The Big Picture

I’m always amazed by people’s general inability to see the big picture of things. I recently had a discussion/argument with one of my friends about credit card debt. This friend of mine is in the process of applying for his first credit card and I cautioned him about how easy it is to accumulate high interest credit card debt. He informed me that it was his intention to pay off his balance in full every month to avoid having to pay any interest. Being the relativist that I am, I informed him that while that is generally a good idea, there may be an instance where paying off your balance in full is actually not the best use of your money. He didn’t understand that statement at all.

I explained to him that using all of your cash to pay off your credit card balance prevents you from being able to use your cash for something else. Something else that might earn you a return that is greater than the interest you’d have to pay by not paying off your credit card in full. To illustrate, I used the example of having a $1000 and $1000 in cash. I said that if you use all your money to pay off your balance then of course you won’t have to pay any interest which is, of course, a good thing. But, let’s say a short term investment opportunity comes along that costs $900 dollars and will have a 10% return. I told him that you would be better off buying the investment and using your leftover cash to make the minimum payment on your credit card. Yes you will have to pay about $17 in interest that month but your investment will earn you $90 putting you $73 dollars ahead. Making the full payment on your credit card will only save you from having to pay a little bit of interest and cause you to miss out on a greater opportunity.

My friend seemed to be completely incapable of understanding what I was saying. He was fixated on the credit card and kept saying that paying any interest is like giving the credit card company free money and that is the worst thing ever. He would only look at that one aspect of his finances and not consider the whole of his monthly cash flow.

I find that this mentality is prevalent in the world of personal finances. Many people think of their credit card as an opportunity to borrow in order to buy what they want when they don’t have the money. I view my credit card as way to keep my cash free for other opportunities. I of course plan very meticulously and make sure that I have the ability to pay off my debts. In the four years that I have been using a credit card I have only carried a balance twice. Every other month (46 months to be precise) I have paid off my balance in full.

In managing your personal finances it is very unwise to look at each aspect a separate entity. All of your sources of revenues and all of your expenses work together. You need to have a firm grasp of this when exploring all the other opportunities you have for investing and making the best use of your cash. The business/investment savvy you become the easier this is. Knowledge and common sense are your greatest strengths when it comes to personal finances. Keep an eye on the big picture.

This Is How It All Starts

By the time I get to be forty years old I don’t want to ever have to utter the phrase “I can’t afford that”. In fact, I would like to retire around that age. I’m not unrealistic about this however. I think that private islands, personal jets, and yachts that qualify as cruise ships will forever be out my grasp. Not that I consider that to be a bad thing. I don’t see how you can have a normal life with normal friends when you’re worth billions of dollars. I can’t help but think that that would just suck.

I don’t want to be a billionaire. I’m pretty sure that people with retarded amounts of money like that really lose their grip on reality. Warren Buffet might be an exception. But, I wouldn’t mind being a millionaire. That way you have enough money to have comfort and security and provide your family with a lifestyle that has them wanting for nothing. I want money but not “fuck you money”. I still need to keep myself grounded.

Since very few people are lucky enough to have a seven figure salary, I guess I will have to take matters into my own hands. I’m of course talking about having a strong and wise investment strategy. There is in fact nothing that I think is more important than this. To rely solely on your salary to support yourself is a short-sighted thing to do.

I’m surprised that not more people do this. A lot of people I know are afraid to take a portion of their hard earned income and place it in the markets. They cite market volatility as the biggest reason. The most common response I get is that it is just too risky. Of course it’s risky. The trick is to find an appropriate way to manage that risk. The best way to do this is to view risk as a necessary part of earning a return. No risk no reward.

Getting started is the hardest and scariest part. I myself haven’t even taken that all too crucial first step. Not because I’m sacred but because I’m starting out with nothing. I’m sure we’ve all heard the phrase “you have to spend money to make money”. The thing is, in order to spend that money to make money you have to have some in the first place. That’s what I’m working on right now. To be clear, I’m not just waiting around doing nothing while I save a little cash. I am doing research on how to invest and how to develop an investment strategy. I’ll get into that later.

My thoughts and feelings towards this are built upon a few nuggets of knowledge and wisdom that I have picked up over the years.

• You can accumulate wealth no matter your level of income. Unless you are living beyond your means you should have at least some money left over in your budget. Or, even better, you should have a line item in your budget for savings/investment. It is important to not let this surplus just sit on the sidelines. Make it work for you. This actually leads into my next point.
• Cash, just like milk, will go sour if you just leave it lying around. If you put your savings into an ordinary savings account then all you are doing is slowly rendering your money worthless. The interest you’ll earn on a savings account will not even match inflation. Year after year your money will lose its value unless you make it grow.
• If you want to make money you will. If you can make one dollar you can make a million dollars. With all of the investments you can make that are readily available to you making money is easy. You don’t even have to work all that hard. All you have to do is be willing to go out and get it. That being said, the pursuit of money can be corrupting. If you set out to make retarded amounts of money then you will. But, it will probably come at the cost of friends, family, and happiness. A 5000 square foot mansion is pretty awful if you’re the only one living in it.

In addition to being realistic, I find those three maxims to be highly motivational. I don’t think the complexities of anything can be boiled down to such simple phrases, but once you have a broad understanding of any topic these devices can be quite effective. When I revisit these three points, and all the others I have, I feel that I can conquer the world. One step at a time, of course.

I of course know a lot more than that but I need to save a few things for future entries. Starting an investment portfolio is something that is very important to me and something I will devote a large part of my time to. I will probably write about it a lot. However, I need to make something clear. I will never discuss the specifics of my investment strategy nor will I ever give out investment advice. Your financial security is not a responsibility I want.

You Are Probably Not An Entrepreneur

As someone with an education in business I consider the word “Entrepreneur” to be sacred. It is for this reason that I get really upset when people employ a liberal use of the term. An entrepreneur is someone with a new idea that forges a new path in the world of commerce. They are also fully responsible for the product or business every step of the way. This includes the eventual outcome. They assume all of the risk and reap all of the reward. If a person does not meet every one of these criteria then they are not an entrepreneur. Also, someone who copies someone else’s business model is not an entrepreneur. For example, someone who opens a new restaurant, unless there is something radically different about it, is not an entrepreneur.

I am really suspicious whenever someone says that a celebrity is an entrepreneur. I give credit to the select few that actually are true entrepreneurs but I must lambaste those that aren’t. I’m talking to you Hilary Duff! I’m sorry but putting your name and face on a clothing line that is sold exclusively at Zellers does not make you an entrepreneur. That makes you a spokesperson. It makes you a celebrity endorser. I don’t have a problem with you doing that. Congratulations to you for making money. But, call yourself what you are. You are not an entrepreneur and calling yourself one disrespects all of the true entrepreneurs that came before you.  I think it’s time we give back the prestige and distinction that term so richly deserves.  

Stupid Useless Degree

In 2009 I graduated from university with my undergraduate degree in commerce. Maybe I’m the only one, but does anyone else think that their bachelor’s degree is completely useless?

Maybe I had unrealistic expectations about what my degree would do for me but before I graduated I really thought that my degree would be my ticket to easy street. I thought it would land me a good job right away and I could start climbing the corporate ladder all the way to CEO. Boy was I wrong.

It might have something to do with the fact that when I graduated the economy world wide was in the midst of a freefall. I am willing to entertain the possibility that it’s slightly harder to find jobs when there is a global recession going on. But, then again, maybe a bachelor’s degree just isn’t that impressive anymore.

When I started to look for work there seemed to be a plethora of jobs that I had the education for and that appeared to be well within the realm of what I was capable of. I set to work sending out hundreds of resumes and cover letters. I must have applied for about 150 jobs. I got back no response. Not one. Nobody called or e-mailed asking for an interview. I didn’t understand what I was doing wrong. I had help from seasoned business professionals in putting together my resume and cover letter. I had a university education. I had a wealth of volunteer experience. But, I couldn’t get so much as an interview.

Then I realized what was going on. All the jobs I was applying for wanted at least two years experience. I couldn’t believe it. Entry level positions were requiring two years experience. I couldn’t get a job for which you need no experience because I didn’t have experience. To this day I can’t figure out why you need a few years experience to be a data entry clerk. I would like to think that my $30 000 degree would give me all the qualifications I need to enter a company’s phone bill into quick books. Apparently not.

Eventually I got lucky and got a job as a bookkeeper at a small law firm. But, of the multitude of applications that I sent out I only got three responses. One was from a woman who owned a company who felt that I wasn’t quite qualified for the position I had applied for but that might be adding a more junior position that she would keep me in mind for if she did in fact create the position. The second was from the law firm where I was hired. And, the third was from an insurance company that wanted an interview but that I turned down because I had already received an offer from the law firm. As it turns out, turning down that inter view was a bit of a mistake but I’ll get to that later.

When I was no longer working at the law firm and trying to find a new job, I encountered the same difficulties. Eventually I got lucky again and got hired by the organization where I am currently employed.

I guess I shouldn’t be too angry about this. All things considered I haven’t had too many difficulties in finding work. It just seems that my Bachelor of Commerce is only slightly more impressive than a high school diploma. I sometimes wonder if I should have skipped university and just started to work after high school. Don’t get me wrong, I don’t regret pursuing my degree and I feel that I am better off for it. I just don’t think it does as much for me as all my teachers, parents and guidance counselors said it would.

Join me on my journey to become filthy fucking rich!

Despite what the title indicates, this is not a blog about my attempts to make retarded amounts of money that I don’t actually need. It is more of a lament concerning the difficulties I, and other young people, have in starting out their lives and careers after school. Just about every person I speak to that is already established tells me that it is harder for a young person to start out today. Although I do not have comparative statistics to analyze, I agree as I am currently experiencing difficulties in that exact situation. I have recently started a new job which I hope to turn into a career and I have moved out of my Dad’s house. I did these things a little bit later than I would have liked and a little bit later than I could have if I only had the foresight.

To put all this into perspective, I am twenty-six years old. That doesn’t exactly make me a senior citizen but I know people my age that got a real head start on me. I also know that it’s not really fair to compare myself to others. We all start out at different points and are affected by different circumstances. I should only compare myself to the person I was last year, or five years ago, or ten years ago. You get the idea. If I do look at my progress in that regard then one might actually be somewhat impressed. I have faced and overcome many obstacles in my life. Some are of my own doing and some are not. But, all have helped to shape the person that I am today.

I think that I have done all that I can to lay the foundations of my life. I mean, I know that there is always more that can be done. I could pursue more degrees and get a more advanced education. I could continue to jump from company to company until I find a better job. But, at some point you have to do a cost-benefit analysis and determine how much of that is actually worth it and how much is just slowing you down and hindering your progress. There comes a point where you just have to get to work and do it. It is at this point where I find myself.

I have been working at my new job for almost three months and I have been living on my own for about six weeks. Being on my own and having to pay for all my necessities myself has been a real wake up call. It has forced me to learn life skills that I had previously been lacking. I was scared silly for about the first two weeks but after that passed I found that I actually liked it. My life has turned into a new adventure that I am actually excited about. There is of course a great many things that I still have to learn and I bet that some of those things I am completely incapable of foreseeing. I’m not going to lie. That scares the hell out of me. But, I am going to face those challenges head on and I’m going to win. I’m sure this process will be life changing and, more often than not, comical.

I want to thank you for reading this. To be honest though, I’m writing it strictly for myself. If people read it, great. If I develop a following, even greater. I’m sure that at least one person will find that they relate to this. After all, …

            “Remember in this game we call life that no one said its fair.”

                                                - Guns n’ Roses – Breakdown – Use Your Illusion II