
Enter banks.
A bank will approach the first class of people and talk their money out of the mattresses and mayonnaise jars. They offer to hold the money for the people who have it. They will protect it from theft and they will pay the owner a fee for the privilege of holding on to the cash safely. Of course savers jump at the chance. They can quit worrying about the maid making the bed and becoming a millionaire and they can build wealth with no work. But wait…TANSTAAFL, right? You can’t get something for nothing. The world doesn’t work that way.
The bank takes your money–and the money of thousands of people like you–for safe-keeping. They pay you a fee, called interest. The rest, the loan out to the second group of people, the ones who need the money. They set aside some of the deposits so the owners can make withdrawals, but the rest goes into the loan-pool. People who need money come to the bank, explain their needs and demonstrate their ability to repay the loan, then they are given money for a fee, also called interest. The interest rate for the borrower is significantly higher–sometimes 20 times higher–than the interest paid to depositors. The difference between interest earned and interest paid is what pays the bank’s bills. That gap pays for the rent, taxes, and payroll.
Ultimately, a bank’s job is to connect the savers with the spenders in a way that’s reliable enough to ensure everybody benefits. If anybody in the chain ceases to benefit, the system collapses. Depositors switch back to using mattresses, borrowers go back to their loan-shark grandparents, and banks close their doors. This is the system that allows the entrepreneurial spirit to thrive, while making money for everyone involved.
Cheap Conference Calls
Sometimes, a conference call can make you thousands of dollars. Whether you’re pitching a product, or planning a new service to offer, sometimes you need to be able to talk with a team.
Business owners rely on many technological tools to conduct business day to day. Online business conferencing is one of the more popular services that owners have come to rely on. There are lots of online websites that provide free conference calling services that will save the small business owner some cash. Some of these sites offer permanent free calling for life and others offer free calling for a limited time only.
Free Conference Calls
There are a number of free conference call services out there. For most, you can use the site and get unlimited free conference calling 24 hours a day and seven days a week. This is a permanent full time offer and no credit card is needed with the best of the service. You can often conference with up to 96 different users at the same time and spend at least six hours on each call. That is more than enough time for the average business owner to conduct all of their all business with fellow participants.
Skype
Skype is another company that has a free business conferencing service for all Skype users. There is no fee for conference calls as long as all of the users have downloaded Skype. Anyone that wishes to use their mobile phone to join in can be added by purchasing Skype Credit. Payments can be made online or through payment processing services like PayPal. This is a cheap way for a small business owner to connect with team members via conference call.
Go To Meeting
GoTomeeting.com is the most well known of the companies providing conference calling services. The company offers its GoToMeeting, GoToWebinar, and GoToTraining that provide unlimited usage for business owners. Basic plans start at $15 a month which is a bargain for owners that have frequent conference calls with employees and customers. At the high end of their offering is GoToTraining at $150 per month. GoToMeeting has a lot of features including the recording and playback of all meetings. This is a useful option for any attendee that misses a meeting and needs to catch up.
These are just a few of the options available to the business owner who is on a budget and looking for a way to stay connected with his employees.
The heat(er) is on! 5 winter home energy saving tips
This is a guest post.
Turning the heat on can strike fear into the hearts of many a home owner. Rising heating bills are not a thing of the past. They are present and there is no end in sight. Relief for high winter heat costs can be found in every leaky window, poorly sealed storm door, inaccurate thermostats and many other locations in and around your home. Seeking out the cheapest gas and electricity prices from local suppliers can help reduce total energy costs and should include home energy audits and payment plans to equalize summer and winter energy bills.
Top 5 Tips for Year Round Home Energy Savings
1. Obtain a free energy audit kit from your local electric or gas provider. Approach your home energy audit as a family. Involving children is one of the best ways to decrease overall energy consumption. Teach the kids about leaving doors open, leaving lights on and the television on when not in the room. Appoint an energy officer for the house who will be responsible for reminding family members about energy conserving activities.
2. Install a digital thermostat, which can be programmed to automatically raise or reduce home temperatures when the house is not occupied such as when parents are at work and the kids are at school. Lowering temperatures to 60 degrees on mild winter days for just six hours during the work day can save on your heating bills without compromising comfort. By limiting the time not to exceed six hours the cost for bringing the home back to acceptable living temperatures is minimal; much longer and the bounce back time is increased sufficiently to mitigate any daytime savings. Reducing overall temperatures by one degree Fahrenheit can save as much as three percent on the total heating bill. Reduce the household temperature by five degrees Fahrenheit and experience a 15 percent saving which is a number most families can easily live with.
3. Comparison shop for the cheapest gas and electricity from local private energy suppliers. Ask about payment plans, adjustable billing cycles and energy reform programs. State and local governments have options for lower income homes, providing subsidies for high winter heating bills. Grants for home improvement along with energy conservation tax credits, which can be applied to heating costs, are another way to reduce budget impacting heating bills this winter.
4. Close vents, use energy efficient space heaters and alternative heat sources for additional energy savings. Closing vents to unused rooms will reduce energy consumption for the entire house. Heating less square footage will require less energy. When closing vents, be sure to seal those rooms well. Install thermal window coverings to reduce heat loss and temperature fluctuations and reduce air exchange at door thresholds with the use of a draft dodger. Using an energy efficient space heater in cold rooms can improve comfort without increasing overall heating costs. Spaces such as basements and laundry rooms can benefit from temporary use of space heaters to increase temperatures for those rooms temporarily. Consider alternative heat sources such as wood stoves and fireplace inserts. Fireplaces are generally inefficient as heat sources. However, wood stoves using catalytic converters can have energy efficiency ratings that rival high tech heat pumps.
5. Appliance energy hogs such as hot water heaters, washers, dryers, ovens and dishwashers should be evaluated each season. Lowering the hot water heater temperature and insulating the water heater and the pipes can reduce energy consumption of this one appliance by as much as seven percent. Wash clothing on cold water settings whenever possible, reserving hot water for only items needing sterilization, such as sick room bedding or cloth diapers. Never start the dishwasher if it is not completely full. The same amount of water and energy will be used to wash five plates and three glasses and will be required to wash a full meal’s worth of dishes for a family of six.
Bribes vs Rewards
What’s the difference between a bribe and a reward? It’s a question that has been heavily on my mind lately. As a father of three–1, 3 and 10–motivating children occupies a lot of my thoughts. Is it possible to motivate a child and reward good behavior without resorting to a bribe?
First, let’s look at the definitions:
bribe n.
1. Something, such as money or a favor, offered or given to a person in a position of trust to influence that person’s views or conduct.
2. Something serving to influence or persuade.
re·ward n.
1. Something given or received in recompense for worthy behavior or in retribution for evil acts.
2. Money offered or given for some special service, such as the return of a lost article or the capture of a criminal.
3. A satisfying return or result; profit.
4. Psychology: The return for performance of a desired behavior; positive reinforcement.
In my mind, a reward is given either as a goal for planned activity or a surprise for good behavior. When used for surprises, it should never be common enough to be expected. If a child is only behaving because she is expecting a reward, it is bribed behavior. She should always be surprised to get the reward.
Using a reward for goal setting is no different than collecting a paycheck. Is my company bribing me to do the work I do every day? They plan to reward or compensate me for the work I plan to do for them. While that my be blurring the line between compensation and rewards, it is valid. My future paycheck is the motivation for my current work.
Bribes, on the other hand, are reward for bad behavior. If my three-year-old is throwing a tantrum in the grocery store and I promise her candy to stop, I have just taught her that the “reward” for a public tantrum is candy. This is reinforcing negative behavior, which will only escalate in the future. If a temper tantrum earns a candy bar, what will she get for hitting Mommy with a frying pan?
The line is further blurred by preemptive bribes. If I tell my children there will be candy when we get home if they behave in the store, it’s still a bribe. Promising dessert if my son cleans his room is a bribe.
So what is the difference?
Bribes reward negative behavior. Whether that is actual behavior or anticipated behavior, bribes provide a reward for it. If you use a treat to end or preempt bad actions, you are bribing your child.
Rewards celebrate positive behavior. A promised treat for going beyond expectations or a surprise for excellent behavior is a reward. It should never become common, or the child will discover that withholding the positive behavior will generate promises of larger rewards. The goal is to reinforce the good to encourage positive behaviors even when there is no likelihood for reward.
For example, my son’s school is part of a reading contest. Over a two month period, if the students read 500 pages outside of school, they will get tickets to a basketball game. If they are in the top three for pages read, they will get personalize jerseys and on-court recognition. My son did the math and was reading enough to surpass the 500 page goal, but not enough to get into the top three. I offered a prize if he made it to 2500 pages. In my opinion, that’s a reward. He was already going beyond the requirement. I have provided motivation to push himself beyond what he thinks he can do. That’s positive reinforcement of good behavior.
On the other hand, when my eight-year-old was refusing to eat dinner, we offered a cookie for dessert if she ate well. That’s reinforcing negative behavior by giving a reward for misbehaving. A bribe.
Rewards are positive responses to positive behavior to motivate future good behavior. Bribes are rewards for negative behavior, real or anticipated, that only serve to encourage more bad behavior in the future.
30 Day Project – February
My 30 Day Project for February is to be able to do 100 push-ups in a single set. The most common reaction when I talk about it? “You’re nuts!”
Is it ambitious to the point of being aggressive? You bet. 30 Day Projects aren’t supposed to be easy. This is going to be a difficult painful month.
On the other hand, I have five fingers. How many people do you know able to do 100 pushups? I don’t know any. In 4 weeks, I will know one.
What have I done to prepare? Nada. Nothing. Zip. Zilch. I am starting this from scratch.
Here’s my plan:
At this moment, I can d0 20 pushups. I am going to start with 5 sets of 2/3 of my max(14) with a one minute break in between sets . That will happen in the morning and before bed. Each session will involve more pushups. I need to add about 3 to a set each day to get to 100 by the end of the month.
Now, it’s entirely possible that I won’t be able to manage 5 sets of 14, or that my progression is unmanageable. That’s ok. I refuse to test my endurance on this, and I’ve done no research. I’m flexible and willing to adjust my plan to match reality.
Aggressive and painful. Wish me luck.
