Lt. Gen. Stephen Lorenz on Leadership

When I hear the word “leadership” I typically envision another run-of-the-mill guest speaker imparting his/her views on a group of people that don’t want to listen. Why? Because throughout my 24 years of life experience, I find it particularly hard to find someone that can really deliver an intelligent, thoughtful, and relevant speech about the topic. The word “leadership” gets tossed around so often for me that I lose sight of its actual meaning.

However, all that just changed today with an hour long speech by Air Force Lt. Gen. Stephen Lorenz. I’ll let you read his bio. He spoke on 13 principles of leadership, which I’ll describe as “simply brilliant.” Easy concepts, but often overlooked. This was the best speech I've ever heard on leadership. Hands down. The presentation started with the following quote by Winston Churchill. I’ve heard it before, but it meant more to me today:

"To every person there comes in their lifetime that special moment when they are
figuratively tapped on the shoulder and offered a chance to do a very special
thing, unique to them and fitted to their talents; what a tragedy if that moment
finds them unprepared or unqualified for the work that would be their finest
hour."

Wow. How true. Preparation, doing your homework, etc…..Are you prepared to do something amazing? Here are the 13 principles:

1. Learn the art of balancing shortfalls—you never have enough time, money, or manpower: Become a doer. Don’t ever give up. Even though you may fail, at least you tried.

2. Life is a marathon, not a 50-yard dash: Plan, plan, plan! You must live to fight another day. Don’t get tripped up by failures, there is always tomorrow.

3. Keep your eye on the ball: A leader sets the tone in any environment. If your organization fails, it’s your fault.

4. The toughest word to say in the English language is “yes”: Don’t just say “no,” always look into it first. If a leader says “no,” the organization will say “no,” and it becomes a habit. You must know your audience and become a cross-generational leader—knowing when to apply different techniques and tactics to lead all types of people.

5. Always make your decisions in the light of day: Stop wrestling tough decisions in the dark—wait until the sun is in your face. Tomorrow is another day.

6. Don’t lose your temper—unless you plan to: As a leader, you must know when to take particular action to achieve “effects.” People respond differently to different situations, so you must know when to yell, cheer, put your foot down, etc in order to motivate. It’s all about the effect.

7. You have to be able to lead your people, get along with your peers, and manage your bosses: There are three levels—superior to subordinate, peer to peer, and subordinate to superior. All three levels may have different opinions about you, and they are all probably correct. Learn your boss: Are they a morning or afternoon person? It is incumbent on the subordinate to get along with the superior—not the other way around. If you have to make a tough decision, rise two or three ranks (levels) above yourself and view it from their eyes also.

8. Ego is the number one facilitator, and at the same time, a detriment to mission accomplishment: Compete against yourself. Don’t blame others because you didn’t get selected, etc. Don’t let your ego determine who you are and how you will lead.

9. Never develop a sense of entitlement: It’s natural, but try not to do it. Don’t ever act like you are owed anything.

10. Apply overwhelming combat power on the point which will have the most effect: This is a methodology. Whatever you are doing, focus your direct attention on the things that are most important to achieving your desired effects.

11. Everything about leadership is grounded in integrity: Don’t ever compromise your integrity. Never sell yourself short. Little things matter—all the time.

12. You never know when you’re going to make a difference: Colin Powell was/is an amazing leader because he always cared about letting others know they are important. Something you say or do may change someone’s life—good or bad.

13. Being in the military is about service to others: This is why we are here—to serve others.

Listing the 13 principles on paper don’t do the speech justice, but I feel they are important to remember so I wrote them down. His final quote:

"My deepest fear is that I’ll look back on my life and wonder what I did with it."

I don’t know about you, but I don’t ever want to have regrets. Definitely a little reminder to make a difference…

The Potential Cost of Having Children

Stumbling on Happiness by Daniel Gilbert deserves partial credit for pointing me in the overall “happiness” direction—tips, tricks, etc. An interesting argument he discusses centers on a study that examined couples before and after having children. Simply put, he says, couples overestimate their happiness at the thought of having kids, and begin a steady downward decline in overall happiness once having them, and their overall happiness level doesn’t increase again until after the kids leave home. Obviously this isn’t true for all couples, but in general people overestimate their happiness towards having children—I think people overestimate their future happiness in nearly all areas. A question I had after reading the book: What role does money play in the happiness of couples after having children?

BusinessWeek released some data regarding the potential cost of having kids—which is likely a huge contributing factor to a couples decline in happiness. Although you can’t break down a child into dollars and cents, everything in our world continues to get more expensive, so it's worth examining.

Consider this:

The Agriculture Dept.'s latest survey found that households in the top-third
income bracket (with average pretax income of $118,200) will spend $289,380 by
their child's 18th birthday—or about $17,000 a year (in 2006 dollars).

The article goes on to say:

Indeed, the USDA survey is probably understating the cost of raising kids.
Considering extras like sports equipment, summer camps, private school, Disney
vacations, and a full-time nanny, raising a child through age 17 could cost $1
million or more. Some parents throw extravagant birthday parties and won't
hesitate to buy their kids the latest video games and cell phones and splurge on
Spanish and painting lessons.

The lesson here is not that you shouldn’t have kids—I definitely want kids. However, a couple should be aware of the extra duties that arrive shortly after birth (including expense)—hopefully I’ll get first hand experience. Anyway, the article points out some interesting facts about the cost of education, and the income differences between those with high school diplomas and college graduates.

Hedging Your Investments

I blogged about my holdings in Conoco Phillips (COP) back on September 6th, and felt compelled to discuss oil with you again after reading an article today by Robert Kiyosaki.

He makes the argument that higher fuel prices are cause for alarm in all parts of the world—which I agree with wholeheartedly because ultimately oil drives economies. Moreover, prices across the board will continue to rise. According to Kiyosaki, “Not only will fuel costs continue to go up, so will food costs. As our dollar drops in value, countries like India and China import more food from the United States.”

The reason why I am a huge advocate for energy (oil) and commodities is because even in troubled times, the inelastic nature of these sectors makes them extremely resilient to market swings—not to mention hedging your portfolio when things go south. Consumers still need transportation to Target (TGT) and Wal-Mart (WMT) for the bare essentials—no matter how bad the economy gets.

I like Conoco Phillips because of their long term growth prospects: PEG ratio, profit margins, etc. Although they are primarily an oil company, they have devoted more time and money for R&D that targets renewable energy sources.

I don’t particularly like Wal-Mart as a long term investment. Same store sales growth has been stagnant for years, which concerns me because they operate in a relatively mature market. The stock market rewards growth potential. Target, on the other hand, with a lower PEG ratio (1.13 compared with Wal-Mart’s 1.22) and higher profit margins may outpace industry growth averages—making them a more attractive investment.

Troubled times calls for……..rational investments—it never hurts to invest in the very things you think are on the rise: oil, food, etc.

Sweeten Your Holiday Spending

The Wall Street Journal weekend edition had a great article titled “Getting the Best From Cards’ Teaser Rates.” I found the article extremely valuable in light of the Christmas season.
Here are some highlights:

-Read the fine print: As issuers sweeten their promotions, make sure you understand ALL the terms and conditions. Many promotions are offered for only three to six months, compared with the 12-month deals more typical in recent years.

-Supercharge your spending: Savvy consumers can take steps to maximize their benefits. You’re probably going to spend a fair amount of money this holiday season, so why not get something back? The Citi CashReturns card offers a 5% cash back on all purchases (with no limits) for three months, but then drops to 1% after the introductory period.

-Consider long-term rates: Pay attention to the rates! I only know a few cards with 0% APR financing—even then, it’s for a limited time. Most companies offer 0% on balance transfers only. If you get stuck, you’re likely going to pay 15% or higher….ouch.

Most people get sick of promotional offers; however, if you really pay attention and read the fine print, you can get some nice rewards: bonus miles, cash back, instant rebates, etc. Bottom line: know yourself and your spending habits. Just because a credit card offers flexibility doesn’t mean you need to make a purchase.

Three Great Tips For Successful Investing

With the DOW hovering around 13,000 from the mortgage crisis fallout, I felt compelled to give you some investment advice: know yourself; determine your time horizon; and start now.

Know yourself: I’ve had people ask me: What is the best investment? Easiest answer: It depends. The first step to successful investing (notice I’m making a distinction between investing and trading) is knowing yourself. What is you tolerance for risk? During rough times will you continue investing or jump out a third story window? Determining your tolerance for risk sets the stage for all your investments and will help give you a proper mix of investments (stocks, REITs, bonds, etc). I have a high tolerance for risk, which is one of the reasons why I dabble in individual stocks. Hopefully they will boost my return.

Determine your time horizon: Most of my investment advice spans 20+ years, with some exceptions for individual stock trading. If you need a large sum of money in three years or less, then you probably don’t want to buy stocks. Saving money for a down payment on a house, a car, etc means your better off keeping cash in a money market account or short term CD so you’ll have a guaranteed lump sum when you need it. I’d hate to see anyone lose a huge percentage of an investment simply because they failed to realize their time horizon.

Start now: The time value of money is a beautiful thing. According to MarksJarvis, “In order to accumulate $1 million at retirement, you'll need to invest just $20 a week in a simple stock-market mutual fund when you're 19, about a $100 a week if you wait until you're 35, and roughly $300 a week if you delay until age 45, assuming a retirement age of 65 and an average annual return of 10%. (Though 10% is in the ballpark of how the market performed historically over many decades, there's no guarantee that it will continue to do so.)” I’m going to make a distinction here: don’t invest in a simple stock-market mutual fund—use a long term index fund like the Fidelity Total Market Fund, etc. 10% long term may be a stretch—I’d say 8% is more likely. If you want to do better, I’d have 20-30% of your portfolio in foreign investments—possibly more if you have a higher tolerance for risk.

Updates For My Readers

A couple things:

1. It’s almost Thanksgiving! Don’t forget to tell someone how much you appreciate having them in your life…everyone appreciates a compliment now and then.

2. I promised to provide more information regarding what I’m reading (books, blogs, etc.)—so here goes:

Reading Now:
Mad Money by Jim Cramer. I haven’t made up my mind about this guy yet. Charismatic, no doubt; however, I question his methods a bit. The only thing I know for sure is that he has the power to move the market—so I’m listening. The Age of Turbulence by Alan Greenspan. The former Fed Chairman tells his life story--a little dry, but loaded with great information.

More Interesting Blogs:
I continue to find great blogs. A few that caught my attention are MyMoneyBlog, IWillTeachYouToBeRich, NetBusinessBlog, and AndrewsThoughts.

The first three I stumbled upon either from referrals or my own search. The last one is written by my friend Andrew Pratt. He is also an Air Force Academy graduate, a Contracting colleague, and insightful in the business realm. Glad to see you're back, Andrew!

My Blog Has Its Own Domain

After careful consideration, I decided to assign my blog its own .com domain name—www.brianreeseblogs.com

A quick Q&A:

Q: Why move your blog to its own domain?

A: Two reasons: An attempt to reach a wider audience. Many search engines crawl actual domains rather than a sub-domain like .blogspot.com. Moreover, Google technically owns all content on its blogspot.com addresses, so having your own domain name gives the writer more flexibility and control. Google hosts my .com for free.

Q: Will http://brianreese.blogspot.com still work?

A: Yes, using my old Blogger domain automatically redirects you to www.brianreeseblogs.com

Q: Why can’t I just type in brianreeseblogs.com? It won’t work!

A: This involves the domain company (GoDaddy.com) attempting to resolve a glitch with Google Blogger. At the moment I can’t find a reliable way to automatically have both work—it has to do with the host failing to ping them properly. For now, you must have www in front of the domain for the site to work. I’ll let you know when it gets resolved.

Q: I want to switch my .blogspot to a .com, .net, etc. How do I do it?

A: Google Blogger gives decent directions in its “help” section. Just type in a search and walk through the steps. I paid GoDaddy.com $45 for my own domain name for five years. There are a ton of add on opportunities (advertising, email, PayPal, etc), but for now, since my blog is not monetized, I didn’t feel the need to add any extras.

The Best Investment Vehicles for Military Personnel

There seems to be some confusion regarding the best long term investment vehicles for military personnel—so here is the rundown—best to worst

1. Roth IRA: An investment vehicle that accepts annual contributions up to $4,000 a year (goes to $5,000 in 2008). Taxed on the way in; NOT on the way out—meaning you don’t get any tax exemptions for contributing. Your investment grows tax free; you must begin withdrawals at age 59 1/2.

2. Thrift Savings Plan (TSP): Operates like a traditional IRA, but allows contributions up to $10,000 a year, instead of just $4,000 for a traditional IRA ($5,000 in 2008). There are a certain number of funds you must pick from that operate like a mutual fund—I don’t like this method because of the traditionally higher expense ratios— I prefer index funds.

Please note: The TSP is the best thing going for civilians working in the military because they are matched, much like a 401k. However, military is unmatched, so the Roth IRA is a better way to grow your investment.

Final analysis: Fully fund your Roth IRA first; any leftover dollars move into the TSP. For now, don’t worry about a traditional IRA.

I’ve had requests for help from individuals here at ASBC; if you have questions or want help setting up your accounts, please contact me and we’ll work something out free of charge! breese27@yahoo.com

If you want to know more about the different IRAs, The Motley Fool does a decent job in this article explaining some of the differences between them.

The Subprime Crisis Continues....

BusinessWeek writer Steve Rosenbush released a frightening article today highlighting the potential $2 trillion economic fallout as a result of the subprime mortgage crisis.

I know you’re probably thinking the mortgage and banking sectors looks attractive (contrarian); however, you must look at the quarter to quarter balance sheet of companies in this industry to see how they are making money, and how they plan to press forward through this mess.

Even though companies like Bank of America (BAC), Citigroup (C), and Merrill Lynch (MER) appear rock solid based on their trailing P/E valuations, you must dive deeper into their finances to see the underlying problems—forward P/E, PEG growth, short interest, etc.

If they can’t generate enough quarterly revenue to pay off their massive debt, the chances of a small investor generating a return in the near future remains dismal at best. My recommendation is to avoid buying these companies until their situations improve. It could get worse before it gets any better.

Stumbling on Happiness by Daniel Gilbert

If you’ve ever had even the slightest inclination as to why you can’t seem to find happiness in your life, then I have a book for you—Stumbling on Happiness by renowned Harvard psychologist Daniel Gilbert.

The book begins with a few rants and raves, while providing a broad perspective outlining the various cognitive processes at work in your brain. Its chock full of scholarly studies, mind tricks, and everyday stories that build on his overarching theme: We are unable to accurately predict our future happiness, because we can’t even explain how we truly felt about our past experiences.

He uses numerous passages from former philosophers (some of which I studied in college) to help explain that happiness is something all humans seek, but few actually understand when they are truly happy.

From philosopher Blaine Pascal:

All men seek happiness. This is without exception. Whatever different means they
employ, they all tend to this end. The cause of some going to war, and of others
avoiding it, is the same desire in both, attended with different views. The will
never takes the least step but to this object. This is the motive of every
action of every man, even those who hang themselves.

Even those who hang themselves? In the end, they were seeking happiness too—although it’s nearly impossible for most people to imagine being happy in this situation.

An excerpt from Stumbling on Happiness:

The fact is, we misinterpret our emotional responses of future events. For
example, most Americans can be classified as one of two types: those who live in
California and are happy they do, and those who don’t live in California but
believe they’d be happy if they did. Yet, research shows that Californians are
actually no happier than anyone else—so why does everyone (including
Californians) seem to believe they are? California has some of the most
beautiful scenery and some of the best weather in the continental United States,
and when non-Californians hear that magic word their imaginations instantly
produce mental images of sunny beaches and giant red wood trees. But while Los
Angeles has a better climate than Columbus, climate is just one of many things
that determine a person’s happiness—and yet all those other things are missing
from the mental image. If we were to add some of these missing details to our
mental images of beaches and plan trees—say, traffic, supermarkets, airports,
sports teams, cable rates, housing costs, earthquakes, landslides, and so
on—then we might recognize that L.A. beats Columbus in some ways (better
weather) and Columbus beats L.A. in others (less traffic). We think that
Californians are happier than Ohioans because we imagine California with so few
details—and we make no allowance for the fact that the details we are failing to
imagine could drastically alter the conclusions we draw.

Some of the highlights:

- We have a tendency to recall and rely on unusual instances, which is one of the reasons why we often repeat mistakes

- We tend to remember the best of times and the worst of times instead of the most likely of times. This can drastically impact our happiness level tomorrow because we set unlikely expectations based on a misrepresentation of our happiness in the past.

- “Economists and psychologists have spent decades studying wealth and happiness, and they have generally concluded that wealth increases human happiness when it lifts people out of abject poverty and into the middle class but that it does little to increase happiness thereafter—“declining marginal utility”—it hurts to be hungry, cold, sick, tired, and scared, but once you’ve bought your way out of these burdens, the rest of your money is an increasingly useless pile of paper.”

- Imagination is an amazing gift. However, “when we imagine future circumstances, we fill in details that won’t come to pass and leave out details that will. When we imagine future feelings, we find it impossible to ignore what we are feeling now and impossible to recognize how we will think about the things that happen later.”

Okay, so how can we most accurately predict our future happiness? There is no simple formula—imagination often tricks us. The best method is to find people working and living in your estimated future and seek their mentorship. Find out everything you can about their jobs, lives, lessons learned, etc…..this is a simple concept, but most people fail to do it.

Please note: Although I thoroughly enjoyed the book, it failed for me on a spiritual level because Gilbert failed to acknowledge some form of higher power helping guide our lives. Do I mean if you are religious then you’ll be happy? Absolutely not. Your happiness level is ultimately in your hands. However, having a spiritual grounding can help formulate a plan for your life, which can give you hope for a better future….

Air Force Hockey

Congrats to my former hockey team the Air Force Falcons for continuing last seasons success--there are plenty of wins to come for this years group. The hard work is paying dividends, and the national polls are finally taking notice.

NHL.com wrote a feature about my good friend Eric Ehn, which you can find below. Good luck the rest of the way!

Eric Ehn - On Campus

A Little Quiz

As we rapidly approach the upcoming presidential election, wouldn’t it be nice to know where each candidate stands on key issues, and how closely related your individual beliefs align with each?

I think we have a solution—emphasis on “think.” I tried it, and ended up with Mitt Romney, although others were very close too. I don’t plan to vote strictly party lines; I’ll vote for the candidate I feel takes a stance on the issues I care most about. Please note: I refuse to publicly back a candidate—but I’ll tell you who I voted for after the election….

To get started: Glassbooth presidential quiz

- Give a plus or minus to each issue in the left hand column; make sure to use all 20 points; multiple points are allowed depending on how strongly you feel about a topic
- Move on to the next step and take the quiz
- Your closest candidate will be revealed, and then you can click to see why your views align

Is the quiz accurate? I’m not sure, but its fun anyway.

Don't Try To Explain God Using Science....

I had this presentation sent to me a while ago. I don’t know who made it, but certainly an enjoyable read—especially for those that insist God doesn’t exist because there is no scientific evidence. I’d hate to be the Professor….ha ha!

View the slideshow here (about 50 slides......but worth it) Click through the presentation using the arrows on the top right hand side of the page.

New Comment Platform from Intense Debate

Readers,

I have added a new comment platform developed by Intense Debate. If you click comments at the bottom of a post, a window pops open prompting you for a username and password. If you are a member at Intense Debate, you can enter your info, otherwise click cancel and type your comment as you normally would, and enter other info if you want.

If you don' like the new comment features--please tell me, and I'll switch back to the old Blogger platform. Thanks!

-Brian

Keynote Speaker: Lt. Col "Gene" Carter -- Tuskegee Airmen

Just days after a brilliant speech by Dan Clark, Lt. Col "Gene" Carter gave a firsthand account of the history and events involving the Tuskegee Airmen.

A brief history of the times: Hitler invades Poland, 1939. Mussolini introduces "fascism." The Japanese invade Pearl Harbor--December 7th, 1941. America officially enters WWII.

During this unprecedented time in our history, amidst the hatred and racism at home, some young African American men accepted an opportunity to earn their pilots license and fly for the United States--they are the Tuskegee Airmen.

He gave an intelligent hour long speech about what it was really like as an African American pilot during that time, including the rigorous seven day a week, on-call training environment to prepare them for combat.

After the war stories and a couple short videos, he gave a few recommendations for young people: (especially those in the military)

-- Three key concepts for self-improvement: preparation, education, and professional development. They are all necessary and extremely applicable; take advantage of all opportunities to get better

-- Continue learning all the time--if you don't, you're going to get left behind

-- Give your subordinates opportunities and encourage those around you to get better

-- Nobody cares more about your career than you do; you control your own fate, so don't blame anyone else if things turn out different then you planned

-- Incredible challenges lie ahead for the U.S in the 21st century; the country needs leaders; don't be afraid to be one

Gift Cards

As millions of Americans gear up for the holiday season, retailers are fully expecting another year of increased prepaid spending on various gift cards. What does this mean for consumers? Another year spent forking over hard earned dollars to big business. Why? Because more and more consumers forget to use their gift cards, and according to statistics, that number will continue to rise.

Paul Kedrosky blogged about this problem, and included a nice chart with some stats.

How can you be a good consumer and protect your money? Easy....spend those gift cards!

Keynote Speaker: Dan Clark

It’s not often you get to hear a truly dynamic speaker. Dan Clark is certainly one of those people. His speech this morning was filled with passion, energy, and inspiration. This was a rare occasion for me, not just because the guy gets thousands of dollars for a speech, but because he managed to entertain a large group of people in a huge auditorium at 7:30 AM, and not one person was sleeping. If you’ve ever been in a large lecture hall, then you know the environment I’m referring to.

His virtually flawless delivery lasted roughly an hour. He spoke about what it takes to succeed, some strategies to help get you where you want to be, and some challenges for leaders (specifically military personnel.)

Here are some of the take-aways:

-- There is always a person, place, or situation that can change your life: be aware and take advantage of different kinds of mentorship.

-- People that say there is no “I” in team probably lost; because there are two “I’s” in winning. Successful teams that win have players that consistently bring different aspects to the table night in and night out. There are no “off” days. The culture is about winning, and every person associated with that organization brings their individual strengths as a team pursues a common goal.

-- There are three key elements for success: (1) passion, (2) creativity, and (3) imagination. They can be the difference between success and failure.

-- Most of the negative things in your life happen because you ask the wrong questions. How you word things really matters, and affects those around you. Ask a positive question, you’re likely get a positive response.

-- Little things matter. Taking care of the details is an absolute must for organizational success.

-- There is a huge difference between discouraged and depressed. Discouragement is simply your response to things that don’t go your way; depression is a clinical diagnosis requiring medication—don’t get them confused.

-- As a leader, you must use your people differently, focus on their strengths and work on their weaknesses. Sometimes, all somebody needs is a little positive reinforcement. Tell subordinates they are doing a great job.

Don't Worry About Wall Street

“Gear up investors; we’re in for a rough ride.” “The stock market continues its dive as the subprime mortgage crisis unravels before our eyes.”

A news blurb echoed even more panic for Americans; noting that nearly 40% of the countries jobs may one day outsource overseas.

Oil continues to skyrocket on fear of shortages, terrorism, and overall turmoil in foreign lands.

Panic on Wall Street seems to be an every day phenomena as financial markets struggle to find anything to cheer about. What should we make of all this mess? Are things really as bad as they seem?

A few things you can do to survive the panic:

(1) Continue investing for the long term, avoiding high expense ratio funds
(2) Stop focusing on the bad news, if it really bothers you that much then stop reading about it
(3) Reinvent yourself

1. Financial markets will undoubtedly struggle as the credit crunch saga on Wall Street unfolds; however, the basic principles of investing remain intact: dollar cost average in low expense ratio index funds (Fidelity Spartan S&P 500 index). Look to shift some funds into foreign investments (China, Europe) as the dollar weakens, it will help offset some domestic risk. Avoid paying capital gains taxes in hopes of making a quick buck; the grass isn’t always greener on the other side. If you qualify, fully fund your Roth IRA—this is the single greatest investment vehicle for young people available.

2. Read A Random Walk Down Wall Street by Burton Malkiel if you can’t get a grasp on the principle of risk-reward and bandwagon trading. Good and bad news will come and go, but the savvy investors keep pumping money into the indexes. Psychologically, the constant bombardment of bad news may make you weary, if it does, stop paying attention. The market doesn’t need your watchful eye to correct itself.

3. Globalization is a fact of life; either embrace it and find a way to contribute, or you’re going to get passed by. Make changes in your life. Never stop learning. Read a book nobody is reading. Randomly email someone that interests you. Expose yourself to new and different environments to find out what you truly enjoy doing. Forget about failing and looking stupid, at least you made an attempt. And above all else: find yourself spiritually (for me it’s Christianity)

This is not a self help guide; rather, some simple ideas to get the ball rolling. When the dust settles, nothing is ever as bad as it seems….

We Get It Wrong, Wrong, and then Wrong Again

As I'm sure you already know, I enjoy reading other people's blogs. It helps bring me a different perspective, and often sparks new ideas. I was paging through Ben Casnocha's blog today and came across an interesting quote that pretty much sums up what happens when we constantly judge others, form our first impressions, and decide how someone is going to be even before we know them. A Philip Roth quote from American Pastoral:

You get them [people] wrong before you meet them: you get them wrong while
you're with them and then you get home to tell somebody else about the meeting
and you get them all wrong again. Since the same generally goes for them with
you, the whole thing is really a dazzling illusion empty of all perception, an
astonishing farce of misperception. And yet what are we to do about this
terribly significant business of other people, which gets bled of the
significance we think it has and takes on a significance that is ludicrous, so
ill equipped are we all to envision one another's interior workings and
invisible aims? Is everyone to go off and lock the door and sit secluded like
the lonely writers do, in a soundproof cell, summoning people out of words and
then proposing that these word people are closer to the real thing than the real
people that we mangle with our ignorance every day? The fact remains that
getting people right is not what living is all about anyway. It's getting them
wrong that is living, getting them wrong and wrong and wrong and then, on
careful reconsideration, getting them wrong again. That's how we know we are
alive: we're wrong. Maybe the best thing would be to forget being right or wrong
about people and just go along for the ride.

Knowing When to Spend, and When to Save

Many young people today struggle with something I’ve blogged about before—the need for instant gratification. After all, this is America—we want it when we want it, and we want it now, even if we can't afford it.

People fail to realize what a purchase will actually cost them in the long run. Here are a few hot items most young people can’t afford but purchase anyway:

(1) The toys we deem necessities for survival: iPod, PS3, cell phone, high speed internet, cable TV, etc…
(2) Eating out: appetizer, main course, drinks, dessert, etc
(3) Driving a fancy new car

I see some different issues here, that all lead back to the same problem—most people don’t know the difference between a want and a need, nor do they have the ability to spend money on the right things—or those that add value.

Starting with the items on the list, here is my breakdown:

Question #1

iPod: I purchased one. Expensive, yes; however, I use it every time I work out, so it adds value to my life. Well worth the $199-$299 price tag.

PS3: I don’t own one, and I never will. I still have a Super Nintendo, which on rare occasion, I play just for old time’s sake. But to sit in front of the new gaming systems for hours on end is beyond my comprehension. I can’t think of a bigger waste of time and money. $499 for the system; $50+ for each game; and the increase in fat cells from loafing on a sofa all day. Sorry gamers, no value added.

Cell phone: I own a cell phone with a basic plan that includes text messaging. Being away from my fiancée sucks (simply put), so the ability to communicate with her, my family, and other friends across the country remains essential. I added the text plan because throughout the day it’s nice to send and receive small messages when you can’t always be with someone. Do I own an iPhone or a Blackberry? No, because at this point in my life it will only distract me from other learning. Not to mention the huge increase in monthly expense.

High-speed internet/cable TV: Yes, I have them both. For me, high-speed internet is a must because it saves time while learning. I don’t wait for web pages to load, and I value my free time—value added. I don’t watch much television because I think it’s a waste of time, but I do watch some select channels. I enjoy watching hockey games and The History Channel, so I’ll pay the money for cable TV, although I wish there was a five channel package!

From the list above, I challenge you to do the same. Find out the things you need versus the things you want. There is no problem spending money as long as you pass the quick litmus test: (1) know what each item will cost you in the long run (opportunity cost, continuing service, etc), and (2) ask yourself if the item you are purchasing will somehow add value to your life.

Question #2

Why do people feel the need to go out all the time? Personally, now that I live on my own, I would much rather cook something at home. Furthermore, it costs a lot of money to go out once a week. A decent dinner for two with all the additions we love in a dining out experience amounts to roughly $50. You can cook a nice meal at home for around $10, not to mention the leftovers that usually give you another meal or two. I know people that eat out 2-3 times per week—scary when you do the math for one month.

Don’t get me wrong here; I enjoy going out on occasion. However, if you’re someone that can’t figure out where your money goes, keep a simple budget, and you’ll probably be shocked to find how much you spend on food and drinks.

Question #3

I will freely admit to you that I’ve made some mistakes when purchasing vehicles. However, I’ll never do it again! There are advantages to leasing a new vehicle; however, for most young people buying a reliable used car is the most economical choice, especially as oil nears $100 a barrel.

For all you fancy car owners, I’m sorry, but I just don’t get it. I drive a 2001 Olds Alero, nicknamed the “old man” car. I have never gone crazy over vehicles, and I never will. However, there seems to be a disconnect in society—own a fancy vehicle and you become more important. What? This may be true if you’re a professional athlete attending a world class dinner party in a tuxedo where they valet your car. I argue that a $400-$500 a month car payment is nothing but a waste of hard earned money. Now add fuel costs and insurance and your probably living beyond your means. A simple rule: If you can’t afford to drive the fancy car, odds are it won’t help your social status either.

Living Together Before Marriage: Right or Wrong?

In today’s society, many couples feel the need to live together before getting married. I disagree with this concept wholeheartedly because of my religious beliefs regarding marriage. However, it’s becoming a common phenomenon in our world, and something I feel couples should reexamine before moving in together. The Q&A below is from a marriage counseling class that I attended a few weeks ago.

The question: Isn’t living together a good way to find out more about your future spouse and learn the things that bother you about each other and correct them before marriage? I think this will help show us if we are compatible…..

The answer: You’re a man, she’s a woman—you aren’t compatible. Any questions?

Obviously, there are areas where men and women find common ground, yet I feel there is a ton of truth to the above statement. Relatively speaking, men and woman are not very compatible, which is one of the reasons why marriage between one man and one woman adds so much value for children. Each partner brings a different dynamic into the household, both of which are equally important in a young person’s development.

Although living with someone before marriage may make better sense financially and allow a couple to learn more about each other—just face it, men and woman aren’t very compatible. Part of marriage is about learning and growing from each other, while changing a part of you to get closer with your spouse. If you have already done all these things before marriage, how much growth will there be in the early years? Will you decide not to get married over something stupid when you could have worked out the problem? Will there be any spark left when it’s time to tie the knot? If you really don’t know your partner well enough to get married, will living together make up for this?

What is The Secret?

I just finished reading The Secret by Rhonda Byrne. The majority of the book repeats itself on the concept of the universal law of attraction, so I’ll focus on that. Simply put, everything you have in your life—good and bad— you have attracted to you. The power of the mind has made your thoughts reality.

The main takeaway for me was to think better and more positive thoughts.

It doesn’t seem like much, but how often do we have a tendency to think negatively? I find there are so many great things in life, but as humans we tend to focus on the negative. Saying things like: “I don’t have enough time.” “I don’t have enough money.” “I don’t enjoy my job.” There are many others. Why not say: “I do have enough time.” “I do have enough money.” “I actually want to go to work.”

It is incredibly easy to get sucked into negativism because the majority of people in life are complainers. Why? Because it’s easy to complain. It feels good to vent. It feels better to blame your current situation on somebody else. However, is it really someone else’s fault?

The part of The Secret I didn’t care for centers on the idea that if we think hard enough about things they will actually happen. Basically, if you are sick or injured, it is so because of the way you think. If you are poor, it’s because you didn’t think rich.

While there may be some truth to the above references, I have a hard time believing it’s the only reason. Moreover, how many experiences can a person say are from The Secret simply because of confirmation bias?

In addition, the book fails to acknowledge a higher power helping guide our lives. With 80% of the world believing in some God, I would have thought the book would address this area more than it did.

Anyway, this new age thinking is catching on in society. If you are having trouble finding happiness, it’s worth the time to investigate this book—it may just change the way you think…….

The Fed's Latest Move

The Economist released a story yesterday regarding the Federal Reserve that carries the headline: Do I Look Like A Pushover? Meaning--Ben Bernanke and the rest of the Fed acts according to what investors desire, and not necessarily the needs of the economy.

I continually wonder if investor expectations actually plays a part in the Fed's decisions. I hope they don't. The Fed has a responsibility to protect the economy as a whole, not just calming storms in the financial markets. On the other hand, is Bernanke a pushover? I don't think so.

However, as we're finding today, a short term rate cut won't always stimulate the market, especially with the downturn in consumer spending.