Archives for philosophy category
3
Aug
Posted in philosophy by Roger, the Amateur Financier |
Things have been pretty rough here with The Amateur Financier. I’ve shared more than a few of my latest troubles, particularly in my Net Worth Updates for July and August. Lately, it seems like just about every day there’s a new expense, from helping my fiancee to trying to keep my old car running. It’s been a very hectic, really draining (of mind, body, and wallet) summer, and sadly, it’s not over yet.
At times like this, I tend to get a bit down in the dumps. It’s understandable, I imagine; there is an entire psychoanalytical profession built on fixing just these sorts of mental issues in people like me. Still, the last thing I need to do to my bank account is paying for professional help; my improved mental state would only last until I got the bill.
I recognize that look in her eyes; now, let's get it out of yours.
No, what I need to do is find ways to keep myself calm, stress-free, and as best possible, happy. There are plenty of methods to try to keep yourself reasonably calm, which I’m trying to follow as best as possible while I work through this current set of problems:
1. Stopping to Take a Deep Breath: It’s easy to get overwhelmed in life, and when you get moving too fast, sometimes things just start to pile one on top of another on top of another. One of the best things I’ve found for such situations is simply to stop, inhale deeply, and try to regain your focus. You’ll find this suggestion on the top of nearly every list of ways to to stay calm, because it’s one of those tips that helps you down to a physiological level.
2. Pull Yourself Away From the World: I’m not talking about packing up all your things, abandoning humanity, and living like a wild person buried deep in the woods. Being able to turn off your computer, power down your phone, generally disconnect from the world and do things on your own terms, even for a short while, can be a major mind saver. I know that everything will still be waiting for you, and if you’re like me, it’s hard to justify not spending your time trying to fix all the problems that are there; but approaching them with a fresh mind can be the difference between completely them successfully and swiftly and going insane staring at them for hours.
3. Get Moving: A little exercise can be all it takes to give your mind a quick restart and cut down on some of your stress. You don’t need to hit the gym for six hours, but while you are following step 2 and temporarily cutting off your contact with the world, why not try to run a bit, or do some stretches, or simply walk a bit more briskly than normal around the block? At worst, you’ll have gotten in some of that exercise so many of us seem to neglect; at best, you’ll have helped to calm yourself down and cleared your mind, with the exercise as a pleasant bonus.
These are only the start; the ways you have for cutting down stress could be many, many more, and I’m hoping you’ve managed to find several that work well for you. These are just a few things that work for me (while we’re at it, writing all these down and sharing them has been pretty cathartic, to boot).
What do you do when stress and worry start to get overwhelming? I’d definitely like to know.
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8
Jun
Posted in Personal, philosophy by Roger, the Amateur Financier |
I have plenty of bad habits. I tend to use my credit cards without thinking of how I will pay off the debt before interest starts to be charged, I don’t keep much of an emergency fund, and I don’t shop around enough when making major purchases (or really, most any purchases). And those are just my bad financial habits; if we get started on all my other bad habits, we’ll be here all day just listing them.
As with any bad habit, it’s hard to break bad financial habits once they get established. When you already have a substantial amount of credit card debt, it becomes much easier to mentally justify adding even more. If you haven’t been investing for most of your life, it’s all too easy to just keep on the same path. Once the habit is established, it takes much more effort to break it than to keep up the habit, even if it is hurting you.
Case In Point...
All of this means that if you want to improve your life, whether that means doing more with your money, cutting down reckless spending, or otherwise getting yourself on a better financial footing, you need to put in some work to get it done. I know, I know, it’s going to be tough; I feel your pain, particularly because I’m going through the same pain.
Luckily, there are some steps that we can take in order to change our habits, if we’re willing to put in the work. While there is no single ‘#X-Step Plan to Defeat Your Bad Habits’ that will work for every bad habit, or even for all the bad financial habits, but there are some common steps that should help you to get your financial life back in order:
1. Define your problem: Before you can make any progress, financially or otherwise, you need to define your bad habit, and figure out how you would defeat it. You also need to make sure that you can tell when you have accomplished your goal, by making it precise and measurable; ‘less stupid spending’ is pretty vague and unmeasurable, but ‘spending less than $100 on frivolous items each month’ is a decent goal (presuming you have a decent definition of ‘frivolous’, of course).
2. Publicize your goal: Now, by ‘publicize’, I don’t mean that you need to buy a billboard to advertise that, for example, you are deep in credit card debt. (Particularly because doing so will only get you in more debt.) No, you should try to share it with those close to you, your friends and family. Assuming any of them have the same problem (and unless your habit is truly unusual, it’s likely that you have at least one or two people in your circle with the same financial problem), you’ll have a ready source of support, encouragement, and possibly even suggestions to help you deal with your problem. (You could also consider sharing your financial issues on a blog or similar forum, at least if you comfortable doing so and trust those who are likely to read about your bad habits.)
3. Replace your bad habits with good ones: Trying to break a habit without a replacement habit is going to leave you with a feeling of emptiness, which you’ll end up trying to fill with…well, the old comforting bad habit. To break the bad habit, you need to find something that you can do to help satisfy that urge, while being better for you (and your wallet). If you spend too much on books (like me), for example, you can replace trips to the book store with trips to the library to get that same feeling of looking through hundreds of books you’d love to read (with the advantage that you won’t have to pay anything to take some of them home). Trips to a new clothing store could be replaced by trips to the thrift store (preferably with a collection of your own clothes for donation). It doesn’t take much to build up a new, healthier habit.
4. Don’t let yourself slip…: I know, it’s tough to keep up and avoid slipping up. The problem is, if you don’t take a hard line approach, if you let yourself slip back into your bad habit ‘just this once’ or ‘only in this situation’, it’ll be that much easier to slide back into doing it more and more often, and before you know, it’s a bad habit again. Be firm with yourself (and allow anyone helping you accomplish your goal to be even firmer), stick with your goals, and if you do slip…
5. …And figure out what happened if you do slip up: Things happen, and plans, however well intentioned and useful, get thrown awry. Chances are, you WILL slip at some point in your attempt to defeat your bad financial habits. When it does, though, rather than berating yourself for your failure (or worse, deciding that you just can’t do it and giving up), try to find out what went wrong. Did you put yourself in a situation where temptation was all but unavoidable? Was there an unusual circumstance that you didn’t foresee, and therefore, hadn’t prepared for? (With financial bad habits, this is particularly relevant; unlike, say, smoking, there are situations where you might NEED to add on more credit card debt in order to, say, get your car fixed or handle a medical bill.) When you see what went wrong, you’ll be able to adapt your plan to take similar circumstances into account, and avoid making the same mistake again.
There you go, a simple plan for keeping those bad habits under control. It’ll be tough (believe me, I know how tough it can be), but if you keep up with it, you’ll end up in a much better place financially. Good luck!
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16
May
Posted in Economics, philosophy by Roger, the Amateur Financier |
Argh, kiddies! Today we’re going to be taking on a particularly contentious issue in modern day society: Piracy! So, polish up those peg legs, get out your eye patches, and teach your parrot to say ‘Walk the plank, you bilge rat’, because today is all about the costs and ethics of piracy!
Well, actually, the type of ‘piracy’ we’re looking at today has less to do with stealing doubloons from passing galleons and more to do with illegally downloading music, movies and software. While not quite as romantic (well, at least until Johnny Depp portrays a software copyright infringer in a movie), it is probably more pertinent to the modern reader (those who will be passing by Somalia aside). The ethics of the issue are a bit outside my per view (to paraphrase DeForest Kelley as Dr. McCoy, ‘I’m a money blogger, not an ethicist’), but, since I’m always up for a spirited debate, I figured I’d dive into the money portion of the piracy debate. Just how much impact does piracy have? To find out, let’s look at the numbers.
The Economic Impact of Piracy
An odd thing happens if, like me, you start to search for solid, reputable numbers on just how much of an economic loss piracy causes modern society: you find them nearly as hard to pin down as a greased pig. The most commonly cited numbers of both overall economic loss and the number of jobs lost as a result of intellectual property are $250 million and 750,000 jobs, respectively, which certainly sounds like quite an impressive amount.
"Avast, Ye Scurvy Bilge Rat!"
But the truth is that those numbers are, well, fabrications. A rather detailed report on Ars Technica notes that neither of the organizations most commonly cited as the source of the given numbers (the U.S. Customs and Border Patrol for the job figure, the Federal Bureau of Investigation for the economic loss) have anything to do with creating them. In fact, the best source for reliable numbers on both counts, a survey done by the International Trade Commission, indicates losses to the economy of (at most) $61 million and 13,774 jobs, and this report dates back to the Reagan era (no more recent reports seem to be available).
Why the wide discrepancy? Well, given the illicit nature of piracy, it’s awfully hard to come up with accurate numbers, and there are numerous problems with trying to do so. First, most figures for the loss caused by piracy typically use self-reports from the businesses affected, whom, as you might guess, have an incentive to maintain that those losses are quite substantial. Second, there’s the assumption made by most companies that every incident of piracy indicates a lost sale; that is, if there was perfect enforcement of copyright laws, everyone now pirating music/movies/games would go out and buy a copy of everything they currently pirate. This is absurd, if for no other reason than the fact that people who earn $500 a month simply don’t have to the ability to buy the 50 games/movies/CDs per month that they currently illicitly download. (Of course, the pirate supporters can take this argument too far the other way, claiming that nobody who currently pirates media would buy anything if they could not obtain it through piracy. The truth is somewhere in the middle; in a no-piracy world, there would likely be more sales, but not nearly up to the number of copies currently pirated.) Finally, as Ars Technica notes near the end of their report, the money that pirates don’t spend on the music/movies/games they download doesn’t disappear from the broader economy; it gets spent (or saved or invested) elsewhere. Calculating the actual loss to the total economy, then, is a much more complicated process than figuring out the number of units not sold as a result of piracy, multiplying by the MSRP, and spitting out a number.
In Summary
So, what does all of this mean for the monetary impact of piracy? Well, it’s kind of hard to tell, frankly, as both sides of the debate have reasons to over- or underestimate the impact to make it seem like their side is more justified. That said, piracy almost certainly costs software and media companies some income, as the pirates don’t always purchase products they pirate; but the costs in lost sales are probably not as high as the company estimates claim. (Both because not every pirated copy represents a truly lost sale, and because some pirates do end up purchasing the media they really like, although likely not as many as the pirates who claim that piracy enables a good ‘trial period’ would seem to believe). For larger, established media firms, this undoubtedly leads to a decrease in revenue (although, smaller firms and bands that are just starting out might see a rise in revenue if piracy helps get the word out). Which explains the rising number of such firms that attempt to use anti-piracy devices in order to minimize their losses, as well as increased pushes for stricter punishments for pirates.
Which side will eventually triumph is uncertain (although my money is on the pirates, both due to their numbers and due to the fact that international law makes catching some of them all but impossible), but the money aspect of media piracy, while interesting, is certainly quite murky. Here’s hoping that, if nothing else, this article encourages you to take a closer look the next time you hear a statistic about media piracy (or really, any statistic).
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10
Nov
Posted in philosophy by Roger, the Amateur Financier |
If you’ve been reading The Amateur Financier for a while, you’re probably aware that one of my guilty pleasures is Cracked.com. I’ll admit, much of what they publish doesn’t really count deep journalism, and even the articles that are interesting and well cited (yes, Cracked is surprisingly good at citing relevant and interesting sources for their comedy articles) tend to involve more curse words than you might be comfortable reading.
Still, every so often they publish something that really makes me think. Such an article was published last week, which discussed the ways that language can control your thoughts. Some of the examples they include Australian Aboriginal tribesmen being better at oriented themselves (because they use cardinal directions such as North and South when orienting themselves, rather than left and right like us English speakers) and how having a name for a particular color enables you to distinguish it from similar colors. It’s kind of amazing what various psychological studies have shown about the effects language can have on our perception.
Money, Language, and You
Naturally, being a personal finance blogger, my thoughts went to how the words we use regarding money affect our actions about making, spending, and saving it. If you talk about investing as being ‘risky’, are you going to put more money into your investments? If putting money into index mutual funds is ‘boring’, how likely is it that you will seek more speculative investments to ‘spice up’ your investments? If you tell yourself that saving money or paying off your credit bills is ‘impossible’, are you even going to try? The language you use to describe your money habits can have a large impact on what actions you take with your money, and as a result, what happens with your finances over time.
When you look at this money, do you think 'A good opportunity to boost my savings' or 'Weekend in Vegas, baby!'?
Given these points, the language we use when we talk about money takes on a new importance. If what you say affects how you think (and it does), and how think affects how you act (also, quite true), then the importance of using proper language regarding your money becomes even more pronounced. So, how can we ensure that we use the proper language? Well…
1. Learn the Language of Money: One of the biggest obstacles people face when trying to be more proactive about their money is the wall of jargon that financial types tend to use. Even if you have a grasp of the basics, telling the difference between ‘large-cap growth stocks’ and ‘zero-coupon bonds’ can get rather tricky. That’s before we even get into the issue of how much money to put into each type of investment. If you want to help learn the language used by investors, one good place to start looking is Investopedia’s Dictionary. It’s one of the most thorough lists of investing terminology out there, and should provide a good grounding in the phrases you’ll encounter while researching your investments. And of course, you can take advantage of my Investing 101 posts to give you a background in many of the most commonly encountered investments.
2. Use Optimistic Language…: It’s important to have confidence in your ability to determine proper investments. If you are constantly doubting yourself, you’re likely to invest in vehicles that don’t provide enough returns to reach your goals. If you are fairly young and pulled your money out of stocks and other growth investments after the market turmoil of 2008, telling yourself that the stock market was ‘too risky’ or not a ‘safe’ place to keep your money, you could find yourself not getting enough of a return to retire at a reasonably young age (or perhaps at all). Instead, remind yourself that investments go in cycles, and that if you are diversified and don’t let yourself panic, you’ll come out ahead in the investment game.
3. …But Don’t Be Overconfident: It can be tempting, particularly if you have had some luck with your investments in the past, to chalk up your success to your amazing investment skill. There’s nothing wrong with that; more power to you if you have had success investing. The trouble is if you start to invest more and more of your money in increasingly speculative (there’s another of those money terms) investments because you tell yourself that ‘I’m too good to lose money’ or ‘It’s stupid to keep some money in savings, earning nearly nothing’. It’s important to remind yourself that potential reward doesn’t come without risk, that there is not such thing as a ‘sure thing’ when it comes to investing.
There you have it, several ways to keep the language you use from sabotaging your money goals. Hopefully, you can now tell yourself that ‘Money management isn’t that hard’ and that ‘If I work at it, I’m sure I’ll increase my net worth over time.’
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