4 
6 | § ¶I Like Visibility
-- And You Don’t Get it In Large Companies
I like the work I do to be felt across every single employee in the company, and recognized too! I want every employee in the company to recognize that their paychecks depend on me.
Sounds ambitious? Not so. That is the feeling you have in a small company. The best employees - those who cause the most impact to sales – are recognized and remembered by anyone. You stopped being “Jose Anes”, and you become just “Jose”, even when there are other three Jose’s in the same office. You are the one and only. Every employee in the company greets you by name, even when you don't remember all of their names.
You do not need to be in sales to be felt. You just need to do something so important that the company would not survive without you: and in small companies this is something achievable. The engineer with the grand idea that changed the company. The operations guy who changed the office layout into a more productive and comfortable one. The marketing guy that launched the campaign that raised sales by 10%.
The problem: In large company you have to be in a very high level management position to create this impact. Small companies haven’t showed me the money lately. The large company of dubious reputation that I work for shows me more money. I haven’t received a very high offer from a small company.
The potential solution: I am willing to go to a small company for less salary, any good small company, as long as I get a significant ownership on that company. I want to have a piece of the company that I am helping build again.
The question is: How do we get to that solution? How do we get a company that offers a significant amount of ownership in exchange for success?? How do I get an opportunity to create massive ammounts of cash through ownership and direct involvement??
4 4 | § ¶Always Tip Cash?
-- I Like to Tip By Charge Card
I have heard many people suggest that you should always leave your waitress tips in cash, as opposed to by credit card. I have heard several reasons, along with my thoughts on them:
- Cash tips are not reported in the W-2 forms and save the waitress money in taxes -- Not necessarily true, sometimes, when the tips are not recorded, the restaurant owner has to estimate them. However, they usually estimate them on the low-side, saving some taxes to the waitress. I do not believe in willingly helping anybody commit tax fraud. I help people use lawful ways of reducing tax liability, but hiding earnings from Uncle Sam is fraud. Some people justify waitress tax fraud on the fact that they earn $2 an hour. Besides the fact that I do not justify fraud I have to point out that if they wait a single table of four for an hour and the table consumes $80 in food and beverage, they earn around $10 in tips. $12/hour is a better salary than a supermarket checkout person, who has to report all his/her earnings to Uncle Sam.
- Credit Card Tips are Shared Among All Service Personnel - True in some restaurants, but usually not the case. But those restaurants also ask the cash tips to be placed in a common pot – if they pocket the tip cash, then they are breaking the agreement with their peers.
- Credit Card Companies Charge Commissions on Tips - This one is probable true. Credit Card companies charge a commission on the charges you make on them. The restaurant owner may reduce the tip to cover the tip’s commission. I have read some articles that suggest that credit card users leave more tips than cash users, which may compensate.
I believe people should just leave the tip on the same method that they use to pay the meal. Don’t make your life more complex than it has to be.
Third Party Content
The creditcard facility enables you to make purchases on credit while retaining cash in your wallet for an emergency. A popular credit card is the citicard which is the Citibank credit card. Spending on your credit card earns you reward points which you can redeem against other products and services. All secured credit cards in the market offer reward points on spending. The bank of america card offers rewards on your credit card. The rewards visa whereby consumers can redeem their reward points online is an added feature of credit cards. Whenever you plan to apply for a credit card, do keep the added features and benefits in mind. Go for low interest credit cards to keep within your budget. The hsbc credit card is an example of low interest credit card. 5 6 | § ¶Do We Care About Our Personal Gain?
-- Do We Still Have The 'Invisible Hand'?
Adam Smith, on The Wealth of Nations, suggests that society will improve by means of an “invisible hand” that will steer it in the right direction. It will happen out of the desire of every person to maximize his gain, and not necessarily that of society.
...every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. -- Adam Smith, 1776, An Inquiry into the Nature and Causes of the Wealth of NationsThe question I have is: Could it be that 200 years later, the people of the U.S.A. have so much (money, benefits, comfort) that they do not see the need for gain and try to find emotional gain in trying to solve other people’s needs? And the cororally of this statement: Could it be that by loosing the personal gain desire, we have lost the “invisible hand” that moves society in the right direction?
Yes, we all certainly want more of what we have got. But gone are the days on which people feared cold, hunger, clothing, or even the lack of luxuries (or affordable luxuries). Once pressing needs go away, we may have enough time to think about what we call “social issues” – or other people’s problems. Getting more and more goes to the backseat, and so does the “invisible hand” theory. At that time we start having conversations about how to solve them, instead of working so hard that our effort makes the whole nation stronger.
Adam Smith and Karl Marx could have made mistakes in their philosophically opposed treaties. Karl Marx’s treaty proved a failure once, with the Soviet Union. Could it be that Adam Smith’s treaty was also a failure? Or could we trust the “invisible hand” will come back to save us from our current path?
1 7 | § ¶Did You Voted Today?
-- It Impacts Your Pocket
Voting is not only about whom you like or who doesn’t. It is not about who talks pretty or can be admired. It is mostly about who will use your tax-dollars for the purposes that interest you the most.
The Office of Management and Budget is kind enough to publish very valuable information that all of us should be reading. For example, look at the following information:
| Category | 1962 | 2005 | 2006 (Projected) |
| Defense | 46.9% | 19.2% | 18.9% |
| Health, Human, Housing | 4.1% | 25.3% | 25.4% |
| Social Security | 15.5% | 22.7% | 21.9% |
| Treasury (Payment on Debt) | 0% | 16.5% | 16.7% |
| Education | 0.8% | 3.0% | 3.1% |
Most of us pay money to the Federal government in the way of taxes, fees, and social security taxes. Our employers also pay a social security tax on our behalf. Corporations pay taxes as well (cutting into the earnings you get through stocks on your 401k plan, for example). Out of all of that money the Federal government takes, 18.9% gets spent on Defense (military), 25.4% gets spent on social services (not counting social security), and only 3.1% on Education.
States also have their own budgets, collection methods, and spending habits. I do believe that localized spending is more efficient than Federal spending, but I have used Federal budget because it affects the widest amount of readers. I prefer higher state taxation/spending and lower federal taxation/spending.
Which areas do you value most? Which areas you want to see reduced? Do you want to see all of them reduced (less taxation)? Do you want to see all of them increased (more taxation)?
3 3 | § ¶529 Plans and Life Insurance
-- It is easy to be afraid of death and education
I love financial institutions, I really do. They provide instruments so that we can build a safe and stable life. The problem is that financial salespeople often sell the instruments that make the less sense on a particular situation – most probably motivated by the gain margins on these products.
An example is life insurance for a young, childless, and wifeless guy. Unless his parents depend on him, there is little reason to have life insurance of any kind. Yet, financial salespeople tend to sell to them, mostly on fear: to lock in rates, to make sure he stays insurable, and all of that. Nice reasons, but rarely cost-effective. These young, dependent-less people take life insurance because they are afraid of dying – a lot more than they are afraid of becoming disabled (disability insurance), having their apartment robbed (renter’s insurance), or even having a hurricane flood their houses (flood insurance).
Same thing happens with 529 plans. 529 plans are mostly for high income earners or small business owners/employees. See, those working for small business may not have access to employee sponsored retirement accounts. And high earners may already maximized their 401k, Individual Retirement Accounts (IRA), and other qualified retirement plans.
You may ask yourself what does retirement has to do with education? Thanks to our convoluted taxation system, a lot! See, federal rules take into account the money on 529 plans to calculate what portion of the college expenses the family of a kid can pay. However, federal rules do not consider the money on qualified retirement plans into the equation (colleges may, but for the education funds they have privately acquired).
To make things more interesting, money in an IRA (or a 401k plan converted into an IRA) can be used for education expenses without paying penalties.
It makes perfect sense to contribute to 529 accounts, but only after you are contributing as much as you can to your qualified retirement accounts. This means contributing roughly $15,000 to a 401k and up to $4,000 to an IRA (lot of money considering that most families earn about $40,000 a year). As I mentioned, 529 accounts are for those families earning in excess of $100,000/ year or for those that do not have access to employer sponsored retirement plans like the 401k’s or SIMPLE-IRAs.
So then why do people flock into 529’s before maximizing their retirement accounts? People are frightened – almost as much as they are afraid of dying. The idea of an uneducated child scares people – at least some people. Plus, education is a “sure thing” – while some people even think they can work until they die. (Education is a time pressing need – the child will reach college age sooner than you are forced to enter retirement.)
Like many things in life, it is all about how you market them. An IRA and a 529 may be investing in the same underlying vehicle (mutual fund). However, if your financial sales guy things you will put more money into the 529 than in the IRA, he/she will most probably try to get you to get the 529 rather than the most efficient and flexible one: the IRA.
3 4 | § ¶Dead People Can’t Pay Their Loans
-- Don’t Take Debt Insurance Unless You Really Need It
Young people are often enticed to take a Life Insurance Policy on their Auto Loans, or even Credit Card Debt. The salesperson tells the young guy/gal that if they die, their estate will not have to pay for the debt. How nice of them!
The reality is that no-one had to pay for the loan – the estate does not inherits debts, whatever is not covered by the individual’s assets at the time of death is written off by the bank! (However, it is true that if the bank can’t recover their money, they will take the assets that where backing it away – it is not as if you can get to drive your car after you die.)
Of course, the bank is very happy to make sure that you have no excuses to pay off your debt, even if you die. But it doesn’t benefit you at all.
What is worse: the cost of debt related life insurance is usually higher than Term-Life Insurance for comparable amounts. Even if you have a wife and ten kids and want to be sure they can pay off the house, the Hummer, the Volvo, and the Mini-Van, you are better off getting term insurance rather than four individual debt insurance policies.
My advice: just save those few bucks that you would pay in debt insurance and put them into your IRA. By the time you are about to die you would have paid the car, the house, and will have a nice nest egg.