We Are All Self-Employed

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As we have found out, in today's economy, there is no job security. Large companies like General Motors and Ford can close up. Many companies are going bankrupt and their employees are now looking for employment  elsewhere.  Business are on shaky ground because of the economy. Your are no longer guaranteed your job. You will eventually lose or leave your job.  But was that ever not true? .

  

 When you are employed you think that by doing your job and doing it well you are thinking you have job security. The idea that you work for an employer is an old attitude. You may find out that there is no such thing as a secure job. We are finding out the great autoworker jobs maintained by a strong union are not so secure. Even the Post Office may cut off Saturday delivery to reduce losses. Even the city and county workers in California are living with 15% wage cutbacks. 

You must reexamine the notion of you being an employee.  Don't see yourself as one. You should see yourself as a one person company, providing services to one customer. You are now self-employed. You are your own boss. This entails all the details of running a company. The first is providing a product to sell. That product is you.  The product must work correctly and provide the service need by you customer. If it doesn't fulfill the necessary requirements the customer will not continue to buy the product. You will be fired.

Second you must provide good communication with your customer. A necessary and timely interaction on the quality and delivery of the product. Is your performance in line with whats required for your work.

Third you must provide customer service. This entails follow-up on your products quality. Is it performing up to  advertised specifications. If its not your fired.

If you like you can always stay the employee. But you can also take on new challenges and think like a Boss. There is always time to express your purpose and passion for your life. Cliff Hakim in his book "We Are All Self-Employed" says "Believing that you work for an employer and acting as though by doing your work, your job will be secure - is a relic of an era long past."    

               

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Being Cynical Is Good

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How can you say that? Isn't being cynical a negative character trait? Let's be sure what we are talking about. The definition of cynical is: 
 

• Believing that people are motivated in all their actions only by selfishness; denying the sincerity of peoples motives and actions, or value of living. 

 
If you are young and single you are not allowed to be cynical. Some have suffered disappointment. They may confuse cynicism with being sophisticated. They believe optimism is naive. It becomes their right to be sarcastic. They become so disillusioned cynicism follows. Get over it you don't have any wrinkles yet. 
 
Sorry people, cynicism is for us 50 plus crowd, we've earned it. We have made it into an art. We have mixed our cynicism with wisdom and experience. Something the young can't do. We know when things we here or see are unrealistic. So the definition of this new cynicism is: 
 

• Believing that "some" people are motivated in their actions only by selfishness; denying the sincerity of "some" people's motives and actions, or value of living. 

If you can remember when we were kids and we would be talking to an elderly person probably 50 plus years old. We would be telling some lie or tall tale and they would give you this look. That is the cynicism I am talking about. It wasn't negative, it was a healthy disbelief. 
 
This skill can only be attained by years and years of experience. Eventually, if your lucky, it arrives and becomes a tool to help you through life. But what can you do with it? 
 
Like a knife it cuts through the BS. It slices away the lies and deception brought to us in our daily life. If you have this skill you have great power. People will underestimate you. Your able to make accurate judgements about politicians and your financial advisers. Your able to understand people more and in result interact with them better. 
 
This ability not only sees the bad; it also sees the good in people. It as if you have x-ray vision to see their true heart. It can point out to you what person or problem is being injured in a particular circumstance. Knowing the problem it can help you pinpoint you efforts to solve problems. You see reality more clearer and so are able to proceed to deal with it. 

Take pride in your cynicism. Its a helpful tool that will see you through all your life. 

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Teaching Kids About Work and Money

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Kids are dumb. You have to teach them everything. Except to eat and watch TV. We have to teach them many things in life and one of the most important things is to work. Teaching your kids to work and having a work ethic is not easy. We had 6 kids in the house at one time. Giving them all chores to do was a time consuming task. Some did there chores well and when they were supposed to and some didn't. It was a job to keep on top of them.

Some parents give ther children an allowance. But in our case it wasn't practical. Handing out money to six kids would force us to get a bookeeper to keep track. We figured they had all they needed so no allowance. They didn't seem to suffer because of it or ever complain. It just wasn't done. You may decide to give your children an allowance yet it seems unnecessary. When I was young we never got one either. We didn't miss it.

Now when they were older their chores increased. Now they started to look for money. They also wanted cell phones. It was starting to get expensive. My Wife and I decided they needed to get jobs. It took some time but they did. Now they paid for there own cell phones with their money. The jobs also filled their time and kept them out of our hair. But don't forget they had to be taken to and from work. More time spent on our part.

They were taught how to spend and where to spend their money. Teaching how to buy things always looking for getting the most value for there money. They also learn the idea of preparedness. Getting somewhere on time. Preparing there clothing and seeing their uniforms or clothes are washed and ready for work. If your kids learn anything, I hope the one thing they learn is Work = Money. My Father always says "You don't work you don't eat."

Todays kids Have many bad examples of people on television, having plenty money and things, but you never see them going to work. They see people just having money. To see on TV an example of someone working hard is rare. If you don't teach your children good habits who will.

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Prepaid College or Educational Savings Account. Which is Best?

For the past 10 years I have been paying into a prepaid college plan. Every month I have been sending in $61.38. Saving for college for your children is a necessary expense I am glad to do. But I have thought if  I have been doing it the best way. What are the options for saving for college?

1. Prepaid College Plan.
2. Educational Savings Account or 529 Plan.
3. Scholarships 
4. Loans
5. Win the Lottery.

On examination Prepaid college seems the safest of all the plans. You pay a small amount every month and your guaranteed a 4 year college education. I sleep very well knowing its taken care of. The math works out that I pay $61.38 for 216 months. Which is a total of $13,258.00. That monthly amount was 10 years ago. Today's payment is $125 for the same thing. The tuition covers classes in a 4 year state college. It doesn't cover books, room and board. I have one in college now, I know I'll be able to cash flow those expenses in 8 more years. 

The 529 plans is the second option. It consists of making monthly or lump sum payments into a state run account which contains a basket of mutual funds as an investment. The idea is to make around 8% on average and just let your money grow. Here we have risk entering into the mix. This keeps me up at night. Will the investments make the 8%? What if there is a market turn down and your balance is reduced by 1/3. Scary. But on the other hand what if it makes the 8%, then your golden. If I took the same $61.00 and invested for 18 years, how would I do? 

Here's the graph of  saving $61.00 a month for 18 years with a 8% average rate of return. Not bad. Almost $30,000 a nice 18 years work. I would of made almost double than my prepaid college. That would pay for a lot of college. If you got this far you would want to move to a money market so you would not be exposed to market risk. 

Scholarships help pay for some or all of your college expenses. You could have a high GPA and get an academic scholarship. You could be good in sports and get a sports scholarship. Depending on your field of study many corporations and public sector entities will pay your way through school if you promise to work for them, after you graduate, for a period of time. According to Scholarships.com there are over 2.7 million scholarships from local, state and colleges available. You should apply to as many as possible till you have the money you need to go to college. 

Another way to pay for college is Sallie-Mae Student loans and private lending loans. This is when you haven't saved anything or just were planning to finance your college education. Depending on what your going to study you could be taking on debt from $20,000 to $200,000. This choice doesn't sound to good, to paying loans for many years to come, there's got to be a better way.

Saving for college has become complicated. But by the numbers the 529 seems the way to go. But risk wise prepaid college is better. There is no risk involved with that choice. I believe a combination of the 2 would be appropriate. I should start a 529 for the remaining 8 years. Saving $100 a month to cover the other college expenses.

Not bad for 8 years. This shows that I'll have enough to pay for room, board and books. About the amount as the prepaid. Should of done this 10 years ago. This plan gives me more options I feel I have more a stronger foundation to stand on. With this plan, college should be not a problem and I'll probably be able to sleep at night.

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Adventures in Financial Planning

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I have tried to educate myself about the different facets of my financial life. Reading the advice of many different authors. Each having their various opinions. I would get behind one school of thought to only later switch to another, not really feeling satisfied in their advice. So I thought one day I would go see a professional financial planner. I had a good idea and a basic plan for myself but needed more advice on investing.

It just so happened a group of friends and myself were having lunch. As we were being seated a young man in a suit introduced himself. He said he worked for "Transamerica Financial Services" and if we would sit for a ten minute presentation he would buy are lunch. Never being able to turn down a free meal, we agreed.

He was a nice young man about 25 years old, He explained, trying to drum up some new accounts for his company. His presentation was about 10 minutes. He talked about his company and what he could do for us. He asked us a few questions trying to learn if we needed what he had. He got our names and phone numbers. We felt obligated, being he was paying the tab. Our food came he thanked us and left.
He called the next day to thank each of us and to try to set up a meeting at his office. I took the bait and made an appointment. I was going to see a pro just like I always wanted. Fate and hunger made my wish come true.

Meeting day arrived. The office was in the nicest building in town. It was like when Jed Clampet was going to go see Mr. Drysdale. I thought to myself what am I doing here I'm broke. I was escorted to a waiting area and offered a drink. Soon the young financial advisor found me and took me to a richly appointed conference room. Still thinking boy I got them fooled. The young man brought in his senior accounts manager and we began. They gave me a lot of info always asking questions. No pressure, just a nice interview. I started to feel comfortable and explained my situation. It took about an hour and then it was over. No talk about about a fee yet but I new that would soon come. I made an appointment for two weeks later and left.

Our second meeting was a little bit more easy for me. We met again in the nice conference room. The two suits entered and we began. This time they had a whole lesson to teach me about there way to invest. They said it would be good for me to invest in an IRA, Roth IRA and a cash account. There reasons made a lot of sense. Other lessons were on life insurance and disability insurance. They were spending a lot of time on me. I thought, I'm going to have to pay for their time and expensive office. Then it came, this was it. In such a nice way they told me I would be given a financial plan to reach all my goals. Wow. They also told me to write a check for $200. I thought it would be more. I wanted a professional plan and now I wash getting my wish.

The two weeks waiting for our next appointment went all to slow. But today was the day. When I was seated, in front of me was a beautiful binder with my life's plan in it. It included all the great things I needed to do. It was quite detailed at over 150 pages. After going through it with my account rep. I felt glad I went through all this. Some of the things that were recommended I started to do and some I will do in the future. That was 3 years ago. I still reference it from time to time.

The bottom line of all this is I received alot of education. I wasn't just sold a product. I have a written plan for my future. Now's the hard part, following through. I highly recommend we all should get a plan from a fee based financial planner. I'm glad I did.

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Loans To Your Children - Great Idea?

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Is it a good idea to loan money to your children? We all have crossed this bridge one way or another. One day your child comes to you with a need for money. Maybe they screwed up and need money for college. Something is broken in their car or house. Because they have never saved for a rainy day, they come to you. But maybe it's an emergency so great and unexpected no one has the resources like Mom and Dad. Your little child is hurting and you feel bad for them. You want to help them feel better. What do you do? 
 
A family I know had this same problem. There was a family with 3 children. All grown children living on their own. By coincidence all 3 lost there jobs at the same time. Mom lent her children money for a period of 6 months. She put on credit cards almost $55,000. Dad didn't even learn about this till in was all over. Mom reached a point where she couldn't even pay the minimums. One thing led to another, she couldn't pay her mortgage. The house is in foreclosure now. 
 
What went wrong here? Mom went nuts and helped the kids in the extreme. I'm sure she didn't mean for it to go that far. This has destroyed her future as well as the children's. Also Dad is going to suffer for his ignorance too. 
 
Maybe what should of happened is Mom and Dad should of sat down with everyone, plan something that would help the children without destroying the family. Maybe a plan of non-monetary help. It reminds me of the way you help someone who is drowning. A life guard is trained to approach a drowning person from the back. Many a time a drowning victim ends up drowning his rescuer in the panic of the moment. 
 
My own sob story pertains to my daughter. She got in a fix and couldn't pay for her last year of college, she needed a place to stay and car insurance. Also she had no job. What I did was let her stay with me. She got room and board. Car insurance with repairs and tuition/books. In a period of 18 months the total came to $8500. All on a credit card. Of course I justified it at the time as an emergency, it had to be done. I had to help my kid. Like the story above. I didn't really make the the right decision. It was agreed that she would pay it all back when she got her professional job. She finally got her good paying job. Let's see when I'll be paid back, I'm sure she will. 
 
The credit card payment isn't killing me and it won't. But it's a nuisance I want out of my life. I probably wouldn't do it again this way. But when your kid is in apparent trouble your brain turns to mush. I'm alot wiser now and alot broker. You also don't look at your kids the same way when they owe you money. You look at everything in their life when they spend money as a waste, that money could have been used to pay the debt. You don't look at your kids the same way. They can feel it and it hurts the relationship. 
 
I hate to reveal this but my parents helped me to the tune of $25,000. I was getting divorced, over a year I spent this much money on lawyers and expenses. If they didn't help me I would of been screwed. This is beginning to look like a trend. That was 14 years ago. They just gave it to me. Never asked for it back. Someday I will pay them back. 
 
Have we learned anything here. Human nature is strong. Parental love is strong. Don't lend money to your kids, just give it to them if you have it. And don't let them drown you. 
 

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