Buffett on the Economy

The American economy is undoubtedly facing an uphill battle. The slow erosion of the housing market coupled with record oil prices is putting a strain on consumers and their pocket books. Even Warren Buffett is concerned, and expects this "recession" to last a while. However, he is sticking to what he knows best, and that’s to continue buying. He stated yesterday, even “If the world were falling apart I'd still invest in companies.” That’s a pretty strong statement, and a lesson to everyone listening: Keep buying!

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Some Questions to Ask Yourself Before Starting a Business

Just came across a great article by Melanie Lindner at Forbes Magazine that discusses the realities of starting a business. Moreover, it addresses some of the questions entrepreneurs must ask themselves before funding a new business venture. The following is an excerpt:

“The first question you should ask: Do you have a compelling value proposition? This point is forever worth repeating: Great ideas are only great business ideas if you can convince people to pay for your product or service at a price above what it costs you to deliver it. Just because you think the world needs new canine cologne doesn't mean anyone else agrees--or if they do, that they would be willing to pay enough to cover your electric bill.”

I would like to start a business at some point in my life, so I find articles like this very valuable. It seems there is no such thing as “too much advice” when starting a business—although simply “starting” is usually the hang-up.

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Life After Graduation: Thoughts from an Air Force Academy Graduate One Year Later

I’ve been thinking of writing a post highlighting some “lessons learned/tips & tricks” that I wish I would have known after graduating the Air Force Academy. Even though all AFSCs and Air Force Bases will be a little bit different, the following should give graduating cadets a head-start:

1. Contact your base if you don’t hear from someone by mid-June. You will likely be assigned a sponsor; however, some bases may not get all the information they need about you from the Academy. You will attend Air and Space Basic Course (ASBC) and your AFSC specific training within the first year. Contacting your base will ensure they know about you and get you signed up for these courses. I didn’t want to be “that-guy” who bothered my incoming base, but the reality is that it would have made things easier for both parties.

2. Volunteer early in your career. You’re going to do nothing but get busier as time goes by, so seek volunteer opportunities early in your career. There are an incredible amount of volunteer opportunities if you’re willing to “step-up” and get involved. However, don’t view these opportunities as a way to get a bullet for an OPR or to make yourself look good—do things because you want to do them. Be humble in everything you do and let your performance do the talking. Don’t forget: Someone is always watching you!

3. Be humble in person but blunt on paper. The caveat to remaining humble is that nobody cares about your career more than you do, so be sure to take no prisoners when writing your OPR. The new OPR gives you roughly ten bullet statements that should tell a story about you for an entire year, so make sure there is significant impact in your bullets! Writing an OPR is an art and can be mind numbing, so be sure and have your mentors/peers help you.

4. Keep a running log of every important thing you’ve done throughout the year. Maintain an easy to locate document on your computer at work that includes the Who, What, When, Where, and Why of everything you’ve done throughout the year. It is challenging enough to write an OPR, and even more challenging if you don’t remember what you’ve done for the past year.

5. Fully fund your Roth IRA before putting any money into the Thrift Savings Plan (TSP). I’m not sure what the confusion is between these investment vehicles, but most people don’t understand the difference. A passively managed low cost index fund is still significantly better than an actively managed mutual fund in the long run. Put as much money as you can into a Roth IRA by dollar-cost averaging in low-cost index funds—NOT mutual funds! The military TSP operates much like a Traditional IRA because it offers tax-deferred contributions—meaning you’ll pay taxes on your money when you want it later in life. You will pay taxes on your Roth IRA contributions going in, but your money will grow tax free. There are situations (if you deploy) where the TSP can be better, so be sure to review your options. In addition, if the military TSP ever begins “matching” contributions, re-visit the idea at that time.

6. Have a basic understanding of ALL costs associated with buying a home. The basic rule of thumb says not to buy a home unless you plan to live there for five years or more. Obviously, there are instances where it works out, but make sure you understand all costs/risks. In addition, the housing market will rise and fall, so make sure you know what you can afford. Some things to consider: mortgage rate, taxes, utilities, HOA fees or other expenses, etc. If you do choose to buy a home, get a fixed-rate mortgage—NOT an adjustable-rate mortgage (ARM). With the recent credit crunch, there are numerous horror stories of people that used builder incentives to get great mortgage rates (ARMs) without fully understanding the risk-reward trade-off.

7. You graduated, but you didn't retire. Don’t get me wrong here, graduation day is/was/will be one of the greatest days of your life, so enjoy it! However, the mentality of some recent graduates is that you’ve conquered the world and have earned retirement. The bottom line is that you start over, which is good for some people and bad for some people. If you’ve had a less than stellar cadet career, you get a clean slate. If you did very well as a cadet, nobody cares— you still have to perform every day. Use your free time to study for graduate school exams. Get involved in your local community. Try new things that may interest you. You’ve had your whole life programmed for four years, so it may take some time to adjust to your new surroundings. In addition, you may have to “re-learn” things about yourself and what you truly like to do in your free time.

8. Continue networking with your fellow graduates/alumni. There are some amazing graduates doing some amazing things both in and out of the military. The best part is that they are usually more than willing to help you out if you take the initiative. Seek them out as mentors and ask for their advice—don’t forget it’s still a “who you know” world.

Final thoughts: The Air Force Academy has prepared you in ways you won’t fully understand or appreciate until you leave. Take advantage of this. Be your own person and figure out your own leadership style, not somebody else's. Whatever you are, be a good one. Feel free to contact me if you have additional questions at: breese27(at)yahoo.com or find me on my blog at http://www.brianreeseblogs.com/

Four Things to do In Your 20's: A Response to Cameron Schaefer

The following is my response to Cameron Schaefer as he has asked for input towards his future post called: 20 Things to Do in Your 20’s. Why my top four you might ask? Why four and not five? Why four and not ten? Because I don’t want you to make this your top 10 list. Use the following in your own way, and not simply the “secret to life” top 10 list…

1. Read 2-3 Books per Month (or more). Once you’re finished with college and all those “mandatory” reads, pick up some books that may actually interest you. For me, these books are usually about investing, religion, or psychology. Ben Casnocha calls this exposing yourself to as much randomness as possible—I think he has a great point here. Read a book nobody is reading. Listen to a lecture that most people are sleeping through. Ask questions, dig deeper, and take notes. I find I don’t remember much if I don’t write it down. Cameron Schaefer wrote a great post called: 7 Ways to Remember What You Read.

2. Actively Seek Mentors. For some reason there seems to be confusion regarding what constitutes a mentor. I define a mentor as anyone who can potentially add value to something. A friend can be a mentor. A relative can be a mentor. Moreover, the best mentors I’ve had are the people that challenge you to be better and constantly seek to improve you as the mentee. Find people you can bounce ideas off of. I have mentors that I talk business with. I have mentors that I talk about Christianity and religion with. I have mentors at work, etc, etc. Just remember: People are always willing to help you and nobody reaches their full potential alone.

3. Study the “Big 3”: Religion (or spirituality), Your Marriage, and Your Finances. If you don’t have a very good grasp of all of these, you will never enjoy the fullness of life and all that it has in store for you. Find yourself spiritually and seek the will of God in everything you do. If you aren’t spiritual or you’re not religious (or both), you will never completely find happiness and contentment in your life. You may find fleeting moments, but you won’t be able to sustain them for any period of time.

a. Learn to love your spouse unconditionally and constantly work to be a better husband/wife. I am currently reading just about anything I can get my hands on related to improving your marriage and starting out right. Will there be growing pains? Of course. But how many people make a life changing decision without proper preparation? Unfortunately, way to many because ½ end in divorce. Don’t be a statistic!

b. If you don’t understand the world of finance and investing, start reading right now! I have a few books to get you started: A Random Walk Down Wall-Street by Burton Malkiel and The Little Book of Common Sense Investing by John Bogle. Unfortunately, personal finance and investing are not mandatory subjects in public schools, so you must be the one to realize the importance of learning these topics! Do you know how to retire with more than $1,000,000.00? Is it better for you to lease a new car, buy a new car, or buy a used car? When you buy a home, should you get a fixed-rate mortgage or an adjustable rate mortgage? Depending on your tax bracket, what is the best investment strategy for you? If you can’t answer all of these questions with ease, you probably need to brush up a bit. Read. Read. Read.

4. “Whatever You Are Be A Good One” – Abraham Lincoln. My favorite quote by one of the greatest Presidents of all time. Don’t complain about the situation you are in—find ways to make it better. No matter what you are doing, be the very best and take pride in what you do and who you are. Look at every situation as if it is the exact situation you are supposed to be in. Subscribe to the mantra: “Live for Today, Dream for Tomorrow.” Be the best at what you are today, but always work to improve and seek opportunities when they present themselves. Don’t ever forget people are always watching you. Don't live your life with regrets.

What I'm Doing 5.1.08

In an effort to both better understand my fiancé and simply to learn more about Christianity, I am reading two books on Catholicism. I have to admit that I’ve been a bit ignorant when it comes to the majority of Catholic beliefs. Although I don’t fully understand everything (nor agree with everything), it has been fun searching passages and interpreting the Bible in different ways.

Also, as our wedding day rapidly approaches (June 14th), my fiancé and I have been diligently reading “Before You Say: I Do,” by H. Norman Wright. We each have a copy, so we’ve been exchanging ideas over the phone. We both feel it is important to discuss a lot of marital issues and challenges before they actually happen. Most people do lots of homework before making important decisions, so why not do the same when preparing for marriage?

Currently Reading:
Rome Sweet Home by Scott and Kimberly Hahn

Catholicism For Dummies by John Trigilio and Kenneth Brighenti

Before You Say “I Do” by H. Norman Wright

Bringing Down the House by Ben Mezrich

Thinking About:
Importance of Mental Preparation

How Inflation Changes Savings Rules

De-Stress in Mere Minutes

The Myth of More

Laughing About:
Darwin Awards Anyone?