The Amateur Financier

Time for a quick quiz.  Tell me what cell phone company will charge the least amount to use their services.  You have one minute…and go!

*Waits patiently for one minute*

Time’s up!  What did you come up with?  Assuming you gave this some serious thought, you probably realized that coming up with an answer depends on a lot of information I didn’t share with you.  How many people on the plan, how often they talk, when they make most of their calls (during business hours or outside normal business times), and where in the world the other people you usually call are located; any or all of these things could impact which plan would be the cheapest.

Even knowing all those factors, however, is no guarantee that you will find the most cost effective choice for cell phone service.  That’s because cell phone companies, realizing that few people, if any, can tell the difference in cell phone service well enough to make a choice based on the service provided, have taken the tactic of trying to confuse costumers on the price in order to stay in business.  If they didn’t, the price of cell phone service would drop to the cost of providing it, and all but the biggest company (perhaps two or three) would be forced out of the market (that’s economies of scale at work).

Sadly, this is the most accurate book about the future I've ever read

Instead, cell phone companies have effectively created their own ‘confusopolies‘.  I wish I could claim credit for creating that term, but it was first coined by Scott Adams, the creator of Dilbert, in the 1998 book The Dilbert Future.  Here’s how he described the confusopoly of the future:

“A group of companies with similar products who intentionally confuse costumers instead of competing on price.”

Basically, any group of companies that produce a product indistinguishable to the average user (because it has no taste, odor, texture, or other easily measurable attributes) could form a confusopoly.  Cell phone service is one obvious example; unless your company is constantly dropping your calls or otherwise making the service unusable, it’s hard to distinguish between the average, the good, and the great.

Other companies that provide near identical service, particularly information and financial companies, can also form confusopolies.  Internet service, online banking, and investing firms are all services that are hard to distinguish based purely on the quality of service; you can execute stock purchases just as easily with eTrade, Sharebuilder, or Charles Schwab.  Rather than competing to the ‘best’, they instead focus on confusing the consumer, or taking a divide and conquer approach by focusing primarily on different segments of the market.  (So Sharebuilder focuses on mutual fund-style investing, eTrade touts themselves to active traders, and Charles Schwab provides access to a stock broker, for example)

Defend Yourself From the Confusopolies

With confusion becoming a more popular method of gaining and keeping costumers and more types of types of businesses that form natural confusopolies coming into existence, how can you protect yourself?  Here’s a few hints to get the most out of the companies you use:

1) Know yourself and your needs: As mentioned, one common tactic for confusopolies is to focus on subsets of the population, and competing on one or two issues that appeal most to that group (as opposed to everyone who needs the service in some form).  When choosing a cell phone company, for example, try to take advantage of plans that will benefit you the most.  If you (or someone in your family) texts constantly, a plan that allows unlimited texts could be the best option for you, while if you only talk on your phone (a novel idea, I know) a completely different plan would be the least expensive.

2) Take Advantage of the Competition: Many companies in fields where confusopolies are rampant provide bonuses to encourage people to use their services.  (Frequently the goal is to get you to sign on due to the low rates and keep paying when the rate eventually shoots up due to mental initial.)  As a result, if you keep on top of your plans and switch when your rates are about to shoot up (or when you are about to run out of free stock trades, or whatever introductory specials are being offered), you can take advantage of their generosity and keep your costs low.  (Provided, of course, that the transaction costs of switching are low; swapping mortgage providers every few years is unlikely to save you any money unless the differences in rates offered is substantial.)

3) Don’t Panic: It’s good advice in general, but in this case it’s especially appropriate.  While you shouldn’t just rest on your laurels, the endless pursuit of the absolute lowest priced service is only going to eat up time and possibly drive you insane.  If you have a cell phone provider, stock broker, and internet company that provide good service for a reasonable rate, you don’t need to switch constantly to save a few dollars.  Just relax, enjoy the service, and keep an eye out for better offers, but don’t feel the need to spend every weekend combing through offers for the services you need.

There you have it, three simple steps to keep confusopolies from taking advantage of you (and allowing you to take advantage instead).  Keep an eye out, as they’re only going to increase in number as a result of ever lowering barriers to entry.  Have fun trying to out confuse the confusopolies!

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Previously, when Wednesday last got Wacky: You found yourself stranded two hundred years in the future, after a time travel money making scheme went awry.  The good: your investment grew into a multi-billion dollar fortune.  The bad: thanks to higher than expected inflation, that’s less than the typical fast-food worker earns in the course of a year.  The ugly: any attempt to withdraw the money in order to travel back in time (and not invest the money in the first place) causes the money to disappear (something about causality and other things that sound like they should be part of a Star Trek plot line).  What will you do now?

You stare at the ATM for a while, watching as your money blinks in and out of existence while you consider withdrawing it, lamenting the quirks of time travel.  You finally consign yourself to staying in the future (or your new present; you make a brief mental note to invest in a dictionary that will give you some words to describe your new situation).

After withdrawing your entire fortune, a few thousand Reagans (million dollar bills; the basic unit of currency in an over-inflated future), you try to figure out where to go from here.  After making one last attempt to spend this money on a rental time machine (you swear you hear Reagan laughing at you as he briefly blinks out of existence before reappearing), you resign yourself to your fate: working in the 23rd century, at least long enough to earn money to travel back to your own time.

First, though, you need someplace to live, and probably some food, too.  Actually, to judge from the gurgling in your stomach, it’s probably best to go for the food first, and then try to find some lodging.  Luckily, there’ s a little food stand not that far from the time travel company.  Unluckily, it seems that only food products that aren’t insanely expensive are food pellets.

You try to ask, in the coolest way possible, just how many pellets you need to consume in order to stay alive, and find out that you hold a month’s worth of food in the palm of your hand.  Provided you have a hand the size of a shopping cart; it turns out that there’s only so far you can compress the 2,000 some calories, numerous vitamins and minerals, several grams of fiber and assorted flavorings and preservatives you need to consume each day before physics says you have to stop.  You buy enough pellets to last a week or two, fork over a goodly amount of Regans, and pray that you don’t turn into a hamster before you finally make it back to your original time.

Then it’s off to find a place to live.  You don’t need anything too grand; you literally don’t own anything but the clothing on your back and the supply of pellets you just bought.  You manage to find a perfect place for your base of operations; a sleep tube at a hotel that’s half a meter (20 inches) wide, half a meter tall, and 2 meters (80 inches) deep (the ‘Presidental’).  Not much space, granted, but it gives you a place to sleep.

Then comes the real trouble: finding a job.  You think about your line of work before traveling to the future, but that’s probably out.  Your field has probably advanced so far that you would barely understand what was happening.  Much as an eighteenth century doctor who awoke in the twenty century would wonder where you kept the ether and the leeches, there would be almost no way you could simply pick up as, say, an electrical engineer and start working.

Of course, that leaves one very undesirable career path for you: minimum wage jobs.  Not the most appealing possibility, but you have to do what you need to do.  Figuring that fast food would be a good start when looking for a job that doesn’t require crazy twenty-third century skills.  It’s a nice thought, but fast food, like much of society, has gone mechanical: all the prep work, and even the serving, is handled by robots.  Clown robots.

DO YOU WANT FRIES WITH THAT?

After feeling the first sting of rejection, and worrying that you will have nightmares for years, you seek other employment.  You try to find a decent sales job; surely, the techniques for trying to move product can’t have changed that much.  Schmooze, be personable, and push the products.  Yup, that’s the ticket.

Unfortunately, years of (over)exposure to high pressure sales tactics, constant bombardment of advertisements, and of course, lots of advance on fighting temptation have rendered most traditional advertisements useless.  In their stead, a new technique has risen to prominence: mind control!  Yup, rather than subtly (well, at least by comparison) trying to influence your decisions, advertisers took the path of least resistance and started to force consumers to purchase their products.  Of course, with hundreds of different corporations throwing conflicting subliminal messages, the end result is about as effective as twenty-first century pop-up ads (and just as concerning to the average citizen).  Just to be safe, you resolve to avoid all media until you’re safely back home.

You finally find a job, at a pet salon.  Too bad all the animals are intelligent.  It’s incredibly disconcerting to be berated by a dog for screwing up a nail clipping, or mocked by a bird for a bad feather comb-over, or insulted by a cat for improper grooming techniques (actually, considering how cats normally are, that’s not too surprising).  Still, you muddle through, doing your best to save up money for a return to the past, promising yourself that you’ll never, ever, EVER get a talking pet again.

Will you make it through your job without going insane?  How much wood would a woodchuck chuck if he could spend all his time gossiping instead?  Will Roger finally allow you to get out of the future in the next episode?  (Answer: HAHAHAHAHAHA!)  Tune in next time to find out!

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I’m a mood that combines playfulness with nostalgia.  I think it’s because I’m currently back home and have a job interview today, so I’m both happy and thinking about my past.  I’ve been thinking a bit lately about some of the stories and fables I was told as a child.

So today, let’s have some fun with some of the most famous of Aesop’s fables, and see how we can apply the lessons found within to our personal finance situations.  After all, these are stories that I (like many of you, I’m sure) have heard since I was young.  Let’s go on a trip down memory lane and see what we can learn about money management from good old Aesop.

1) Fable Name: The Ant and the Grasshopper

Short and Sweet Summary: There was once an ant and a grasshopper.  (Good start, no?)  The grasshopper laughed, frolicked and played the days away, while the ant diligently spent his time during summer and fall gathering up extra food.  The grasshopper laughed at all this effort; why gather food when there was such an abundance all around them?  When winter came, though, the grasshopper found himself out of food while the ant had plenty, and the grasshopper comes to realize the folly of his short-sighted ways.

A hardworking ant, possibly working hard

(Depending on what version you read and the particular message the author is trying to push, the final fate of the grasshopper and the ant (or ants, in some versions) can vary.  In the most traditional versions, the grasshopper dies from starvation.  Since this doesn’t make the most child-friendly ending, in many cases he gets food from the ant, usually in exchange for providing some service or at least promising not to be as lazy in the future.  There are also plenty of more politicized versions, having the grasshopper suing the ant and taking his hard-earned food (to send up socialist/communist worldviews) or attacking the ant for being so stingy (to attack those who hoard wealth).  For our purposes, we can end the story once the grasshopper realizes the error of his ways.)

General Moral: Prepare today for lean times tomorrow.  Also, if an ant and a grasshopper both offer you financial advice, go with the ant.

Financial Moral: Pretty much the same as the general moral; be sure to stock up on money (or other supplies, etc.) while you have the opportunity, particularly if you know the lean times will be coming.  Replace ‘winter’ with retirement, ‘food’ with money, and ‘ant’ with anyone who didn’t get a trust fund for their 16th birthday, and you have a pretty good plan for saving for your golden years in our ‘fund your own retirement’ economy.

2) Fable Name: The Tortoise and the Hare

Short and Sweet Summary: A tortoise and a hare have a race because the hare was talking smack about the tortoise’s mama (or possibly just called the tortoise slow).  During the race, the hare takes an early lead, getting so far ahead that he decides to take a nap (or goes off to play keno, depending on the version of the tale).  While the hare is distracted, the tortoise slowly but steadily catches up, and then overtakes him.  By the time the hare wakes up (or gets kicked out the of the casino due to his bad credit), there’s no way for him to beat the tortoise.  Victory to the slow guy with the shell!

General Moral: Slow and steady wins the race, OR don’t take a nap until you finish the darn race.

Financial Moral: Pretty much the same as the general moral (the one about slow and steady winning in the end, not the napping one).  A decent to good financial plan, implemented over the course of a lifetime, will be much more effective at boosting your net worth than a great financial plan you only follow off and on.  (Note: you should not take the lesson that betting on a long shot in a race is a good way to improve your financial security; they’re long shots for a reason, and no every gamble will pay off in the end.)

3) Fable Name: The Dog and the Bone (noticing a pattern to these names yet?)

Short and Sweet Summary: A dog goes walking alone with a bone in his mouth.  He looks down into a still pool of water, and sees another dog looking back at him, also with a bone in his mouth.  Getting greedy as he looks at the other dog’s bone, and thinking that the other dog looks like a bit of a push over, our first dog opens his yap and barks at the second dog.  His bone drops into the water, disappearing under the waves, leaving the dog (and his reflection) without any bones at all.

Pictured: Dog; Not Shown: Lost Bone

General Moral: If you get greedy, you risk what you already have.  Also, mirrors can steal your soul (or at least, confuse you, if you happen to be a dog).

Financial Moral: Let’s quote another source of great wisdom, Warren Buffet: ‘Rule #1: Never lose money.  Rule #2: Never forget Rule #1.’  As with bones, so it is with money; it’s much easier to keep what you already have then it is to earn more.  If you get greedy and try for excessive gains, you can end up losing what you already have.  (Add in the number of scams and other simply fraudulent ways people will try to get your money, and the importance of keeping what you have comes into sharp relief.)  Invest smartly and don’t try to shoot for the moon with your returns, and you’ll have a much better shot at growing your wealth and adding to your supply of bones (or cash, if you prefer that type of thing).

4) Fable Name: The Goose that Laid the Golden Eggs (just like that, the pattern is gone)

Short and Sweet Summary: A farmer and his wife (I picture them as Ma and Pa Kent from the Superman comics, but I’m pretty sure that’s not what Aesop intended) discover that they have a goose who lays golden eggs.  After a few days of enjoying the bounty this goose puts out, they get impatient, and slaughter the goose to get all the golden eggs at once.  Alas, once the goose is dead, they find no golden eggs inside, and realize that they’ve just killed a source of great wealth.

General Moral: Greed and impatience destroy wealth.  Also, geese aren’t filled with all the eggs they’ll ever lay (at least, not in fully developed form).

Financial Moral: As usual, the general moral can be pretty easily applied to the personal finance; get greedy and it’ll backfire on you.  This is most apparent when looking at your nest egg (an apt term for a waterfowl based fable); if you start with a small, safe withdraw rate when you retire, your nest egg will have the chance to grow, continuing to generate more money (golden eggs) for your spending pleasure.  Pull out too much of your money in the first few years, and watch as your nest egg quickly withers away, and you spend your retirement years desperately searching for more money (or a goose that lays golden eggs).

Alright, that’s enough nostalgia for one day; hopefully, there’s plenty of stories mentioned here that spark a few memories of your own childhood, and maybe, just maybe, remind you of a

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Previously, in our Wacky Wednesday hi-jinks: You’ve rented a time machine and attempted to profit by investing money and coming back two hundred years later to spend the profits.  The plan worked; your measly one thousand dollars had become more than 4.8 BILLION dollars; unfortunately, inflation has taken such a toll that this amount is about the cost of a used hovercar.  (”The Pinto Mark XIII, now with non-exploding hoverpods!”)  It takes several Reagans (one million dollar notes, so named for the late twentieth century president on their front; whether this is an honor or an insult, you don’t yet know) just to buy a cup of coffee.  Realizing your error, you run back towards your DeLorean shaped time machine, only to find it being towed away…

You wave and shout to get the tow truck men to stop, but they give you a dismissive shrug, make a few comments about ‘work is work’, and continue to haul away your only way to get home.  Eventually, your shouts and curses, (and the tears welling up in your eyes) convince the driver of the hover tow truck thing to give you a lift back to the rental place.

As you climb into the cab of the hovering tow truck, you wonder why everything in the future seems to be hovering.  After that, you wonder what you should do from here.  You don’t have much more money (adjusted for inflation) than you had back in early twenty-first century, but you’re in the FUTURE!  You could go on adventures on the moon or join a Star Fleet crew, visit strange solar systems, and sleep with green women (or men; far be it from me to judge you).

As thoughts of space flight and glorious science fiction adventures dance through your head, you look out the window to get a better view of this strange, new world.  You’re greeted by a bunch of billboards (floating, of course; you wonder if there was a law passed in the twenty second century that absolutely everything had to float or what).  After adjusting your eyes to the garishly designed billboards, you manage to make out some of the things being advertised.

The first sign you make out seems a bit odd; non-artificial strawberries on sale, 500 grams for 200 Reagans.  You’re still getting used to this whole future currency, and the metric system always gave you trouble (and you don’t even want to guess what the whole ‘non-artificial’ comment means), but it sounds as if a carton of strawberries is selling for the 2010 equivalent of two hundred dollars.  They certainly sound rather precious.

A few more billboards continue to erode your confidence that this is not the fantastic future for which you were hoping.  An assortment of ‘food pills’, living tubes with huge monthly rents, and ads for ‘One of the Last Remaining Forests’ make the future seem less utopia and more distopia.  It isn’t until you see the billboard for ‘Soylent Green’ that you finally decide you’re much better off back in the past.  You’re not sure if it’s some kind of twenty-third century joke or truth in advertising run amok, but you sure as hell don’t want to find out.

Now that you’ve decided to go back, you try to figure out how you can still profit off of time travel.  Clearly, depending on interest alone isn’t going to be enough to make you rich with no effort, so you may as well as see if there’s any way to make a Reagan or two off of your next time machine rental.

Unfortunately, most of the easiest ideas that pop into your mind just won’t work.  Trying to set up your own time travel travel agency would require a lot of work; getting the needed permits from the Time Police alone could take hours.  Ditto for exchanging products across time; while selling strawberries (and other natural products) in the future sounds like a great way to make money, you can’t imagine nobody else would try it if it was allowed.

Your mind briefly goes toward the idea of gambling.  While most forms of gambling disappeared shortly after time machines began being used commercially (the one casino that remained open was the site of the famous ‘Trump Debacle’; nearly one billion dollars won by ‘gamblers’ armed with future knowledge in the course of one day, leading to lawsuits for decades), there’s still the chance of passing information about future events to yourself before they went mainstream.  It’s just a matter of getting by those Time Police.  But come on, they can’t be everywhere (or everywhen) right?

You finally settle on your plan as you pull into the time machine rental place; travel back in time, pull your money out of the investment that got overtaken by inflation, pass it to another version of yourself along with some hints about future sporting events, and then distract the Time Police elsewhere.  Maybe you can try to kill Hitler; that always gets their attention.

You settle on your plan, and go up to the debit machine to pull out your money, to find that your account balance is empty.  Thinking it must be some horrible mistake, you vow to stay in the future just long enough to complain to your broker, when the full amount reappears in the account.  Still confused, but rather happy, you go to pull the money out again, when once again, it disappears without a trace.

Bewildered, you wonder just what’s wrong with the machine for a moment before it hits you; there’s nothing wrong with the machine, there’s a flaw in your plan: if you take the money out in the past, it won’t be available for you to use now in the future.  The only way you can have the money now is if you don’t travel back to take it out.  Frak!

How can you get around this paradox?  Will you be stuck in the future forever?   Does Roger like asking rhetorical questions as a way to wrap up these articles?  (Answer: Heck Yes)  Stay tuned next week (or the week after if I get busy again) for the next exciting chapter!

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(As part of my attempts to ‘loosen up’ while blogging, I’ve decided to make my posts on Wednesdays into more humorous affairs.  It’ll be the perfect way to get over the hump while still learning a thing or two about money and personal finance.  Have fun while we discuss a perfectly legitimate (if rather far fetched) way to make a huge personal fortune.)

Let’s say you have a time machine.  No, don’t ask where you got it; that’ll just spoil all the fun.  How about we say that you got it at the local Doc Brown’s Time Machine and Mr. Fusion Emporium?  (Editor’s Note: I’m the first in line for a franchise when they start to expand.)

Once you’ve finished warning your past self of all the mistakes that you’ve made and how to avoid them, you’re both delighted and surprised to discover that you haven’t faded away after altering the flow of time.  (Or maybe your past self just didn’t listen; make a mental note to find a time when you weren’t out partying during which to pass on vital future information.)  You still have one trip left on the time machine before you have to return it, though, so what should you do now?

"Hi, I'm Marty McFly, and I'll be your chauffer for the evening." (c) Universal Picture

That’s when you have a brilliant plan; take advantage of compound interest to make yourself a billionaire in the future!  Yes, all you need to do is put aside a small amount of money now, allow it to grow for a few centuries, and you’ll be rich beyond your wildest dreams.  It’s the same principle of compound interest that inspires financial advisers to tell you to start investing early, but rather than waiting a few decades (and working the whole time to keep saving), you’ll simply skip ahead a few centuries and live like a king!  You’re not the first person to have this idea; it’s a concept known as the

Compound Interest Time Travel Gambit

and it’s been used in everything from Futurama to “The Restaurant at the End of the Universe”.  If time makes your investments grow, than more time must make them grow even further, and centuries would allow you to become obscenely wealthy in the future with only a tiny amount of money invested now.

You make up your mind, pull all the money you have left after your time travel rental out of the bank (a full $1000) and after a little bit of research at the time travel office, invest it in a fund that looks to have good prospects over the next two centuries.  You hop in the time machine, set the chronometer for 200 years in the future, and the gun the gas to get up to 88 miles per hour…

BAM!  You’re on a road that hasn’t been used in over a century, since cars no longer need to drive on the ground.  You head over to your brokerage, to learn how your fund did.  Your broker pulls out your files (blowing the dust off them in a comical fashion), and with a little bit of checking on her computer, tells you that your balance is currently over four billion (yes, billion with a B) dollars.  (It’d be around $4,838,949,585 if compounded at 8% for 200 years, for those who like exact numbers.)

After you recover from your fainting spell, you tell your broker to cash some of the fund out, so you have some spending cash to enjoy this strange new world.  You remember that inflation has been active the years you’ve been gone; at an average rate of 3.5%, it’s going to take $1000 to have the same spending power as one dollar when you left.  So, with one thousand dollars being the new single, you decide to take out a healthy amount to ensure you have enough; “Give me one million dollars” you ask, smiling broadly as you do so.

Your broker raises an eyebrow, selling off a portion of your investment, and handing you a single bill (one with a picture of Ronald Wilson Reagan on the front, you note with a bit of nostalgia).  You’re a bit surprised, but when you see the ‘$1,000,000, Legal US Tender’ written on the back, you decide the government must have started issuing much higher denomination bills rather than revalue the currency.

“Don’t spend it all in one place,” your broker calls after you, a rather weird thing to say.  You see a nearby coffeehouse, and decide to have a quick drink.  You order your standard double foam, extra tall, mocha chocolate vanilla low-caffeine chive tea, and watch as the cashier rings it up.

“That’ll be five Reagans,” she says, waiting patiently for you to pay.  You hand her the bill, waiting for your change.  She sighs, “That’s one; four more, buddy.”

You stare at her a few moments before the truth dawns on you; inflation has taken more of a toll on the value of your money than you thought.  Whether because a few jags of hyperinflation during the time you were gone or because of a trend of long-term higher inflation, prices didn’t increase 1000-fold; no, the world experienced 1,000,000 fold price increases, a process known in books and movies as

Ridiculous Future Inflation

As Lazarus Long, one of Robert Heinlein’s characters put it, “$100, put at 7 percent interest compounded quarterly for 200 years, will increase to $100,000,000 – by which time it will be worthless.”  (”Back to the Future” had an example that was even closer to home, predicting a Pepsi would cost $50 in 2015; if that comes to pass, I’ll be the first to admit that Obamanomics failed spectacularly.)  Cursing your lack of foresight (as well as wishing that you read/watched more science fiction before you went on your time travel jaunt), you head back towards your time machine, trying to think of how you can invest your money to become wealthy in the present (well, your present, which is currently the past…you know what, describing past, present and future when it comes to time travel gives me a headache).  But alas, your time machine is being towed; curses on repo men who can track you anywhere in the time!

Will you ever be able to get back to your own time?  How many Reagans will it take to rent a hotel room while you sort things out?  Will the Amateur Financier actually finish this story next week?  (Answer: Maybe)  Stay tuned for the next exciting chapter of Wacky Wednesday!

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D’OH!  It’s one week before Christmas, and you haven’t started on your Christmas shopping yet?  Boy, are you going to be in trouble.  Luckily for you, I’m nearly done with my Christmas shopping, so I’ll take a little time and help you to get things ready.  (And by ‘nearly done’, I mean all my presents are bought, wrapped, and ready to go.  Well, except for a few I just bought yesterday, they still need to be wrapped. Alright, I still need to buy those few presents, as well… Once I get done with this, I might need to do a little shopping.)

Anyway, back to the subject of this entry: handling a lack of gifts on the biggest gift-giving holiday on the calendar.  Hopefully, you’re not panicking too much, as you still have most of a week to figure something out and get good gifts for everyone on your list.  The methods you have at your disposal include:

1) Buying the Gifts: In spite of what you might think, you can still order gifts online many places and have them arrive in time for Christmas.  Of course, the longer you wait to find that perfect gift for the people left on your list, the less time the packages will have to arrive; if you have any hope of getting the presents where they need to go in time, you should order now.

Pictured: Shoppers from last Christmas Season

For the truly last minute shopper, though, there’s no greater thrill than wading wallet first into the crowd at your local mall.  Do it today, and experience all the joy and wonder of getting yourself crushed into a small object the size of a sardine can.  Also, if you’re looking for Zhu Zhu pets, don’t bother; apparently, small animatronic hamsters are this year’s Tickle Me Elmo (or, if you prefer the classics, this year’s Cabbage Patch Dolls).  Assuming you make it out alive, and with a least a few functioning brain cells, it’s time to look at the next option on your list:

2) Make Something: If you build it, they will play.  At least, that’s the hope.  This technique will work best if (a) you are six years old, and every adult assumes that absolutely everything you create is freaking adorable, or (b) you happen to be an expert at some sort of craft.  Yes, if you are a skilled potter, sculptor or other artisan, the only worry you have is that it’s too late for you to get any good work done in time.  Oh, it is too late?  Well, welcome to the club, brother!

Assuming you want to plow ahead with making a present even if you aren’t that crafty, do yourself a favor and keep it simple, stupid.  This is not the time to experiment in exotic techniques like ‘rare earth metal kinetic sculpture’ or ‘furniture making’, but just stick to making something you know you can handle, like macaroni art.  Of course, if that’s ALL you can make, you might want to try my last suggestion:

3) Fake a Coma Through the Holidays: Alright, buying something didn’t work, and making things didn’t work.  How else can you make it through the holiday season with your dignity intact?  Why, faking an injury that causes you to drift into a coma, of course!  The best method is to have a bowling ball drop from a height sufficient to wound you and make you lose consciousness, but not to result in permanent injury.  It might take a few times, so start from a low height and work your way up.  When you wake up (ideally long enough after Christmas that nobody asks you where you put the presents, but not so long that it interferes with your professional or personal life), the holiday will be over, and you’ll have made it through without the need to buy any presents at all!

There, that should be enough to get you through the holiday gift-buying season relatively unscathed (except for that gaping head wound where the bowling ball hit).  Enjoy the tips, and have a happy holiday.

(A note to all the non-Christians out there: As children, you might have been annoyed at the fact that basically the whole month of December was devoted to a holiday you didn’t celebrate, where children other than you got toys.  I hope that, now that you are adults watching all the adults who celebrate Christmas drive themselves nuts trying to make the holiday perfect for their children, that you feel karma has justified your suffering.  Have a happy holiday season, and enjoy the Chinese restaurants on Christmas day; I hear they’re practically empty, and you should have your choice of seats.)

(Note: as mentioned in the title, this is humor.  Please, don’t go wounding yourself (or anything else crazy) just to avoid the holiday.  I was just trying to poke fun at the lengths to which last minute shoppers (including myself) in order to complete their shopping.  Don’t take this as an actual suggestion of how to handle your holiday shopping.)

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It’s Friday, the first Friday after Black Friday, no less.  With the end of the week upon us, allow me the luxury of getting a bit off topic.  I’m going to go over some advice offered by Benjamin Franklin, one of the wisest men from the time of the founding of the United States of America.  It’s amazing how, more than two centuries after he wrote Poor Richard’s Alamanack, so much of Franklin’s advice is still relevant (if phrased a bit archaically).  What’s more amazing is how few people seem to follow his commonsense suggestions, even those who have heard these sayings before.  We’ll start with what is probably his most famous maxim:

“A penny saved is a penny earned.”

The virtue of saving summed up in a mere seven words, Franklin pretty much says it all.  One of the fastest, easiest, and safest ways to increase the amount of money you have available is simply spend less, at least less than you take in.  Get a good handle on that, and the rest of this personal finance thing falls into place.

The Elder Statesman Himself

“Who is rich? He that rejoices in his Portion.”

Another one that still makes sense, it’s important to remember to be happy with what we have.  We can strive to improve our lives, of course, but being upset that others have more does nothing to improve our lives.  Plus, as Franklin was well aware, nobody is ever satisfied with their lot in life.

“The poor have little, Beggars none;
The rich too much, Enough not one.”

It’s a sad commentary on human psychology, but we are wired to never be satisfied with what we have in life.  We look at what other people have, we feel we don’t have enough, and we continue to strive to get more.  When we do get what we desire though, we find out that having money comes with its own set of problems.  Amazing the way things work themselves out.

“Work as if you were to live a hundred years,
Pray as if you were to die tomorrow.”

Franklin had a way with words; being prepared for any eventuality, whether you’ll live to a ripe old age (and need to survive off your savings and investments) or meet an unfortunate end (and leave your survivors to make a living without you), you need to be prepared.  Hard work and prayer will help to cover your bases, as will saving for retirement and getting insurance (since some things have changed since Franklin’s time).

“He that would Fish, must venture his bait.”

A somewhat longer, more old timey way of saying ‘Nothing Ventured, Nothing Gained’.  If you’re hoping to get something (say, a fish), you’ll have to risk something of yours for the opportunity (say, a worm).  The same with investing: you can’t make a profit without the potential of losing your investment.  It’s just the way of the world.

Now to end on a much happier note…

“Beer is living proof that God loves us and wants us to be happy.”

This one is only attributed to Franklin, but it is one of the best quotations I’ve ever heard.  Remember the simple pleasures in life, and be sure to enjoy the drinks!

(The Benjamin Franklin quotations and picture  taken from The Electric Benjamin Franklin)

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By the time you read this, Halloween will have come and gone.  Hopefully, everyone had a great holiday, with plenty of candy, creative costumes, and scares.  (The good kind of scares, not ones that involve running out of candy as a gang of miniature hoodlums comes knocking on your door.)

There is something about Halloween that seems to bring out the kid in everyone.  Or at least, the childlike thrill of becoming someone, being able to step outside yourself and take on a new persona, act and react in ways that you normally couldn’t.  I don’t know what it is exactly; my best guess is that we all, regardless of how much we love our lives, occasionally want to see how the other half lives.  If the other half happens to be a vampire who’s ready to drain the blood of innocent maidens or handsome rakes, well, all the better then.

Psychologically, the idea of wish-fulfillment and unconscious desires made into a reality is wonderfully inspiring.  Add in the types of costumes chosen (sexy and seductive roles for the women, powerful predators for the men, figures of authority and control for the children) and the implications get even more profound.  Everyone can seize whatever is lacking in their own life and become something more.  That’s it; the true purpose of Halloween is nothing more than an id-releasing, ego-stroking, Freudian fantasy come to life!

Or maybe it’s all about the candy.

Candy: It's what's for dinner (for the next two weeks...)

Yup, definitely about the candy.  Happy Halloween!

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Well, I’m in a bit of a humorous mood today, so we’re going to do something a little different.  There are any number of weird and wacky words  and phrases that are used by investors to help describe the investment world.  You don’t normally think of investment bankers, accountants and others as the wild and crazy types, but they apparently have a pretty decent sense of humor when it comes to creating names to associated with the financial world.  Let’s take a look at some of them (courtesy of Investopedia)

Ankle Biter – A small cap stock, that is one with a market capitalization of less than $500 million.  The titans of Wall Street must have pretty high ankles if a company worth $500 dollars gets the same moniker as a 2-year-old toddler.

Black Knight – A company attempting a hostile takeover of another company.  A nicely descriptive phrase regarding how a targeted company will likely view the potential acquirer, conjuring up some potent imagery of invading hordes and kidnapping.  (Also, one of the nicknames that my Sondra uses for me.)

CNN Effect – The slowing of consumer spending during times of gripping news.  During a war or terrorist attack, people tend to be glued to the tube, trying to get all the latest news, before going back to their normal schedules..  I suppose nowadays it could be called the Fox News Effect or MSNBC effect, depending on your political leanings.

David Hasselhoff Index – A stock index of companies associated with David Hasselhoff, under the assumption that companies linked to him are more likely to be profitable. (Really?  Alright, we’ll run with it.)  Other related celebrity indexes include the Eva Longoria Index, the Lindsay Lohan Index, and the Paris Hilton Index.  (Again, I have to ask, really?)  All are based on the idea that companies linked to particular celebrities dervie some sort of unquantifiable benefit from the association.

Eat Your Own Dog Food - To use the products that your company produces.  If you’re a software company, for example, it means that your employees use your software in the course of their work.  It’s a good way to show confidence in your own products, but I have to ask: what do professional investors eat that ‘dog food’ is the food product that they chose for this expression?

Fool In the Shower – A central bank that doesn’t wait long enough for a stimulus action to work, increases the stimulus, and eventually ends up overshooting its goal.  Used by Milton Friedman, who used the allusion of a fool in a cold shower, who cranks the heat all the way up and ends up being scalded.  A good reminder that major policy changes take time to move through the economy.

Hot Waitress Economic Index – The theory that the more attractive waitresses there are, the worse the job market is doing (since attractive people have little trouble finding other work in good economic times.  So, if your waitress (or waiter; unlike Wall Street, I try not to discriminate) looks like a supermodel the next time you go out to eat, the downturn in jobs isn’t over yet.

Mad Hatter - A corporate executive who is considered incapable of leading the company.  One good warning is if he starts yelling out ‘Change Places’ at various points during a board meeting.

Samurai Market - Slang term for the Japanese Stock market; included here because I’ve been spending way too much time on the Financial Samurai’s website of late (and because, as my carnival on Monday should have indicated, I’m a bit of a Japan-ophile).  Similar to terms like ‘Yankee Market’ for the American stock market and ‘Bulldog Market’ for the British stock market.

There Ain’t No Such Thing As A Free Lunch (TANSTAAFL) – A reminder that there is a cost to every decision we make, in terms of time, energy, or money.  Also, a reminder that nobody, with possible exception of your mother, will ever give you something with nothing expected in return.  (Also known as There Is No Such Thing As A Free Lunch (TINSTAAFL) for those who don’t like to use the word ain’t or have double negative in their phrases.  In either case, even the acronym is a mouthful.)

A Ton of Money – A lot of money; apparently, if you actually had enough one dollar bills to weigh one ton, it would add up to $908,000.  Personally, I would prefer a ton of twenties or hundreds, but even a ton of singles is a pretty hefty wad of money.

That’s all the definitions I have time to share; there’s plenty more to consider (and chuckle at) on Investopedia’s financial buzzwords list.

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Sometimes, the ideas I get for my Super Saver Sunday cartoons are just plain weird.  Case in point, today’s cartoon.  While taking to bunking in a refrigerator cartoon would certainly cut down on your rent or mortgage, it just doesn’t make good financial sense.  For example, one good rain storm could completely wipe away all the equity you’ve built up, as your cardboard castle melts under the onslaught.

There are more practical ways to save on the cost of rent.  If you are not absolutely in love with your current dwelling, you can always look for something else.  By searching for a place to live in a slightly different neighborhood, you could save a great deal of money on your living expenses; different towns in the same general region can have much different housing markets, and by moving from a more expensive one to a less expensive one, you can save a good deal of money.  Similarly, downgrading your current apartment or house to a smaller one is one possibility for savings.

But what if you absolutely adore where you currently live?  You’ll need to try talking your landlord into cutting down on your rent.  If you are a good tenant, particularly in a bad market for finding renters, you will have much more in your corner when you try to get your rent lowered; a landlord facing a several month vacancy will be willing to compromise with you, compared to one who has a long waiting list for your place.  Otherwise, try to make whatever appeals you can to your landlord to make your dwelling more affordable; the alternative is not a pretty sight:

(Side note: I would hope it would go without saying, but I’m not, repeat, NOT trying to make fun of the homeless.  Just thought I should throw that out there.)

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