Everything is going to be just fine

Turns out that 2013 is the first year since 2005 that the percentage of 18-34 year olds living at home has declined.  This actually is GREAT news when you think about it.  When you look at the chart, you see that the percentage of that age group starts growing in 2005, several years before the recession actually began.  2005 is the year that homes started getting too expensive for people in that age group, creating the logical conclusion for those folks to move back home in order to save up for a downpayment.

So what does this mean?  Well, we can look at two factors that most likely matter:

1. The unemployment rate for this age group is dropping, allowing people to afford to move out

2. More people in this age group are getting married! And married people can’t live at home with their parents.  I mean, they can but that’s just weird.

With people beginning to move out of their parents’ basements or the apartments above the garage (I’m looking at you Kirk Cameron), we’re brought to the age old discussion of renting vs buying.  Right now this is an interesting discussion for me in particular, as I may or may not be moving to a Northern California city at some point in the next three or four months.

Or Argentina.  Argentina looks nice.

Or Argentina. Argentina looks nice.

We’ve spoken about renting vs buying before but I’ve started to get slightly annoyed with some people lately.  I won’t name names, mostly because they’re not online people, but in general, they don’t get the concept.  Here’s what I typically hear from them:

“Houses aren’t great investments because your money would be better off in the stock market.  The housing market went up like crazy before but you missed out on the recovery.  Besides, in the long run houses only appreciate at 1% a year, adjusted for inflation.  So why bother buying a house?”

Nope, nuh uh, no.  See, my problem here isn’t the whole housing appreciation thing.  I get that.  That number, however, is based off of housing appreciation from 1890 to 2011, adjusted for inflation.  That’s a pretty serious long term timeline there.  Longer than I will likely be alive but that’s beside the point.  The point here is that the alternative to buying is not investing that money in the stock market.  It’s renting.  And renting is the WORST.  There is 0% return on renting.  In fact, you’re just a consumer there, paying for someone else’s lunch.  I’m tired of people comparing buying to investing.  When you buy a house and your mortgage is comparable to what your rent would have been, you’re always going to come out ahead.

And with that, I think I’m officially in the market for a house, depending on where it is.  Preferably one with a gold leafed Eucalyptus tree in the backyard.

Taking risks like a champ

I'd really like to know why the person is the Great One's "special friend"

Most people don’t like to take risks.  They prefer safe.  Safe investments, safe neighborhoods, safe countries. Safe safe safe.  But at some point in our lives we all need to take risks.  It’s bound to happen.  And the thing is, a certain amount of risk can be a good thing.  It allows us to break free from our constraints and hopefully grow towards our goals.

The reason I’m getting into this is because most of the people I know are stuck in a rut.  We’re all in our mid to late twenties, still in the early stages of careers, and we don’t know what we really want from our lives.  You’ve probably read somewhere that this is the point in our lives where we’re supposed to take risks because we have enough time to make our comeback from any failure.  But that’s not the goal here.  I’m talking about calculated risk, good risk, risk that moves things two steps forward.

The first step is just making yourself open to change.  I’ll give you an example.  I graduated college in 2009 and was searching for a job.  Knowing that the Texas economy was still growing while the rest of the country was in shambles, I moved to Dallas from Boston.  From there, I got a job in Los Angeles and have been here ever since.  The only reason I was able to make either of those moves is because I put myself out there and was open to new places and new things.  If you’re not willing to accept the risks inherent in life changes then nothing can change.

The next key to taking risk is that you have to want it.  Most people don’t get that when it comes down to it.  You need to want something so badly that you’ll actually go for it.  Want to move to New York City?  Contact that recruiter!  Want to be a lawyer?  Set up shop and start practicing.  Want Financial Independence?  Go read Mr. Money Mustache and make it happen.  If you want it bad enough, you’ll take a look at the risks and figure out ways to make it work.  Maybe you’ve got to get a second job in order to pay off your student loans early enough to truly retire.  Maybe you need to just get out of the city you’re in and go to Fiji or New Zealand because that’s what you want.  If you want it badly enough, you’ll look at the risks and laugh in their faces.  You’ll make it work.

Next?  Keep trying.  We encounter risk every day of our lives in little, tiny doses.  We also see it all the time in big, potentially crushing doses.  The point is, you have to keep after it.  This goes right with the prior step of wanting something so bad that you’ll do anything for it.  If you keep taking risks and they’re good, calculated risks, you’re going to succeed.  There is a reason that some people are serial entrepreneurs.  Sure, they may just be wired differently than everyone else but there is something encouraging about people who just keep taking shots.  Wayne Gretzky famously said “You miss 100% of the shots you don’t take.”  Well, it’s true.  Plenty of people sit back and watch as friends, family and those around them succeed in love and in life.  They complain that it should be happening to them, that they could do it too.  Well my friends, they’re not taking their shot.  And if you don’t take yours, things will rapidly slip out of grasp.

I'd really like to know why the person is the Great One's "special friend"

I’d really like to know why the person is the Great One’s “special friend.” I’m going to mullet over…

Most of the risks we see in life are made up of our own fears that we’ll be inadequate or incapable of success.  The more you try and put yourself out there, the more you’ll learn about yourself and see that it is simply not true.  But without trying, without wanting it, you’ll always let the risks overwhelm you.  So get up and start a company or talk to that pretty girl or cute guy.  Take a chance and don’t let the potential risks get in the way.


Image courtesy of Wayne Gretzky’s “Special Friend,” Jeffrey Simpson.

Stop Wasting Time

We all know that each of us has only a limited amount of time in each day, week, year, or lifetime.  We’ve talked before about attaining a work-life balance but now I’m thinking most of us (including me) waste too much time.  I miss deadlines for this site sometimes.  I’m not proud of it but it happens.  Sometimes it’s because I didn’t plan ahead and ran out of time and sometimes it’s because I just couldn’t think of anything.  Both come down to my own preparation and my severe procrastination.

Yikes, big ass clock

Yikes, big ass clock

Fortunately, in the office, I don’t act this way.  I get things done when I’m there because I’m able to focus and build a game plan for each day.  But we all waste time in some ways.  Let’s go over a few of the problems:

1.  Constantly checking and responding to emails:  Sure, you want to be prompt but you can’t constantly be answering emails or you’ll never get anything done.  If you continuously stop and restart your mental process on the project you’re doing just to answer an email, you’re wasting your time!  You can still be prompt without answering emails immediately.  Block out certain time where you’ll answer emails and questions.  I like to do first thing in the morning, after lunch, and right before I leave work.  This way I tend to take care of everything during the day and night.

2.  Putting out every small fire that comes your way: no one likes fire drills at work.  They take you away from whatever it was you were working on and screw with your process and your day.  Now, I’m not saying that you don’t jump up and fix the big problems.  What I am saying is don’t get dragged down by the little problems.  More often than not, they’re being blown out of proportion by someone and will put themselves out.  If you’re the boss, you can’t bother with these things.  If it’s your personal life, don’t let it bring you down!  Just keep moving and focusing on the goals you’ve set.  Everything else is going to align up over time.  It’s all a process!

3.  Cracked.com: Normally I wouldn’t include something as simple as a single website but let’s face it, Cracked is a gateway website.  You start off reading about badasses surviving in the wilderness, click a wikipedia link and come out of an internet binge four hours later on the wikipedia page for ceramics tiles made for Justinian I.  If you’re at work, block Cracked.  If you’re home, just try not to get sucked in.  Maybe reserve it for the weekends.  Just don’t let it take you.

4.  No goals, strategy, or focus:  Make a damn list!  You can’t live every day by the seat of your pants.  If you don’t have goals or a routine, you’re letting what happens in your life drive for you.  You need to take back control and focus.  Creating a list, however mundane it may seem, will help.  Crossing things off your list as you go is immensely satisfying and you’ll find you get much more work done when you plan ahead.  Professionally, it’ll look good to the bosses.  In your personal life, well, you’ll never be without toilet paper again.  Wouldn’t want this to happen to you…

If you can enact some simple changes in your life, you can save yourself so much time.  It’ll make your more efficient at your job and it’ll make your personal significantly easier.  The more time you waste, the further away you get from Financial Independence.  If you’re here, chances are that’s a goal you want to attain.  So stop wasting your time, start planning ahead and saving some time for yourself.  You’ll thank yourself for it.


Image courtesy of ToniVC

Starting your own business | Start ups

As some of youmay or may not know, I work at a sort of startup.  Not like a google, free food with all crazy stuff start up.  My company is in finance, as I’ve mentioned, and we have a foreign parent providing all the capital.  Instead, we’re run with the intent of being as nimble and innovative as possible while having the immense financial backing of a foreign parent with a whole lot of cash and an incredible long term view of how to make money (not going to lie, I love it).  The result is that I’ve seen a lot of things that start ups have gone through: the scaling of a product, the building of the workforce, the decision between hiring an extra person or just letting things ride for a year.  And because we weren’t created with the concept of building an idea to sell for a profit inside of three years, we’re focusing on sustainability.

This kind of thought has been on my mind a lot lately and I feel like working it out.  It’s not quite personal finance and is more entrepreneurship but still, hear me out.  I’m sure there is a finance lesson in here.  I promise, as with most of my inane ramblings, there will be a point.  That point: investing.

Facebook seemed like a great investment to a lot of people.  A billion users, everyone is addicted, how could it not make money.  And then the IPO happened, the stock rose, it fell. Then it fell some more.  NASDAQ got sued, Morgan Stanley got sued, everyone got sued.  In general, everyone was pretty pissed.  Well, except Facebook.  You see, they did everything right.  They raised the most money possible, according to demand, for their company.  Of course now it sucks for everyone that bought the stock (with a short term viewpoint) but that’s life.

IPO’s, especially start type companies that haven’t been around for a while, are tough.  If you had purchased stock in the company that makes Annie’s Mac and Cheese (my favorite, if you ever want to get my some food) instead of Facebook, you would have brought home over a 30% return by now.  Why is this?  Annie’s was private too, how come their stock went up.  And this is what drives us deep into the concept of the start up as an investment.

You see, Annie’s wasn’t a start up.  Not all IPO’s are actually.  In fact, several IPO’s each year are mature companies with solid business plans and proven track records of profits.  While there is risk, as with any equity investment, there is a history you can use to discern whether or not the IPO gives you good value for your dollar.  With a start you don’t have that chance.  Instead, you have to figure out if the deal is worth while.  Even then, you’re still stuck.  Start ups have the unique problem in business of growing even when nothing else is.  A start up in a mature industry will grow, like crazy, simple because the market dictates that they have to have a bit of the pie (if they are run correctly).  So you’ll look at their numbers and think that they can continue the torrid pace and become the biggest open source software company working on a linux platform in the industry.  Then the plateau, see no more organic growth and that’s the end.  Or maybe their picture filtering software can’t match instagram.  Or their fake gold on their fake mafia facebook game just isn’t popular enough anymore.

The point is that not every idea is profitable.  Start ups are fun.  They create cool things, they have great people working for them and when things work out, they turn into Microsoft or VMware.  But most of them end up like…well I can’t remember the name but they were not a good start up.  Should this fact deter you from investing in a start up or working for one?  No!  Working for one, although in the enterprise space, is one of the best decisions I’ve ever made.  Learning how to run a business from the ground up will benefit me for years.  It’s a masters in entrepreneurship except they pay me for it.  On the same hand, investing in a start up (at the IPO or through a website like sharespost) is also worth it.  However, the company needs to make sense.  For example, Warren Buffett didn’t invest in Facebook.  Also, sorry, I talk about Mr. Buffett a lot.  Whatever, he’s awesome.

Anyway, the general idea here is that if you can understand what a start up is doing (oh, you’re offering networking gear that has open source, linux based software that can be configured for any business? Right on!) they aren’t necessarily a bad investment.  Even more, they might not be a bad place to work.  As I mentioned earlier, I’m learning more from working at a start up that I would at a regular firm.  And working for one of these firms is just as much of an investment as buying into them.

When all my rambling is said and done, what I’m really trying to say is that if you evaluate a start up, either as a job or a capital investment, you will find that if you don’t understand it, the risk isn’t worth it. However, if you understand it, whether it is a new oil pump company or an electric motor or a networking software firm, you’ll realize that this can be something.  What it comes down to is you.  And in investing, that’s almost always the case.