Blarg! The deadline for this year’s video contest was Sunday night, but we may have run into some technical difficulties. Some folks are reporting that their submissions were reported as “received”, but they’re not showing up in the pool of contest entries. This is Not Good.
If you submitted an entry to the video contest, please check the list of entries. If your submission isn’t there, contact me directly or leave a comment on this post. There were enough problems with this year’s process that we won’t use it again in the future. I apologize.
With that out of the way, let’s look at some of my favorite personal-finance stories from this week:
Turtles vs. rabbits
As you may recall, I recently discovered Jacob Fisker’s fantastic Early Retirement Extreme blog. I’m now reading his book (look for a review in the next month), which I like. There are many, many great articles at Jacob’s site, but I was naturally drawn to the recent discussion about financial turtles vs. financial rabbits. Posting in the forums, George notes that many financial books and blogs advocate getting rich slowly. He also notes that people who achieved huge success often took some sort of shortcut. In other words, they got rich quickly. Or quicker, anyhow.
This observation produced a thoughtful discussion, and a follow-up post from Jacob on his blog. (It may also lead to a post from me at Get Rich Slowly…) I believe strongly in the power of getting rich slowly. But, I also believe in the importance of hard work, calculated risks, and seizing opportunity. The “get rich slowly” methods form the bedrock of sound financial future. The calculated risks sometimes help accelerate the process.
Other stories
Speaking of saving slowly, US News has a great piece on saving for retirement on a low income. This article will be useful for many folks, but I’m sad that it misses a crucial point. If you have a low income (and you’re unhappy with it), the best way you can boost your retirement savings is to find a higher-paying job. Yes, I understand that there’s more to it than just saying, “I want another job.” But that’s the fundamental solution to this problem.
Frugal Dad has a list of 15 things our grandparents lived without (and we probably could, too). Color me a Luddite, but I agree with almost everything on this list. I’ve been particularly baffled by the proliferation of GPS devices over the past decade. I just don’t get it. What’s wrong with a map?
Finally, Studenomics has an interesting little post that discusses what personal finance is not about. This is a fun way to frame the problem. Instead of thinking about why you’re saving money, think about the things that don’t motivate you. I’m not motivated by conspicuous consumption, for instance, or saving for the sake of saving. I don’t need to understand every little piece of personal finance.
This article is about Spare Change
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There’s nothing “wrong” with a paper map except that maps are hard to read while you are driving and you can go quite out of your way before realizing that you’re lost or that you missed a turn. I think GPS are pretty useful. I have used the one on my phone on a couple of occasions.
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If you understand directions and how a grid works, then really all you need is an address and a basic understanding of the area.
Anyways, the list sounded an awful lot like the ramblings of a semi-coherent octogenarian about the good ole days.
I especially didnt like the health insurance item.
GPS, cell phone, cable tv, all of that is fine, but health insurance? I would have substituted the internet, air conditioning, or 24/hr news channels.
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Unless you live in say, Boston, where all the streets are one way going the same direction and they cross each other multiple times. Not all cities are gridded.
ITA on health insurance. Though without a/c I couldn’t live where I’m living now.
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Or if you live where I do, in a rural area, where it can be easy to miss a poorly marked county road which is the only way to get to my destination.
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The turtle/rabbit reproduction analogy is an excellent one! It’s why millionaires are like the millionaire next door (turtles), but multi-millionaires are different– they use high risk high gain strategies that pan out for a small number of folks but not most folks.
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I don’t think there’s anything wrong with using GPS, and it’s certainly very useful in some places. But I’m appalled when I see otherwise intelligent people become totally clueless and hopelessly lost when their GPS fails them. And I’m only 27, so it’s not as if I grew up in the “good old days.”
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Some of us are just hopeless with directions, or don’t visualize them map-style.
I don’t have a GPS, and I’m not sure it would help – among other things, cab drivers can never find our house because Google has the address just slightly wrong – but navigation in strange places is a specific skill not everyone’s great at.
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I’m pretty much a late adopter of technology, but having a GPS made all the difference on a recent cross-country trip.
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I agree with a lot of stuff on that list but as a single person my gps makes me a safer driver. I bought it after moving to a new area and I was driving a lot at night in the dark and it was hard to read the maps and there wasn’t always a safe place to pull over. Plus I’m paranoid about missing a turn so I was constantly trying to read the map to remember what turn was next and it was becoming a safety hazard. Now if I usually had someone in the car with me to read the map. The other uses I found were allowing spontaneity in doing things since at the time I didn’t have a smart phone and the optimize my trip feature that would put my errands in the optimal order. I consider the $90+ tax on my gps well worth it, and now that I know the area better I may pass it on to a friend.
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Some otherwise intelligent people have poor senses of direction and challenges thinking spatially. For them GPS is a godsend. My phone’s GPS has made navigating infinitely simpler. I find that it’s actually improved my sense of direction and memory. If you don’t have these issues, though, I can see how it would be unnecessary.
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Thanks for sharing my piece with your readers JD. I always look forward to a good debate about personal finance and what it is/is not about.
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RE: getting a better-paying job.
It’s not always something that’s necessarily beneficial. it’s the reverse side of “conscious spending”
Say you’re a poet (I know a few). You can teach, apply for grants, be an artist in residence, and practice what you love, day in and day out. Or you can go into advertising and write copy and have more money, but be miserable because of how you spend your time and who you spend your time with.
Say you’re a stay-at-home parent with 5 kids. You help save a lot of money but don’t bring in revenues. You can go out and get a job (pays more) but you’ll have to entrust your child to the care of strangers, buy meals on the road, and die an early death from stress.
Say you’re a humanities professor. You love to teach and do research. Sure, you can apply to become Department Chair, or Dean, and make lots more money, but you’ll teach less and likely forget about research– you life is now an endless succession of meetings about money. Is that why you went into academia?
Or say, that with our wonderful health care system, and the threats of dismantling reform, you have a sick child that need special long-term care, but you only qualify for Medicaid if you make less than a certain amount. Making more money is suddenly not so attractive, is it?
Yes, as a general rule you want to make more and not less, but there are things that you might sacrifice in the process of making more money, and each individual has to decide on the value of the trade-offs.
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Well put, El Nerdo.
I’d also argue that many people who choose low income occupations make life better for everyone and that it’s a worthy investment of our government resources to provide basic needs for everyone regardless of income–like health insurance or decent housing. I hear that makes me a socialist.
I live in a town with a great music scene. I chatted with a Grammy award winner yesterday. And he’s dirt poor. I’m glad he’s willing to make great music instead of becoming a stock broker.
I don’t think J.D. argues that everyone has to make high income choices. But it can be tough to just get along in an environment where we’re all expected to foot our own bill for everything (unless you’re GE or Boeing).
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More…
1. GPS Devices. – I call for directions
2. Tanning Bed Salons. – Ridonculous
3. Cell Phones. – I own a prepay that gets used rarely, get my calls free on the computer via google voice
4. Microwaves. – a disgusting way to destroy food
5. Credit Cards/Debit Cards. -credit is for suckers, check cards make it easier to track expenses.
6. Electronic Book Readers (Kindle).- why buy an extra device when you can download the software to your laptop.
7. Digital Cable. – waste of time and money, unless getting the basic plan lowers your internet bill (it does to me)
8. Health Insurance. – good luck paying for surgery without it
9. Plasma Televisions. – sorry, i love mine, it doubles as a monitor and was a deductible business expense
10. SiriusXM Radio. – radio sucks! except for NPR. either way i’m not paying.
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Kindle: I love to read mine while I’m working out on the elliptical machine (in my home gym!). I just make the font size a little bigger so that it’s easy to follow along. It’s also much easier to hold/read than a book when laying out at the pool (not in a tanning bed!).
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Credit cards are for suckers and the intelligent. If used properly, a credit card (1) adds a warranty, (2) makes spending tracking easier, (3) earns you rewards.
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Maybe sometimes, but the house always wins.
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I am completely baffled about why the writer of that piece considers “health insurance” as not necessary. In 2007, 62% of all bankruptcies were linked to medical expenses. (Now, those statistics are probably less because of increased unemployment rates, but it’s still significant) For me personally, over the last 7 years, if I had not had health insurance, I would have spent $30,000 for the delivery and prenatal care of my two children. When my youngest daughter contracted spinal meningitis and was hospitalized for a week, the hospital bills were well over $50,000. And there are untold expenses for a numerous newborn and regular childhood check ups. Just last month, I was sent to the ER to rule out a serious health problem and the bill was $10,000 for the one procedure. It’s amazing how expensive medical bills are. Perhaps it wasn’t necessary years ago because most of our most amazing life-changing technology wasn’t around 75 years ago, so medical costs were fewer.
As for GPS, our cell phone does this, speaking the directions outloud at the appropriate time so one doesn’t need to look at a map while driving. While we don’t use it while we’re in town, it’s a life-saver when you’re in a different city and are trying to navigate through crazy big-city traffic to find how to get to that hotel, zoo, etc. And when we’re hungry, our GPS/Navigator will tell us what restaurants are nearby our current location, which gas station near us has the cheapest gas, etc. I remember in the “old days” when I was driving on the interstate, wondering if I should get off at this exit or the next one for gas, decided to wait, and then the next station cost $.15 more! When we traveled prior to our new technology, I had to print out maps from our home to the hotel, to each restaurant, and to each site that we wanted to see. I’d have a stack of maps. And I had to plan it all in advance to figure out what directions I’d be needing on the trip. With our new technology, our vacation can be so much more flexible.
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I definitely like the risk/reward analogy. Everyone has to find a comfort zone to operate within, and stay open to new opportunities. The longer you’re in the game,the better your odds of being successful.
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GPS navigation is so much better than paper maps that it’s like comparing Facebook to writing letters with pens on paper and mailing them with stamps and envelopes.
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It may be better for getting from one place to another, but for truly getting a feel for the place you’re in, you can’t beat a paper map (or a map on computer) where you can look at the whole region at once.
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Love this analogy. Many of the successs business people in the mainstream today are not those who played it safe during their careers, but rather took risks at one point or another. Great info.
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I submit that the author of that article has never been responsible for cooking for a family day-in day-out. The microwave is a freakin’ godsend – I cook on Sundays and we reheat through about Thursday, then I have to cook again. I feel about microwaves the way my grandmother felt about synthetic fabrics you don’t have to iron.
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the frugaldad post of 15 things we could live without seemed poorly thought out. Health insurance? Student loans? I don’t have the energy to fully debunk these so I hope it’s self explanatory. And then things like satellite radio thrown in… yes, unnecessary, but also hardly an assumed necessity in our culture.
maybe getrichslowly has spoiled me.
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Like others, I laser-focused on the GPS aside. Having one saved my marriage. (I didn’t tell you to turn left, the GPS did)
We do a lot of driving in and to different places. I can’t draw the path on a paper map as fast as the GPS can. I certainly can’t tell you how long we’ll be sitting in the parking lot that is the M25 orbital (around London) but my GPS can, and if it thinks exiting and striking out on side roads is faster, it will suggest it (how’s that for seeing countryside you wouldn’t normally?)
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There’s nothing wrong with a map per se, but then again you can’t ask a map “Hey, where’s the nearest hospital/gas station/car rental/wal-mart/thai restaurant/movie theater/police department” and expect an answer.
And I guarantee having a quick answer to some of those questions has improved many people’s lives.
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I found one of our family’s favorite restaurants (Dixie Crossroads in Titusville, Florida) while in vacation with the GPS. We’d left Merrit Island after birding and were all super hungry. The restaurant name sounded interesting, so we went. best decision ever!
I don’t hardly ever use my GPS when I’m around town, but I definitely make sure it’s packed for every vacation. Like others have said, it makes life more flexible. I definitely do turn it off sometimes and just explore. But having the GPS has expanded our options and definitely cut down on the “crap, we missed our turn!” type arguments.
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Thanks for the link to early retirement extreme – that guy totally rocks!
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Hi GRS community,
I liked this post on turtles vs rabbits from a career perspective. I’ve been like a turtle but steadily building up my income over the years, and also saving a lot. Now at 38 have a net worth of $2.5M and earn $300k a year. I am debating taking a job at a profitable but small company where I could continue earning $300 – 500k a year or work for nothing (20k a year) but have the opportunity for profit sharing where I could earn up to $2M a year based on how well the business does.
Any suggestions from the reader community?
Thanks,
Dave
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Dave, psychologically, I like to take the sure thing. It just eliminates a layer of stress for me. (plus, $300k a year? holy cow. I’m not sure I’ll ever see that much money. You make more in a month than I make all year. That’s nothing to sniff at, especially since you manage your money well.)
How about for you? Does the variability in money possibility stress you out? Or would that energize you to work harder? Only you can answer and know what balance is best for you.
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@ Leah- thanks for the advice, I have enough saved up that I can deal with the variability of something not paying well but the risk is that if I cannot succeed I will feel like a real idiot. That can be motivating and really stressful at the same time.
I think you will make more money over time- just keep working on adding value in your career and hopefully your employer recognizes and appreciates this. I started at age 22 with a Masters degree so it’s been a pretty long journey to get to this point. Sometimes you reach the destination and when you get to a certain point of actually being able to retire you lose motivation to keep going to work, especially when times are hard- just because you can take a break. It’s like being a senior after getting accepted into college- you still need to graduate but nobody cares about your grades… hard to stay motivated at that point, right?
@ Mark- I am not trying to brag in all honesty but your advice is really good. Sometimes it’s hard to say what makes me happy- I do like the security of bringing in a steady high salary but am very stressed out in this job- normally it’s a real killer.
-Dave
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My suggestion – stop bragging and do what makes you happy.
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Read “The Millionaire Next Door” and avoid the fate of MC Hammer.
If you’re already in a secure position financially, why not take the risk and have fun with it? It’s not like you won’t learn anything from the business or derail your career if things don’t pan out, right?
I guess it all boils down to how much you trust your team and your faith in the business.
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JT – by way of another spare change item, thought you might be interested in this article from the moneysense magazine:
http://www.moneysense.ca/2011/04/19/hidden-danger-at-mint-com/
I know you like mint … so this was definitely concerning!
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Glad to see the love for Jacob’s book and blog at Early Retirement Extreme. It is much needed for people once they have the basics down and are wondering what is next.
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JD, I posted a video, but it does not appear to be on the entrant page. What’s the best way to get it to you?
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Whats wrong with a map? Are you kidding me? You obviously have never used a GPS. You can get a cheap GPS for $49, making it barely more expensive than one of those Thomas Guide’s (remember those?!).
I’m all for nostalgia, and maps have their place – just not in moving cars for on-the-fly route guidance.
Don’t be silly.
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What’s wrong with a map? When you’re a presbyopic (can’t wear the reading glasses while driving) single woman driving alone at night in an unfamiliar area, especially in a busy city like DC, a map isn’t much use. Even in the daytime I don’t like to pull over to the curb in the city. I LOVE my GPS. Even when going somewhere I go all the time, the GPS is invaluable if there is a detour because, while I know the highways, I don’t know the side roads. It’s often hard to find a place to pull over, find the right map book (yes, in the Balt-Wash corridor you need a book for every county you go thru), find the page in the book where you are, find the page where you want to end up (might be in a different book); you might have to work your way through several map books to get from point A to point B.
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Totally agree with the GPS thing. Not to mention a map is as easy a clicking over to Google or Mapquest and printing a page…for free!
Plus, I bet 90% (or more) of drivers simply commute from home to work…so why does everyone need a GPS? Also, it makes your car a greater target for theft.
PS – glad to see you mention the ERE blog again and can’t wait for the book review.
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Okay, okay. I concede the GPS thing. I guess it’s because I’ve never used one myself, and the times I’ve been in a car with one, they’ve always seemed like more of a hassle than a help. But some of you have made compelling arguments about why they might be useful. I think that even Kris would like a GPS!
Instead of thinking they’re not of value, I’ll think they’re not of value to me. So, that makes it frugal when I choose to buy a car without one, right?
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One problem with GPS is that it is sometimes more accurate than the map! You might have your position down to 3ft accuracy, but if the map is off by 300ft, the system will put you on the wrong street.
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My very favorite thing about GPS is their ability to recover and recalculate after a missed turn or unanticipated detour. While a map user might have to circle around and reproach the missed turn a GPS will immediately recalculate a new route to your destination based on your current ‘off-route’ position. … which may or may not be circling back around. And it will keep recalculating as long as you continue to keep missing turns.
Another favorite feature that mine has is the “go home” option. No matter where I’m at, I just hit “go home” and it gives me the route home.
Yet another neat feature is that most any destination will pull up various route options for (shortest distance, calculated fastest, use highway, no highway).
Obviously, all of this is only useful when traveling outside of my normal routes. I find my GPS is incredibly valuable when traveling to new cities or making road trips.
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