Wednesday, May 27, 2009

Great links

I'd like to share a few great articles and post that I linked to my Twitter page. The content is great and worth your review.

interview tips:

great 'get hired' type article:

*travel! awesome post:

how to nail an interview: http://www.howtonailaninter...

negotiate your salary:

top credit cards:

dave ramsey thingi:

direct investmnts: http://www.getrichslowly.or...

a blog w great vacation deal links:

smpl "60 sec gde to prfct crdt":

Gen Y on the job hunt:

I found all these links interesting and useful; hope you do too

Monday, April 6, 2009

Financial Advising: What advise is good advice?

This is a guest post from Mike Huefner, a recent graduate of UB and an Intermediate Product Control Analysts for a major financial institution. Here he shares his insights on Financial Advisors (FAs).

What is a Financial Advisor? A FA is an individual with clients who advises them on their finances and portfolios. Yes, I realize that if I were to end my thought here I would have to apologize to the creator of this website because I am fairly certain the number of viewers would have dropped from 6 to 2 (of course I would still be frequenting the site). The simple question really is complex, the answer even more-so; but you would be surprised on how difficult of a question this might be for your advisor. Do you have a FA? Does your Dad? Does your neighbor? Have these FA clients stopped to think about exactly how much time and expertise the FA has dedicated to their portfolio?

Shortly after graduating from University at Buffalo I looked into a career as a FA. I was searching for a job where I could take all this new found academic knowledge and put it to use. I thought what better place to do this than as a Financial Advisor. The title itself was something that seemed almost as perfect of a fit for me as my girlfriend of 7 years. (I know thats a senseless plug, but that’s what ya gatta do to keep a girl for 7 years ha.) I began applying for financial advising positions locally, and despite my lack of professional exercise was able to land a handful of interviews. During one interview the company went into great detail about the six-week training session I would be part of. The training consisted of working with a firm veteran and learning the in and outs of success in the world of financial sales. "Financial sales?!" Sales is not what I endured those 8 AM economics classes for. I was not looking for a job that a drop-out working at the JC Pennies could do, and more than likely do better than me. Maybe there was more to this profession than they were alluding to and that they just don't want to divulge into nuts and bolts of the job on the first couple of interviews? I decided if this was to be my next career I best find out. Inquiring about the choices of financial products and services that I would have at disposal to discuss with clients resulted in a startling reply of “We have prepackaged services available.” Prepackaged services is nothing more than another term for 'catch-all' generic limited options. This was not a financial services branch which took employee knowledge and used it to make the best choice that suited the individual clients need. Each person is different and prepackaged products, even if brilliantly devised, can't satisfy everyone’s unique needs.

This experience made me somewhat hardened to the industry and in looking back, being offered a position straight out of college to manage others finance with my “expertise” is foolhardily in itself. In reality, what experience did I need to possess but the ability to sell? College students should not be the ones advising about retirement when most do not possess their own 401K. I would want someone that has been around the block with real knowledge. It is all well and good to study the collapse of Long Term Capital Management in the 90’s but what a prospective client should be looking for is someone that had their own money in the markets and experienced economic trends themselves. You want an advisor who has a vested interest in your success and has accountability. You don't want your money to be nothing more to your FA than the black and red that shows up on your Profit and Loss spreadsheet.

I write this article not in an attempt to knock at the Financial Services industry; the deep rooted recession has left enough writers taking on this cause already. FAs are necessary, perhaps to a greater degree in turbulent times. FAs can serve an essential purpose for individuals who need assistance in asset management. Whether this is out of convenience or necessitated by a lack of understanding of the markets; FAs do have an important place in this modern world. My agenda is not to bad mouth Advisors but for Investors to take a moment to think about the fundamentals and true purpose (sometimes heavily incentive based) of those advising them and to remind individuals of some key concepts that should be in the back of your mind before you entrust your lifesavings in another’s hands.

  • Do your research: This is your money and in the end you are going to be left holding the bag if your investments fail. It is imperative for an individual to conduct their own research before consulting a FA. If you are new to investing and do not know how markets interact or how investing really works then discuss this with your FA. For example, a 20 year old is more apt to want to hold a riskier portfolio than someone near retirement since they are young enough to take the bumps and bruises the market will deliver. A good question to ask would be what kind of options are available that typically yield higher returns; from there you can go back and research on your own. Get into it, that way you will have no-one to blame (or thank) but yourself.

  • Shop around: I know FAs that have been in the industry for decades who have helped individuals plan for everything from retirement to buying a pool, but there are just as many 'chop shop' advisors. It doesn’t hurt to shop around and ask questions. If you go with a FA be sure to  find one that's right for you. It might not be the one that cold-called you last Saturday afternoon.

  • Explore your options: Your parents’ generation might have been hard working but they weren’t always the most knowledgeable about financial matters. These days there is more to finance than T-charts and balancing checkbooks, and you know this. For those financially savvy, alternative means to investing may be something for you. A baby on a Super Bowl ad was able to trade at $8 dollars a trade and you can too.

  • Remember: Everyone has limits: Working for one of the largest financial service firms in the world, I have learned a lot about how markets react to news; the key word being 'REACT'. Anticipate is really what we're trying to do... but no one can predict how markets will move. Know that your advisor cannot predict what is going to happen, all they are able to do is help you manage your assets and risk.

All of this is common sense but in a world where bank stocks are trading at less than the value of the banks buildings and where gas prices rise no matter how oil performs in the world market; common sense has not only lost its commonality, it's been thrown out the window.

This article has been edited by Brian and does not necessarily reflect his opinion. That being stated, it's a great topic and offers a nice personal insight. Worth posting.

A few editor's notes/opinions:

-Whenever investing, past performance never guarantees future performance.

-FAs do provide many services that a well organized and financially in-tune individual can master themselves, but anyone with serious assets really should consult a third party. (i.e. A FA or personal accountant)

-Mike is absolutely right that the primary goal of the FA is to attain new clients aka they're in sales. They have to sell themselves and typically push designated investment packages. That screams 'conflicts of interest' to me.

-Financial advice is a great tool that we all need to acquire. Don't listen to the talking heads out there, learn the basics for yourself then get complicated if you must.

Thanks for reading

Thursday, March 19, 2009

Why your friends don't save money, eat healthier, or clean their garage

This is a guest post from Ramit Sethi, the founder of, a blog on personal finance and entrepreneurship. His new book, I Will Teach You To Be Rich, will be published on March 23rd. This post was featured on  Get Rich Slowly.

A surprising thing happens to people in their forties. After working hard, buying a house, and starting a family, they suddenly realize that they’d better start being responsible with their money. They begin reading financial books and trying to learn how to set up a nest egg for themselves and their families. It’s a natural part of growing older.

If you ask these people in their forties what their biggest life worry, the answer often is, quite simply, “money.” They want to learn to manage their money better, and they’ll tell you how important financial stability is to them.

Yet the evidence shows something very different.

In the table below, researchers followed employees at companies that offered financial-education seminars. Despite the obvious need to learn about their finances, only 17% of company employees attended. This is a common phenomenon: As Laura Levine of theJump$tart Coalition told me, and I paraphrase, “Bob doesn’t want to attend his 401(k) seminar because he’s afraid he’ll see his neighbor there…and that would be equivalent to admitting he didn’t know about money for all those years.”

They also don’t like to attend personal-finance events because they don’t like to feel bad about themselves. But of those who did attend the employer event, something even more surprising happens.

Of the people who did not have a 401(k), 100% planned to enroll in their company’s 401(k) offering after the seminar. Yet only 14% actually did.

Of those who already had a 401(k), 28% planned to increase their participation rate. 47% planned to change their fund selection (most likely because they learned they had picked the default money-market plan, which was earning them virtually nothing). But less than half of people actually made the change.

This is the kind of data that drives economists and engineers crazy, because it clearly shows that people are not rational. Yes, we should max out our 401(k) employer match, but billions of dollars are left on the table each year because we don’t. Yes, we should eat healthier and exercise more, but we don’t.

Why not? Why wouldn’t we do something that’s objectively good for us?

Barriers are one of the implicit reasons you can’t achieve your goals. They can be psychological or profoundly physical, like something as simple as not having a pen when you need to fill out a form. But the underlying factor is that they are breathtakingly simple — and if I pointed them out to you about someone else, you would be sickened by how seemingly obvious they are to overcome.

It’s easy to dismiss these barriers are trivial, and say, “Oh, that’s so dumb!” when you realize that not having an envelope nearby could cost someone over $3,000. But it’s true. And by the end of this article, you’ll be able to identify at least three barriers in your own life — whether you want to or not.

Why people don’t participate in their 401(k)s
If you’re like me, whenever you hear that one of your co-workers doesn’t participate in their 401(k) — especially if there’s an employer match — you scratch your head in confusion. In my case, I feel a rage boiling up that reminds me of the ruins of Pompeii.

Even though this is free money, many people still don’t participate. Journalists will cite intangibles like laziness and personal responsibility, suggesting that people are getting less responsible with their money over time. Hardly.

It turns out that getting people to enroll in their 401(k) is just plain hard. Yet using simple psychological techniques, however, we can dramatically increase the number of people who participate in their company’s retirement plan. One technique, “automatic enrollment,” automatically establishes a retirement plan and contribution. You can opt out at any time, but you’re enrolled by default.

Here’s how it affects 401(k) enrollment. (”AE” = automatic enrollment.)

From 40% participation to nearly 100% in one example. Astonishing.

Today, J.D. has given me the opportunity to talk about one of the ways to drive behavioral change when it comes to your money. I call them barriers.

While I do this, I’m going to ask you for a favor. You’ll see examples of people who lost thousands of dollars because they wouldn’t spend one hour reading a form. It’s easy to call these people “lazy” — and there’s certainly an element of that — but disdainfully calling someone lazy doesn’t explain the whole story. Getting people to change their behavior is extraordinarily hard — even if it will save them thousands of dollars or save their lives.

If it were easy, you would have a perfect financial situation: You’d have no debt, your asset allocation would be ideal and rebalanced annually, and you’d have a long-term outlook without worrying about the current economic crisis. You’d be your college weight, with washboard abs and tight legs. You’d have a clean garage.

But you don’t.

None of us are perfect. That’s why understanding barriers is so important to changing your own behavior.

“Just spend less than you make — duh”
There is something especially annoying about the comments on personal-finance blogs. On nearly every major blog post I’ve made in the last year, someone has left a comment that goes like this: “Ugh, not another money tip. All you need to know is, spend less than you make.”

Actually, that’s not true. If that were the case, as I pointed out above, nobody would be in debt, overweight, or have relationship problems of any kind. Simply knowing a high-level fact doesn’t make it useful. I studied persuasion and social influence in college and grad school, for example, but I still get persuaded all the time.

These commenters make the common mistake of assuming that people are rational actors, meaning they behave as a computer model would predict. We know this is simply untrue: Books like Freakonomics and Judgment in Managerial Decision Making are great places to get an overview of our cognitive biases and psychological motivations.

For example, we say we want to be in shape, but we don’t really want to go to the gym. We believe we’re not affected by advertising, but we’re driving a Mercedes or using Tupperware or wearing Calvin Klein jeans.

There are dramatic differences in what we say versus what we do. Often, the reason is so simple that we can’t believe it would affect us. I call these barriers, and I’ve written about them before:

Last weekend, I went home to visit my family. While I was there, I asked my mom if she would make me some food, so like any Indian mom would, she cooked me 2 weeks’ worth. I came back home skipping like a little girl.

Now here’s where it gets interesting. When I got back to my place, I took the food out of the brown grocery bag and put the clear plastic bags on the counter. I was about to put the bags in the fridge but I realized something astonishing:

…if I got hungry, I’d probably go to the fridge, see the plastic bags, and realize that I’d have to (1) open them up and then I’d have to (2) open the Tupperware to (3) finally get to the food. And the truth was, I just wouldn’t do it. The clear plastic bags were enough of a barrier to ignore the fresh-cooked Indian food for some crackers!!

Obviously, once I realized this, I tore the bags apart like a voracious wolf and have provided myself delicious sustenance for the past week.

I think the source of 95%+ of barriers to success is…ourselves. It’s not our lack of resources (money, education, etc). It’s not our competition. It’s usually just what’s in our own heads. Barriers are more than just excuses — they’re the things that make us not get anything done. And not only do we allow them to exist around us, we encourage them. There are active barriers and passive barriers, but the result is still the same: We don’t achieve what we want to.

Active barriers are physical things like the plastic wrap on my food, or someone telling me that it’ll never work, etc. These are hard to identify, but easy to fix. I usually just make them go away.

Passive barriers are things that don’t exist, so they make your job harder. A trivial example is not having a stapler at your desk; imagine how many times a day that gets frustrating. For me, these are harder to identify and also harder to fix. I might rearrange my room to be more productive, or get myself a better pen to write with.

Today, I want to focus on passive barriers: what they are and how to overcome them.

How to destroy the passive barriers around you
Psychologists have been studying college students for decades to understand how to reduce unprotected sex. Among the most interesting findings, they pointed out that it would be rational for women to carry condoms with them, since the sexual experiences they had were often unplanned and these women can control the use of contraceptives.

Except for one thing: When they asked college women why they didn’t carry condoms with them, one young woman typified the responses: “I couldn’t do that…I’d seem slutty.” As a result, she and others often ended up having unprotected sex because of the lack of a condom. Yes, technically they should carry condoms, just as both partners should stop, calmly go to the corner liquor store, and get protection. But many times, they don’t.

In this case, the condom was the passive barrier: Because they didn’t have it nearby and conveniently available, they violated their own rule to have safe sex.

Passive barriers exist everywhere. Here are some examples:

Barriers in e-mail
I get emails like this all the time:

“Hey Ramit, what do you think of that article I sent last week? Any suggested changes?”

My reaction? “Ugh, what is he talking about? Oh yeah, that article on savings accounts…I have to dig that up and reply to him. Where is that? I’ll search for it later. Marks email as unread

Note: You can yell at me for not just taking the 30 seconds to find his email right then, but that’s exactly the point: By not including the article in this followup email, he triggered a passive barrier of me needing to think about what he was talking about, search for it, and then decide what to reply to. The lack of the attached article is the passive barrier, and our most common response to barriers is to do nothing.

Barriers on your desk
A friend of mine lost over $3,000 because he didn’t cash a check from his workplace, which went bankrupt a few months later. When I asked him why he didn’t cash the check immediately, he looked at me and said, “I didn’t have an envelope handy.” What other things do you delay because it’s not convenient?

Barriers to exercise
I think back to when I’ve failed to hit my workout goals, and it’s often the simplest of reasons. One of the most obvious barriers was my workout clothes. I had one pair of running pants, and after each workout, I would throw it in my laundry basket. When I woke up the next morning, the first thing I would think is: “Oh god, I have to get up, claw through my dirty clothes, and wear those sweaty pants again.” Once I identified this, I bought a second pair of workout clothes and left them by my door each day. When I woke up, I knew I could walk out of my room, find the fully prepared workout bag and clothes, and get going.

Barriers to healthy eating
When I was in college, I loved those Ramen Cup of Noodles. Unfortunately, I stored them in my closet, so each time I wanted one, I would have to walk to another room, reach up to the top of the closet, open the package, and prepare it. Ridiculous! Instead, I created this:

Obviously, that’s a ridiculous example because I was a college student, but imagine how you can apply this to eat healthier (which we all routinely lie about): If you find yourself snacking on Cheetos all day at work, try this:

Don’t take any spare change in your pockets for the vending machine. Even if you leave quarters in your car, that walk to the parking lot is barrier enough not to do it. Give yourself an alternative:

How do you think that’ll affect your eating behavior?

Applying passive barrier theory to your life
As we’ve seen, the lack of having something nearby can have profound influences on your behavior. Imagine seeing a complicated mortgage form with interest rates and calculations on over 100 pages. Sure, you should calculate all of it, but if you don’t have a calculator handy, the chances of your actually doing it go down dramatically.

Now, we’re going to dig into areas where passive barriers are preventing you from making behavioral change — sometimes without you even knowing it.

Fundamentally, there are two ways to address a passive barrier.

  • You’re missing something, so you add it to achieve your goals. For example, cutting up your fruit as soon as you bring it home from the grocery store, packing your lunches all at once, or re-adding the attachment to a followup email so the recipient doesn’t have to look for it again.
  • Causing an intentional passive barrier by intentionally removing something. You put your credit card in a block of ice in the freezer to prevent overspending. (That’s not addressing the cause, but it’s immediately stopping the symptom.) Or you put your unhealthiest food on the other side of the house, so you have to walk to them. Or you install software like Freedom to force yourself not to browse 50 websites in a day.

Personally, here are a few passive barriers I’ve identified for myself: I keep my checkbook by my desk, because for the few checks I receive in the mail, I tend to never mail them in. I keep a gym bag of clothes ready to work out. And I cut up my fruit when I bring it home from the store, because I know I’ll get lazy later.

Let’s see how this can work for you.

  1. Get a piece of paper and a pen, or open up Notepad on your computer.
  2. Identify 10 things you would do if you were perfect. Don’t censor —just write what comes to mind. And focus on actions, not outcomes. Examples: “I’d work out 4 times per week, clean my garage by this Sunday, play with my son for 30 minutes each day, and check my spending once per week.”
  3. Now, play the “Five Whys” game: Why aren’t you doing it?

Let’s play out the last step with the example of exercising regularly:

  • say I want to exercise 3 times per week, but I only go twice per month. Why?
  • Because I’m tired when I get home from work Why?
  • Because I get home from work at 6pm Why?
  • Because I leave late for work, so I have to put in 8 hours. Why?
  • Because I don’t wake up in time for my alarm clock. Why?
  • Hmm…Because when I get in bed, I watch TV on Hulu for a couple hours.

Solution: Put the computer in the kitchen before you go to sleep —> sleep earlier —> come home from work at an earlier time —> feel more rested —> work out regularly.

That’s a gross oversimplification, but you see what I mean.

Pick ten areas of your life that you want to improve. Force yourself to understand why you haven’t done so already. Don’t let yourself cop out: “I just don’t want to” isn’t the real reason. And once you find out the real reasons you haven’t been able to check your spending, or cook dinner, or call your mom, you might be embarrassed at how simple it really was. Don’t let that stop you. Passive barriers are valued in their usefulness, not in how difficult they are to identify.

Summing it up: Passive barriers in your life
Passive barriers are subtle factors that prevent you from changing your behavior. Unlike “active” barriers, passive barriers describe the lack of something, making them more challenging to identify. But once you do, you can immediately take action to change your behavior.

You can apply barriers to prevent yourself from spending money, cook and eat healthier, exercise more, stay in touch with your friends and family, and virtually any other behavior. You can do this with small changes or big ones. The important factor is to take action today.

A caveat: Sometimes people take this advice to mean, “The reason I haven’t been sticking to my workout regimen is that I don’t have the best running shoes. I should really go buy those $150 shoes I’ve been eyeing…that will help me change my behavior.” Resolving passive barriers is not a silver bullet: Although they help, you’ll be ultimately responsible for changing your own behavior. Instead of buying better shoes immediately, I’d recommend setting a concrete goal — “Once I run consistently for 20 days in a row, I’ll buy those shoes for myself” — before spending on barriers. Most changes can be done with a minimum of expense.

Thanks for reading.

This is a guest post from Ramit Sethi, the founder of, a blog on personal finance and entrepreneurship. His new book, I Will Teach You To Be Rich, will be published on March 23rd. Look for a review here soon!

Monday, March 9, 2009

The First Step: the budget

Finance planning has become a thing of the past for many youths. It's a dying art. It is easily the greatest stress and most common rut of young adults. Responsibility and control are essential in escaping and avoiding this rut.

In Brief: The first step is to end the cycle of poor spending habits. (A good 'Rule of Thumb' is that if  its not worth purchasing the good with your cash then you better reevaluate.) The next step is to reduce your 'fixed' expenses. And the final step is to make more money.

Creating a working budget is key. It will help identify the causes of our financial weak areas; these may be obvious and subtle. For starters concentrate on the obvious. Poor budgeting of income and living beyond your means is the easiest way to fall into a deep rut, financially and perhaps in other fundamental ways as well.

I would like to emphasize the importance of knowing where your money is going. If you don't track and understand where your money is going then you run the risk of being taken advantage of.  I struggled with this through college. The game changer for this personal rut came from monitoring my expenses and controlling most of my meaningless spending. Monitoring makes the big difference, it forces you to evaluate how you spend.***

Take my budget challenge! Below you'll find a link to Google Docs, they offer a free budget spreadsheet templet. It's exceptional.  You will need to set up a gMail account if you don't have one. After your in, click "NEW" then pick "From template..." then in the "Search Templets" field  at the center top of the page enter "Family Budget Planner". Open in and get started. (It took me roughly three minutes to input all my relevant data.) Adjust the templet as you see fit. Again, it's free and it's very comprehensive; thats why I like it.

Take the first step...

Google offers an array of useful tools and applications, I suggest checking them out. (A future blog may introduce and evaluate some of the more popular/useful applications.)

Any troubles, throw a comment down.

***A quick note: This theory of monitoring applies to dieting as well. If diet is a concern of yours then take this one week challenge, let me know the results: Carry a notepad and write down everything you eat, prior to eating it, for one week. The idea is that when you write down what you eat you are making a more conscience decision on what you consume. You actively evaluate your diet, which in turn causes you to make better decisions (at the least it may help point to some problem areas). America's best diet?

Sunday, March 8, 2009

Mission Statement:

The mission statement of The Motley Rut is, so to speak, encased in the concept that we face periodic stagnancy, or ruts, in various aspects our life that we inevitably have to deal with. 
Our goal is to highlight and develop the simple and sometimes complex solutions that will allow you to conquer your rut and delve into the "next step".
Areas of concentration are to include priority management, debt elimination, the job search, increasing happiness, increasing wealth, beating stagnancy (at the work place/home), health and fitness, self sustenance and improving relationships.
This concentration may at first appear broad and without meaningful focus, but I assure you that they are all intrinsically connected.
Our aim is to eliminate the "cycle of ruts" that we encounter through practical and detailed measures.

About: Blog ideology

This blog is meant to be a forum to encourage new and old ideas on how to create the best life for ourselves. For me, it's family ties, outdoor adventures and personal growth that are important; music, art and botany are also interests.
Understanding that as individuals we each have different passions and goals, this blog is geared with the intention of stringing together bright ideas and stories that offer insights on how we can have everything we deserve.

The Motley Rut

Music, art, personal finance and the movement in and out of ruts