I know, wisdom dictates that I either keep fixing up what I have or buy something used, preferably 2 years old, because values drop most during those first years and if there are any major defects they’ll have shown up, probably. However, this wisdom is faulty, outdated, and doesn’t account for my admitted control issues. (I’m OCDelightful!)

Our Situation

Currently we have 2 cars, a Civic and an Accord, both (obviously) Hondas, both from model year 2002 (and both which have recalls on them for some airbag issue).

The Civic, which I bought new in March of ‘02 for around $13,000 (including tax, tag, and title), is at 160,000 miles. Overall, it still runs great, although maintenance issues have slowly become costlier. (For example, I just spent $600 in non-regular maintenance related issues.) Still, the car doesn’t cost me more than $2000 a year in total maintenance, which is pretty decent considering I own it outright. Fuel economy is still excellent and for the exception of a faulty fuel pump sometime back in late 2003 I’ve never had any issues with it. (The fuel pump was under warranty.) This is not the car I’m looking to replace.

The Accord, on the other hand, I bought used in September of 2006 for $13,500. Includes extended warranty, taxes, tag, and title. At that point the most important things for me were to get a reliable car with a payment of about $250 per month, and to get a car I felt comfortable driving long distances in. (I love my Civic, but being 6′1″, I can’t quite stretch out my legs.) The car had 43,000 miles when it was purchased. Just under four years later, it sits at approximately 122,000 miles, meaning that I average about 22,000 miles per year on the vehicle. This is the vehicle I’m looking to replace. Why? Because I can’t trust it (and its starting to cost me).

Don’t get me wrong: the car has never left anyone stranded, and it’s a good car, but before I got to it someone drove it for 43,000 miles, meaning I can’t account for its care history for the first 1/3 of its total mileage life (or half its age, although whoever had it obviously drove it a lot less than me). Recently it started having transmission issues, nothing big, just shifting harder than before; once in a while (very infrequently, actually), mid shift, the RPMs shoot straight up and the car quits accelerating. A second or two later, it catches and goes, pulling the car forward and threatening passengers with a mild case of whiplash. Due to this, we took the car to a transmission shop to get it check. The mechanic said that there didn’t seem to be anything wrong externally with the transmission, but that he thinks there’s something inside that needs repair. Minimum cost: $800, just to take the transmission out, look inside, put it back together and put it back. (This includes taxes.) Parts and additional labor would be extra. Add to this the need for new rotors, a timing belt, and a few other miscellaneous items and suddenly this car threatens to cost me around $2000 in repairs, not including the paint job I need to give it because of some major scratches on the side of the car (there when I bought the thing and are begining to rust) or the $900 I just recently spent on its 120,000 mile maintenance and getting it new tires. My father, formerly a car repair shop owner, says I should try a transmission flush, although the transmission mechanic said he doesn’t think that would help. Still, that’s at least $100.

The value of the car, in its current condition, is about $3900 for sale in the private market, according to Kelly Blue Book. We still owe about the same on it. If I can get that much for it it’ll be a miracle.

Can you see now why I’d rather get rid of this one?

The Fallacy of the Used Vehicle

Cars depreciate, that’s a fact. However, some cars depreciate far more than others. American cars, for example, have a far steeper depreciation after the first two years than either Hondas or Toyotas. (Some claim this is changing, particularly with Fords, but I haven’t really seen the evidence: I don’t know how much of that sentiment is based on fact and how much is based on patriotism.) This means that if you’re going to buy an American car, you might do well to go ahead and buy something used. If you’re going to buy a foreign car, though, chances are you’ll pay nearly as much with the used as you would with the new. There’ll be a few thousand dollars difference, true, but if you’re financing then this difference is offset by the financing deals banks and car dealerships give new car buyers. (For example, Honda currently has 0% for 36 months and 1.9% for 60 months on all new Accords, while Ford is has 0% financing, 60 months, on all new Fusions, plus $2500 cash-back.) Here’s a concrete example:

A 2010 Accord EX-L starts at about $29,000 according to Honda.com. Go to Cars.com, and do a search for used Accords and here’s what you get:

• 2010 Accord EX-L, 72 miles on it, $29,815
• 2009 Accord EX-L, 9,256 miles on it, $24,980
• 2009 Accord EX-L, 6,266 miles on it, $23,998
• 2008 Accord EX-L, 36,086 miles on it, $23,991
• 2008 Accord EX-L, 28,295 miles on it, $23,703
• 2009 Accord EX-L, 9,500 miles on it, $23,279 (although my first question becomes, “what’s wrong with it?”)
• 2008 Accord EX-L, 19,356 miles on it, $22,987 (Honda Certified Used, which is excellent.)

Looks good, right? If I was paying cash then this would be wonderful! Now lets look at monthly payments, comparing the last vehicle on that list (the Honda Certified Used) and the new Accord. (I’ll be using the Cars.com Auto Loan Calculator. Note that I round up for prices.)

• Used: At $23,000, no down payment or trade-in, 6.5% sales tax and 6.96% interest at 60 months my monthly payment is $480.
• New: At $29,000, no down payment or trade-in, 6.5% sales tax and 1.9% interest at 60 months my monthly payment is $540.

Alright, so there’s a $60 dollar difference. Not huge, but nothing to balk at. Now comes the big one: maintenance. (I’m using the AOL Autos calculator and presuming, quite safely, that I’ll be driving 20,000 miles. Yes, AOL still exists; I was surprised, too.)

• For a 2008 Accord bought in its third year, my estimated maintenance costs would be around $1,610 for year 1. Year 2: $210. Year 3: $3,700. This breaks down to around $153 per month.
• For a new 2010 Accord my estimated maintenance costs would be $120 for year 1. Year 2: $353. Year 3: $1610. This breaks down to around $57 per month.

This means that by buying used I’m spending, total, about $90 per month for the used above the price of the new, with the diference being purely maintenance. This doesn’t include efficiencies provided by new technologies introduced into the later model, or the fact that while the bulk of maintenance cost rise for the new will occur after the loan has been paid off (and the car is a mere 5 years old), the maintenance cost rise for the used car combined with the monthly payment will make the auto increasingly more expensive in the later years of the loan.

To put it simply: if you’re going to do a long-term (60 month) payment, buying new allows you to separate car payments from increasing maintenance requirements: you’re either paying for maintenance or for financing, but not both. Buying a used car, however, means that towards the end of the loan you’ll be paying for maintenance AND the loan itself, leaving you in the same place I’m at now, feeling like you’ve been taken for a sap.

Finally, there’s the whole control issue. I don’t know who did what to that car for the first 20,000 miles of its life. Did they change the oil on time? Do routine maintenance? Drove it around mostly in the mid-western and northern states, ensuring that rust would become a factor once it made it down to Florida? (Interesting fact: cars that spend their entire lives in FL develop far less rust than those which are brought from up north.) When I buy a car new I know exactly what goes into that car and what kind of care it has had; if something goes wrong, thee’s a pretty good chance I’ll know whose fault it was. (This is why I always either go to the dealership or find someone recommended in the CarTalk Mechanics Files. In fact, this is how I found my favorite Honda shop in Ft. Lauderdale, ForeignTech (formerly HondaTech), located on State Road 7/441, just north of Broward Blvd.) In other words, I control the environment that car exists in and there are few if any unknown variables. That’s piece of mind a new car will give you.

Of course, there is a third option: just keep what’s already here. Fix it up, pay it off, and keep it for a while longer. This has been heavily considered, but we decided that having two very high mileage cars, no matter how well maintained, put it at risk of finding ourselves in some future date needing to buy two cars at the same time. The last thing I want to do is have to buy two used cars in a hurry. While I love sparring with used car sales people, (seriously, I LOVE it!) I don’t care to do it at gunpoint.

Sidenote: There are a few points I’m sure some of you more financially astute folks are thinking, like “why not just save $500 a month and pay cash when you’re ready?” and “why not get a cheaper used car but finance for a far shorter term to avoid the maintenance cost overlap?”

With the first question its a question of practicality: we didn’t start saving for a car years ago (even though we do have savings, a rainy year fund NOT to be spent on cars). Had we successfully done so, it would be fine, probably. $500 for 4 years would be $24k, just about the right amount for a new midsize sedan. But starting now, even at $500 per month would still mean that it would be 2 years before we could buy something as cheap as a Smart Fortwo, which my wife refuses to drive around here (lots of trucks) and is impractical from the standpoint of our parenting plans (don’t read into that), or a used vehicle, which we would rather not buy, due to the aforementioned control issues. I really don’t think we have 2 years. Combine the repair and finance costs for what we do have and we wouldn’t even be able to start saving any appreciable amount for the next year.

The second question is actually a great one, and something we’re considering. I used a Honda Accord for my example because it was our default choice, since that’s what were replacing. Smaller, more inexpensive cars are also options. We also plan to put a down payment. The examples were simply for the sake of having some numbers to play with.

Alright, So Buying New. What Are the Options?

Although I used the Honda Accord for my example above, we’re far from making a final decision. We’re still considering the Ford Fusion and Taurus; Toyota Venza, Matrix, and Prius (yes, I’m well aware of recalls), Honda Insight, Civic, Crosstour and Fit, and others we haven’t yet really looked at. (One car, the Smart Fortwo, was eliminated, sadly, because we need a back seat. Oh, but how I want one of those little skates.) It’s still nebulous for us so the answer to this will come in another article sometime in the near future. For now, if you have any recommendations, especially about the cars I’ve mentioned here, I’d love to hear it.

And here’s a question for you: given the state of the economy (particularly in the US) and where things might be going, what are your plans for ensuring your economic stability?

By the way, if you really, really want to know what I consider a must to read, and you use Google Reader, go ahead and add me to your “Shared” list: gnorbx@gmail.com. And yes, it’s always reciprocal. If you don’t use Google Reader, then check out my Shared Items. I warn you, though, I tend to go on thematic blitzes, so if everything there looks like it’s about transhumanism or self improvement or writing or philosophy, try going back a few pages.

Anyway, here’s the new Le Linkage list of sites you should visit:

Novelr Needs Your Help: So Eli over at Novelr has finally hit the big time and started receiving a fair share of pageviews. The problem with this, as anyone who’s ever run a site knows, is bandwidth. He needs more now, and doesn’t have the money to cover it, so he’s sort of asking for donations. Now, if you’ve been reading this blog for a while you know that I don’t often ask for money. In fact, the only time I’ve ever even mentioned donations is when I added that “Donations” area at the bottom of my home page, with links to the Methuselah Foundation and the Digestive Distress and Dysmotilities Association. (As you can guess, the donations aren’t for me. I’m in the very, very fortunate position of being able to offer Gnorb.NET for free, since Google Ads pay enough to cover the bandwidth.) But I’m asking you, if you have a few dollars to spare, to help a blogger out.

Edit: From Eli (in the comments section below): “The crisis is over, Gnorb. A few really good readers pooled together their resources and the Novelr’s above the water again.” In other words the M Foundation and the DDDA can still use the help.

Root & Sprout^TM: This one’s for the parents out there. Oft mentioned blogger Melissa G is starting a new monthly publication! Root & Sprout is an online magazine “for practical information, stories, and advice about being a parent and raising kids.” Now, I know every parent reading this is already awesome, but check Root & Sprout out to see what you can learn from other just-as-awesome parents. And tell ‘em Gnorb sent you.

Writing Tools for Mac: If you’re a writer and you have a Mac, you’ll want to check this list of writing applications out. There’s a video there, too, by the way. I don’t know how you can help someone out with this, but I’ll include it anyway.

Edit: As per reader request, I’ll help a brother (with a Mac) out by making a shortlist: SubEthaEdit, Google Docs*, Microsoft Word*, BBEdit, Scrivener*, TextExpander, WriteRoom*, Ulysses, StoryMill, CopyWrite… You can see some descriptions at Literature and Late.

WSF report: 90 Is the New 50: Ever dream of climbing Mt. Everest at the ripe young age of 125? More and more biologists are jumping on the engineer negligible senecense bandwagon. Maybe it’s time you do as well. Options to extend life are, at the moment, limited to lifestyle choices — diet, exercise, and leading a purpose driven life — which may increase your life from ~75 years to ~90 years. Not much, but enough to give you a chance at receiving the treatments. Help yourself and future generations out by calling your senator or state representative. “Without funding, this longevity science which is truly on the verge of a breakthrough will be marooned.” (After you read that, however, I also highly recommend Is Aging Itself a Disease? by the Vorlon-loving Anne.)

2008 Consumer Action Handbook: If you’re in the US, ever heard of the Federal Citizen Information Center? Probably not. Too bad, because it’s their job to distribute free and low-cost (less than a gallon of gas) Federal consumer publications. Find out how to get out of bounced checks and overdraft fees, improve your credit, reduce junk mail and telemarketing calls, get a paid apprenticeship, and much more. Before you help a brother out, why not make sure you’re in a position to help?

Using Mini-Retirements to Get More Out of Life: While on the subject of finance, let’s talk about retirement. If you work, you’re likely looking forward to the day when you can finally call it quits and actually get on to living your life. But what about taking mini retirements? The truly wealthy do it all the time. Can you set yourself up to doing it? The article linked goes to an interview with Timothy Ferriss, author of The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich .

10 Books that Prove Science Fiction Just Got Harder: For the past few years, the market for hard sci-fi (science fiction that isn’t afraid to explain what’s going on) has been getting smaller and smaller. However, it looks like the genre’s about to be revolutionized by a group of very awesome books that recently came out. When I saw this I realized my reading list had just gotten larger.

Neil Gaiman Writing for Dr. Who? In short, no. Gaiman’s name has been thrown about after Steven Moffat took over the show and made the following carefully worded statement: “Well, Neil and Steven Moffat had dinner, and Neil hasn’t said no, but there’s many slip between cup and lip…” Remember the game telephone? Where you pass on a message to someone and they pass it on, and eventually the last person gets a message that’s totally different from the first? Well, the internet rumor mill is a lot like that, and the “hasn’t said no” turned into “OMG NEIL IS WRITING DOCTOR WHO BEST NEWS EVER.” He’s not. Yet.

Alright, so that about does it for this edition. Want to read more? The head on to Sentient Developments for George Dvorsky’s “What I’ve been reading” list. And like I mentioned before, you can check out more of what I’ve been reading by checking out my Google Reader Shared Items. And, if you don’t feel like reading, but instead want to watch a couple of informative, yet entertaining movies, Mark Cuban has a couple of recommendations.

A few days ago, someone over at 9Rules Notes asked about the best financial advice others could offer to someone coming out of college. Some of the answers were traditional, some where a bit “out there”, but the one that caught my eye was this one:

Get one credit card (one!) to build credit, but pay off every cent before you get charged a penny of interest.

She goes on to talk about a few items I not only totally agree with, but have started to live and swear by (treating savings and investments as fixed, monthly expenses; treating yourself once in a while). But it was the statement quoted above that really caught my eye, since it highlighted a misunderstanding of the purpose of credit and credit cards. (This is not to say that the author doesn’t understand these, but it does speak of a somewhat limited view of credit which tends to limit the available financial options at the disposal of most individuals.)

Most people think of credit cards as money they can borrow when their funds run low. They also think of credit as something that builds up over time if you take care of your bills on time. While both of these statements can be true (depending on your particular situation), they miss the point of the entire credit score and credit card system.

By the way, before we start, remember this: credit cards are not there so you can spend extra money. They’re meant as short term tools for investment, primarily for business. If you can appreciate and understand this statement (and I hope that by the end of this post you will) you’ll soon realize that credit cards may be one of the most useful tools at your disposal. If you don’t understand this statement, then yes, for the love of God, “get one credit card (one!) to build credit, but pay off every cent before you get charged a penny of interest.”

The Basics of Credit

Your credit score is nothing but the rating financial institutions use to rate how much money they can safely make off of you. Why do I say this? Think about it this way: because letting you borrow their money is an investment for them, which may have a return ranging anywhere up to 32% a year. (If you’re the one lending the money, and therefore receiving the benefit, then this is called “Return on Investment”, or ROI for short. If you’re the one being lent money, and therefore paying the interest, then this is called an “Annual Percentage Rate”, or APR for short.)

Here are a few examples of how your credit — the measure used to determine how good of an investment you are for them — can go up or down.

• If you borrow $2000 on a credit card with a $5000 limit and you pay it all off within a year (with all payments being made on time), then your credit score will increase because the company knows that you (a) will borrow money and (b) are good about paying it back in a timely fashion, with interest. (Remember: the higher your APR, the higher their ROI). You’re tagged as a good investment for them.
• If you never borrow any money and always pay everything in cash, then your credit score will neither go up nor down. In fact, it won’t exist. You will find it hard to get a loan when you need it because you’re what’s called a “ghost” in the system. In other words, you don’t have a credit rating at this point and they don’t yet know whether they can trust you! (This really ticked me off when I first discovered it: I had always made it a point to pay for everything cash, then when I went to get a car loan I couldn’t do it because I had no credit!)
• If you borrow $2000 on a credit card then don’t pay even the minimum payments, you’ve just told the financial institutions that you cannot be trusted. Even if you do make your payments, unless they’re on time, the companies will tag you as someone who doesn’t deliver the returns on investment in a timely fashion. This makes you a risky investment, and as a result your credit score goes down, since they might make money off of you, but they may also lose money on you. You’re tagged as a bad investment for them.
• You have a credit limit of $5000 spread over two credit cards ($2500 each). You max them both out on things like going out to dinner and taking care of miscellaneous expenses, and buying yourself some new furniture that you really shouldn’t be buying. You start paying off the minimum payment at whatever interest

Side Note: Interested in Interest? By the way, ever wonder why interest is so high on your statement? I mean if it’s 21% interest, why is more than half your minimum payment going to the principle?! Interest is calculated as follows:

• taking how much you owe (say, $10,000),
• dividing that into, say, 50 months, or 2% increments (so $200 each — your monthly payments, so a more common number is 60 months for cars),
• figuring out the total annual interest on the entire amount ($2,100 is 21% id $10,000),
• then dividing the total interest by the number of months in a year (12, so $175),
• then adding the monthly payments ($200) to the interest payments ($175),
• and herein we arrive at your total monthly minimum payment: $375, almost half of which is being paid to interest.

If it takes you 3 years to finish paying for this, then this means the companies are making not just 21% on 10,000, they’re making 21% on $10,00 (the first year), 21% on $7,600 (the second year), and 21% on $5,200 (the third year). (Yes, the clock on interest is reset every year, and the interest payment is based on the current amount owed. This is why interest doesn’t go down during the year itself unless you refinance.) Since your payments for the principle were based on the number of months in which you agreed to pay it (and for credit cards I believe the industry standard is 50 months, though this number may be well over 100 months, depending on the card and your situation), the principle statement either stays the same or goes up, proportionally as interest goes down. This is why you get car loan payments of $400 a month on a stead basis, but the principle/interest ratio changes over time.

If you don’t get all this just yet, don’t worry: finish reading this article, then come back to this part. Read it a few times if you have to. Heck, write it down and make up a few examples of your own based on this, but make sure you understand what’s going on with your interest.

So wait, what other evidence is there to support the claim that a credit score is all about them making money off of you?

Have you ever wondered why it was that companies would (a) charge you to view your own credit score, and (b) lower your credit score every time you checked it? (If done often enough, checking your credit score can cost you up to 20% of your total credit score!) It’s because they benefit when you’re left ignorant. What if something happened where they made a mistake on your credit score. Suddenly all your credit card rates rise and you have no idea why! You finally check your credit (which lowers your credit score even more), notice that there have been four checks supposedly bounced in your name (we’ll call this a system error, not identity theft, for simplicity’s sake), and call them to tell them that this is an error on their part. After all is fixed, your credit card rates come back down, so the banks are making less money off of you! Sure, you’re a safer investment, but now they’re competing with other companies which want your business because you’re trust worthy, and so your APR drops to meet the competition. Things would be so much easier (for them) if you weren’t so trustworthy. After all, then you’d be stuck with them, right?

(Of course, it can get nastier than that: some banks will tell you “well that’s just too bad” and keep your rates sky high for someone else’s mistakes. But that’s another subject for another time.)

Only after years of outcries from consumer groups did the government step in and tell credit companies to provide one free credit check per year. To keep their businesses going, the companies capitulated to the demand, but just barely.

Hopefully now you understand the purpose of the credit score. One of the ways to use this knowledge in order to make the score higher (especially if you don’t have a lot of credit) is to take out a credit card and borrow $500 to buy something (or to PayPal some cash over to norb@gnorb.net). Pay it off slowly for a few months (twice the minimum payment is good), then after 3 or 4 months, pay off the whole thing. Do that a few times to show the companies that you’re not frivolous in your spending, and that you can be trusted with money. Later on, when you’re considering buying a car or a house (provided you don’t have the money to buy them cash; yes, people do it all the time) your credit score will reflect that you are a good investment for them a trustworthy custodian of money, and you’ll be able to get a lower APR. (Remember, it’s all about competition for them: they’re competing with other financial institutions for your business. The free market works both ways. Be comforted in this, you do have some power, but it’ll take some work.)

Now, I’ve been talking about the consumer’s point of view, which doesn’t really help you unless you want to spend money. But what if you want to make money? Can you really make money using credit cards? In short yes. In fact, this, my friend, is when the real power of the credit score and the credit card come in to play.

Side Note: How do Investments Work?Now, all this time I’ve been talking about companies investing in you and how this is all part and parcel of your credit score, but you still don’t know how investments work. “I’m not a company,” you say, “I don’t have a stock market ticker symbol!”

Remember: financial companies research you like you research a stock. (Even better, actually, since your finances are a lot more transparent than those of a Fortune 500 company).

An investment is simple: you give Person X money so that he can do whatever he wants to with it, then when he comes back to you he says “Your money grew at this percentage rate, so here’s your money back and some more!” When you buy stocks you’re doing the same thing, except you don’t know what your percentage return will be. When a company gives you credit money, they’re doing the same thing (investing in you) , except they know how much their return will be, since it was part of the agreement.

You invest money in something hoping that it’ll grow, that your money will work for you instead of you for it. If you do you research then your chances of losing money are much less than if you don’t do your research. Same thing with financial institutions: your credit score is basically how they rate you as an investment. A high rating means you’re a good, safe investment. A low rating means you’re not a very good investment. To cover their losses, they’re going to demand a higher return on investment from you if you’re a risky investment, which is why your interest ratings and credit card APRs are so much higher when you have bad credit.

The Credit Card: Your Silent Business Partner

I was listening to a speaker on a television program not too long ago talking about how he buys and sells real estate. Of course, he was trying to sell his own real estate system, so he started talking about the almost mystical “no money down” techniques he uses to buy real estate. Ever wonder what those real “no money down” techniques involve?

Allow me to burst the bubble: there’s always money to be put down. There’s always money to move around. How much money comes out of your own pocket and how much comes out of someone else’s is what determines the real “no money down” situation. While there are a number of ways of looking at this (partner investments, owner financing, down payment assistance programs, etc.) the most common “no money down” technique involves using credit cards.

Now, before you get all uppity and self righteous about how stupid people would have to be to use credit cards to pay off real estate (or any business, for that matter, something I’ll discuss later), let me make another shocking, bubble bursting statement: it’s actually a pretty smart idea, and to an extent, this is why credit cards were created in the first place. Here are few very simplistic examples:

• You see a house for sale for $150,000. You know for a fact that the houses in this area sell for $300,000 (even in a down market), and that it would take only $15,000 to fix, so you decide to buy the house: you want to either fix it and profit, or flip it for an immediate profit. The down payment on this house is $15,000, which you don’t have. Here are some options:
  1. You find a partner who will give you the $15,000, plus he’ll fund the fixing of the house (another $15,000). You do the work, he puts down the cash. He’s asking for 30% of the profit, however, in addition to his $30,000. If you sold the house for $300,000, then your profit would be $150,000, 30% of which would be his, in addition to his initial investment. In short, this means that out of your $150,000, $75,000 would be going to him (his original $30,000 plus 30% of the profit, or $45,000). Total profit to you: $75,000.
  2. You decide to use a credit card (or multiple — it doesn’t matter for this example) with an APR of 21%. You try to flip the house, but no one buys it, so you finish fixing it up, paying the next $15,000 with other credit cards at the same APR. You’re able to sell the house for $285,000 in 6 months. Your gross profit is $135,000. Presuming you paid 21% interest for 6 months on $30,000, your grand total to pay the credit card companies is about $37,000 (I’m using round numbers to be clear; mathematicians, please don’t stab me with your protractors). Your net profit is then $98,000.

  Which is the smarter choice, the partner, or the credit card? (In either case your ROI is not really measurable because you never actually invested anything. Now, this won’t always be the case, but if someone else is funding this much into it, expect to pay a good percentage. The advantage of a partner is that if for some reason the house didn’t sell for two years, then yes, you would end up owing more to the credit card companies. But for business investors (and not speculators) this is seldom a problem. Business investors and business owners who know their business know how to manage these kinds of risks. (And in real estate, the rule of thumb is that you make your money when you buy, not when you sell: if you can’t run the numbers and know you’ll come out profiting, you shouldn’t get into that deal. But I digress. Remember also that you shouldn’t use credit cards to put the down payment on a property which won’t produce income for you. For that, go and get yourself a down payment assistance (DPA) loan.)

• You own a business selling jewelry. You’re about to put on a sales show. Last time you were at a show, you sold out of your jewelry before the end of the show, costing you sales. Based on past response, you decide you need to spend $35,000 (wholesale) in pieces, which you expect to sell (if all of them sell) for a total gross profit of $135,000 ($100,000 net profit). Right now, however, you don’t have $35,000, and you can’t pull out a business loan (for some strange reason I won’t explain). You decide to use your credit card and buy the jewelry. The show, one month later, is a total success, and while you don’t sell out of your pieces, you still make $120,000. After you pay the credit card, you still have made $84,400 in profit (with the rest going to the credit card, $35,000 for principle and about $615 going towards interest), and to take care of the left over stock, you sell it for 50% off the retail price, which still makes you a small profit.

In both of these cases, credit cards were used to make money. Sure, you paid interest, and the interest rates could be considered high, but what would have been the cost of NOT using the credit card? In the first case, it would have forced you to lose over $20,000 in profit money, while in the second case it would have cost $85,000!

In neither of these cases were credit cards used for consumer expense, they were used for business expense, and as such were making money for both the credit card company (in the form of interest) and the business person. This is the classic win-win situation. This is also the original intent of credit cards, to extend and make convenient general lines of credit. Furthermore, they allow financial institutions to make standing loans which accrue interest for them every time they’re tapped. In fact, think of a credit card as a general loan, which you can use for whatever you want. The loan amount is your credit limit for that card, and you can get another loan by simply getting another card. The higher your credit score, the more they’ll trust you with since they know that you can be both trusted with the money, and that you’ll make money for them. In short, you’re a good investment.

The question, as far as you’re concerned, is what you use those loans for. Do you use them to buy a television (and therefore pay for the television AND for the interest, or you use them to invest in a business that will give you an ROI (therefore making more money than you’re paying out)? Do you use them to help yourself, or do you use them to hurt yourself? (This, by the way, is where money management comes in. I’m not talking about the software, I’m talking about the discipline.)

The mistake most people make is to think that credit cards are there so they can buy things now and pay them later, or they can buy expensive things and pay them over time. While this is true, treating credit cards like this is like treating a fever by trying to bring the fever down, instead of by resolving the root cause of which the fever is a symptom: it signifies a misunderstanding of its actual purpose. Believing this is how you hurt yourself.

OK, I Think I Understand… but Not Really

Alright, with everything we’ve covered, I’m going to show you how you can use credit cards to make money. Before I tell you any of this, however, remember that you’ll probably need at least OK credit to do this. Also, you’ll need to be extremely disciplined. If you’re not, for the love of Visa, don’t even try it.

Suppose you have a credit card (we’ll call it CC1) with a $3000 credit line and a 13.99% Annual Percentage Rate (APR). You get offered another card by another company. This card has no transfer fees and a 0% interest on transfers for the 12 months (we’ll call this CC2). Here’s a simple way you can make some money with it: Open up a high-interest savings account with the bank of your choice (we’ll presume the ROI is 5% on this account). To open this account, do a cash advance from CC1 to the savings account for $3000. Apply for CC2 and immediately transfer the $3000 balance from CC1. When you get CC2 (and unless you have bad credit, you probably will), CC2 will have a $3000 balance at 0% APR for the next year. (Note that you’ll still need to pay the minimum monthly payments.) The $3000 now sitting in a bank will earn you 5%. This means that at the end of the year, you’ll have made $150 (actually more, since interest is compounded), all without spending one dime. This is what’s called making money with other people’s money (OPM). Right before year’s end, take the $3000 from the savings account and pay your credit card balance, pocketing the rest. (And yes, taxes will have to be paid on that money, but think about it: how much work did you really put in for that? Was it worth it?)

Of course, this example runs with fairly small numbers as far as the credit game is concerned, but it’s OK: the principle is what matters here. If you’re smart, credit (and credit cards) allow you to borrow money from one entity in order to make money for yourself. In the long run this is in their best interest because it means that they can capitalize on your skills to make money: they lend the money, you do the work, you walk out with the bulk of the cash. Sound like a good deal? It is, if you’re careful and understand these principles.

The problem with most people is that they never actually set up any sort of financial action plan, at least not a stable one. What I mean is this: too many times I’ve met people who focus so strongly on one strategy (owning a business, owning real estate, investing in stocks and mutual funds) that they forget to actually set a plan in motion that will protect them in case things don’t work out as they’d expect.

Here’s an example: suppose you start a business and in two years find yourself making $150,000 a year. Awesome, right? You buy yourself a nice house, a nice car, and stick some in savings just in case. ($10,000 is enough, right? I mean, it’s more than most people have.) So what if you have a little debt, you can take care of it!

A year later a shift in the market causes your business to tank. (Make up a reason for this: real estate? Market turns sour; Network marketing? Company goes out of business; Franchise? new road construction takes all your traffic somewhere else.) Your income goes bye bye. Your debts amass and the bill collectors come calling. What’s your financial picture like now?

The sad part is that most people, even those making a lot of money, don’t have a proper financial plan, mostly because they somehow rationalize they won’t need one. “My business is going great,” or “I don’t make enough money to need a financial plan,” or “That couldn’t possibly happen in this market, or in my business” are some possible excuses. Yet all of us know that one event outside our control — a stock market crash, a hurricane, a drop in the value of the dollar, another Enron — can take everything and wipe it out. Depressing thought, no? No wonder people don’t like thinking about it.

Instead, most people put their faith in specific products or procedures, like investing in stock, real estate, municipal bonds, mutual funds, 401K’s/403B’s, tax lien certificates, network marketing, franchises, businesses, gold, currency trading, life insurance… the list goes on. The problem is that all of these have down sides. Not one is 100% guaranteed! And unless there’s a financial plan in place to account for the various “what ifs” then the risk to the person relying on these products and procedures is multiplied by a factor of their ignorance.

Feel insecure yet? You should. I certainly did when I started to realize all this, when fiscal common sense (or what should be common sense) finally started to dawn on me.

With all this in mind, this past weekend The Wife and I finally got together and sketched out a financial plan. (We actually started by going out to the Davie Ale House and doing it there while splitting one of the huge appetizers they give there. Total time required: about 2 hours, although we still have a little work to do.) Until now, believe it or not, we didn’t really have one! Our “plan” — or what we called a plan — was to make money, put it in savings and our 401K’s, pay off our loans and any credit card debt, maybe invest in buying a home (or some rental property), and starting a business that could develop us passive income so that we could go from where we are to being wealthy, if not rich. (Remember: rich is measured by money in comparison to others; wealth is measured by time, or how long you could live at your lifestyle if you couldn’t draw an income from your own efforts. You can be rich and be broke. You can’t be both wealthy and broke.) Needless to say this plan needed re-tooling. Badly.

Our new plan, while not yet finished, is a lot more comprehensive, and it’s something which we’re confident will give us the footing we need to feel first and foremost safe and secure. Why “safe and secure”? Why not comfortable, wealthy, or rich?!

The simple answer is this: if I’m rich and something happens to my income at that level, do I have a safety net? More than just a big savings account, I mean. Or am I always going to be scared of something happening? A “safe and secure” plan is that safety net. In case all else fails, this plan will ensure that you and your family are taken care of. You may not be comfortable, but you’ll never go without food and shelter, no matter what. After a “safe and secure” plan has been created and put in motion, then should you create a plan for comfort, wealth, and eventually riches.

With this in mind, our new plan involves the following:

• First, we make sure that no matter what happens we’re both financially secure, that we’ll never be without, no matter what happens during our life or after it. (A good financial plan should take into account such details as what happens in the event of your death.) We call this the protection phase of our plan. It includes stuff which protects what we have now. This includes car and home insurance (neither of which is particularly inexpensive in Florida), including a liability umbrella to protect us in case of lawsuits (not planning to get sued any time soon, but with our sue-happy culture, one never knows; this is really in the grounds of the insurance, however, and the various deductibles); disability and health insurance (we’re covered here, for the most part, though I think we could be a bit safer), and finally life insurance appropriate to our needs (there are a bunch of these out there — term, variable, full-life, universal, etc ad nauseam).
• Second, we begin working on our savings. This also includes paying down our consumer debt, such as any credit cards we may have balances on and our car payment. (Not every debt needs to be paid off, but the fewer the liabilities, the easier things will be.) Additionally, this also includes putting at least 3 (though preferably 6) months worth of expenses in a very safe, ultra-low-risk account, such as a money market account. Low yield, true, but the purpose of this account is to have liquid funds, just in case. Finally, we have to maximize our forced savings, meaning our 401K’s. (For the record, the 401K and 403B accounts are savings accounts, although you may invest the funds in mutual funds, stock, and even real-estate. Yes, you can buy real-estate with your 401K.)
• Third, there’s the growth component. This is where we begin investing in things such as property (like, say, buying our first house, or buying a small multifamily rental property) mutual funds and stocks, and municipal bonds. (Tax liens and purchasing debt can also go into this part of the equation, since they give you a better rate of return, backed by real estate.)

Once all this is in place, once we’re “secure” — and we expect it to take about a year to put everything in place like we want it — we are ready to step into the comfortable planning stage. The only difference in this versus the previous is the way we deal with the various products I just mentioned.

For example, in the Protection phase we can move from Term life insurance to whole life, variable, or universal. In the savings phase, we move from 3 months to 6 months and even 1 year of expenses in the bank. Additionally we’ll be able to put more into money markets and retirement plans. Finally, for the growth component, we can begin investing in more properties, buying businesses, and individual stocks. (Note that you can start a business in any stage of the game, but what’s available to you changes according to where you find yourself.)

Now, you may be wondering why I mentioned the products I mentioned. Here are some of the advantages and disadvantages (from what I’ve learned) of the items I’ve mentioned here:

• Stocks: This is usually the first think people think of when talking about investing. It’s also one of the most volatile of investments, since you don’t really control it (unless you’re buying millions of dollars worth of shares.) On the up side, these can have some of the biggest gains thanks to things like speculation and buzz. Rule of thumb: never put anything into the stock market unless you’re prepared to lose it. Of course, seasoned day traders are another breed entirely, but I’m talking about me here, and seasoned day trader I am not.
• Mutual Funds: Think of these as beginners kits for people getting into stocks. They aren’t as risky as stocks, but because of the almost complete lack of control you have over what the fund buys, these are also fairly risky, almost gambles. Overall, a well researched fund will likely give even a beginning investor some return.
• Real Estate: The great think about real estate is that it usually goes up. The bad part is that an uninformed person can lose a lot of money very quickly. Someone who’s studied market cycles, however, and can call up on the appropriate strategies at the right time will usually be able to make money in any market, so real estate actually offers a great deal of control, even if the market in your area tanks.
• Network Marketing: This is probably one of the safest investments out there. The problem is that because they’re usually so easy and cheap to start, most people don’t take network marketing businesses seriously. Big mistake. The down side here comes in the area of control: if the company you’re working with tanks, what are you left with? What are your customers left with? The thing with these companies is that it’s not the product which really matters, it’s the education system. Find a good system and a good mentor within that system and you’ll be able to learn more about business quicker than most any other way, and with far less risk than any other business venture. The Wife and I are involved in a network marketing business for that very reason: the system we’re involved with is great. In fact, I count that association as one of the best moves I ever made.
• Franchises: Like network marketing, franchises are more valuable for their system than their actual product. Ever see a McDonald’s go out of business? Not many, right? Why do yo think that is, because they have the best burgers and milkshakes in the world? Hardly. It’s because they have one of the best training systems in all of business.
• Municipal Bonds: These are good because they’re pretty much guaranteed. The only downside is how long they take to mature, and how much money you’re actually making in these.
• 401K/403B’s: These are actually savings bonds, but for employees these are also the last real tax-free shelters available. (Self employed persons and business owners have a lot more in the way of tax advantages and can move their money around quicker.) The biggest bright side with these is the fact that they’re essentially forced savings, and as such call for a certain level of discipline. They’re also fairly flexible, since money here can be used in various forms of investments with taxes deferred until the point where money is withdrawn. Not bad, eh? And for most employees there’s also the “free money” aspect: many employers match dollar-for-dollar what employees put in. Not a bad way to give yourself a 3% or 6% raise (since that’s usually what’s matched). The biggest disadvantage is that you can’t actually draw anything from this fund until you’re almost 60 years old, not without penalty at any rate, except under very specific conditions, and even then you have to pay that money back. At least you’re paying yourself, right?
• Gold: I don’t know enough about gold or other precious metals to say why they’re bad, save maybe for value fluctuations and requiring a lot of study. Of course, there’s what whole “history” thing which puts Gold as being a fairly steady investment. That is, until someone does what they did for aluminum in the mid-1800’s. That’s when synthetic aluminum was created and the metal went from being worth more than gold to being worth almost nothing overnight.
• Currency Trading: Same issue as gold: lots of studying required, and an event like war could take whatever reserves you have and drop them like a rock int he ocean. Imagine if you had bought Iraqi Dinars in the mid 80’s, what would they be worth now? They were almost on par with the dollar at one point, if I recall correctly.

Anyway, these are some of the products. Talk to your financial adviser about these, or get online and do some research. Tons of info available to you for free.

Speaking of financial advisers, through this entire process, it will be of immense importance to us to work closely with a financial planner who is familiar with ourtype of situation. As such, we plan to interview at least 10 financial planners in the areas and ask the following questions:

• What’s your expertise? (This will be asked up-front, before we tell him/her what we need, since the last thing we want is to say “we need A, B, and C,” then have him/her say “Well, I’m an expert in A, B, and C.”)
• What does your typical client look like, what’s their financial situation?
• What does your typical client make annually?
• What type of asset base does your typical client have?
• What’s your favorite advice to give people?
• What do you like for people to do? (And just as important, what do you like for people to NOT do?)

This will be the first addition to our financial and planning team. After this, an accountant (or at least a bookkeeper) will likely be the next addition to our team, since they can help us leverage any assets to improve our overall situation (as well as teaching us to read and scrutinize balance sheets). Additionally, during this time we’ll also be interviewing lawyers who can help us with the asset protection side of things. Obviously, we’ll want to take advantage of vehicles such as LLC’s (Limited Liability Corporations) and Trusts, but that will depend entirely on our need(s) at the time. Finally, throughout this process we’ll be talking to people who we consider mentors in our lives, people who we’ve seen what they have in life, their relationships, and finances, and who we respect in those areas. One thing we’ve learned is that if you’re going without a mentor you should be ready for some hard bumps, because you will get them.

The more we study this, the more The Wife and I realize how much we don’t know, and how much we’ve been leaving to luck with our financial picture. With a plan in hand, we now feel like we’re on our way to ensuring our financial independence in the long run.

By the way, this plan was created using notes we took by listening to one of the CDs in Robert Kiyosaki’s “THINK IT” “LEARN IT” “DO IT” – You Can Choose to be Rich set (CD 8, I think). (For the record, I borrowed the CD from a friend — a mentor — who recommended it to us.) I plan to get the rest of the set fairly soon. The information in this one CD may have saved us months of ambling around, trying to figure things out on our own. I can only hope that this post can help you.

The past ten days have been fairly hectic for The Wife and I, which is why I haven’t been writing all that much. Two weekends ago, we went to a business conference in Orlando which talked about e-commerce, interpersonal networks, and building home-based businesses. After that, on Monday, we went to a seminar for something called the National Grants Conference. (I’ll be writing more about that and something called Auction Teacher in the next couple of days. Probably.) Tuesday night we had our weekly business workshop. Friday I got sick, but she dragged me into some presentation about rehabbing single- and multi-family homes, then that night we had another business workshop (where I passed out because of the aforementioned sickness.) Saturday and Sunday were spent at the Fort Lauderdale convention center, where a real estate and business “Learning Annex” was taking place (headlined by Donald Trump and Tony Robbins). Yesterday we were supposed to go to another presentation, since we were considering buying a few vending machines, but frankly by that time we were completely pooped, and spent the night instead sleeping and trying to digest everything we’d learned in over the past week and a half.

Seriously, this was crazy.

What I found most interesting about this experience, however, was just how reliant America really is on systems. Everybody we heard had some sort of system: the real estate guys, the vending machine guys, the house flippers, the tax lien certificate buyers, the multi-family owners, Trump, Robbins, Raymond Aaron, Jack Canfield — even George Foreman and Erik Estrada! (Yes, Estrada and Foreman were there, promoting land and marketing systems, respectively.) Makes you wonder, what gets done without a good system backing you?

Answer: nothing. At least nothing big.

What amazed me about my experience is how people who I recognize — who I know have accomplished something with their lives because I see them on television or read their best selling books — all insist that if you want to get somewhere you’ll need not just a system, but mentors, people who’ve been there and done that. (Of course, in the case of many of the real estate guys at the conference, it was their system you needed, and you could get it for only $995!)

I talk to people all the time who talk about mentors and systems all the time. What gets me is how few of these people know what a mentor really is, who appreciate the power of a system, or how you’re supposed to work with either. They use the right words, in the proper order, throwing them around to impress other people, but it’s like the lights are on and nobody’s home. Now, I’m not saying these people are dumb or anything like that. What I’m saying is that they’re inexperienced, and when you’re inexperienced it’s really easy to fall into the trap of getting with the “in” crowd by trying to talk how they talk, without full understand what you’re saying and why.

My question to you is this: who are your mentors? Who in life do you follow for different aspects in your life? Do you have someone who mentors you about your relationships, your business, your finances, your health, or your spiritual well-being? If so, how often do you talk to them? How do they stretch you? Have they stretched you? Have you earned their trust? Can they really be honest with you? Do they have permission to guide you, and will you follow their advice?

By the way, your mentor may be someone who you listen to about finances, business, and family life because they have what you want and are willing to tell you how to get it; or they may be someone you pay (like a coach) to push you in the direction you need to go, outside the boundaries of your comfort zone. This is a person who has a direct path to your brain, whose advice you seek whenever a situation arises within their areas of mentorship over your life, who you trust, and who you’ve built a respecting friendship with. (Here’s a hint, by the way: you never de-edify your mentor. Ever. This means no jokes at their expense, and not being deceitful to them in any way shape or form, including deception by omission.)

What about a system? Do you have a system in place, a plan of action to follow? Is it proven? Have other people walked that path and achieved predictable results? This isn’t just for your business or finances, but also for your health, well-being and self-esteem. Do you actively seek ways of making yourself a better person? Do you have a goal? And does your mentor know about that goal?

The past couple of weeks have been a pretty intense learning time for The Wife and I, and it looks like this phase’s going to stick around for a while. I hope that if you’ve gotten this far into this post you’ve thought about the questions asked in the past two paragraphs. Ask yourself those questions and be honest in your answers: if you lie you’re only deceiving yourself.

Now if you’ll excuse me, I’ve got to go lay down. I’m still fighting whatever hit me Friday.

• Books: Did you know they sell books in thrift stores? Yes, I know, this probably seems like a completely ignorant, inane, and likely insulting statement, but until about a month ago I didn’t know they did. Furthermore, for those of us who live in Broward county (I’m not sure about anywhere else in Florida), the county libraries have a section called “Friends of the Library” in which you can buy donated and retired books. Here’s the cool part: many of these books are almost new!

  Here’s what I’ve noticed: if you go to a thrift store (I’m talking Goodwill and Salvation Army here, since my experience with used book stores has been less than stellar), most of the books will look used, some a lot more than others. These stores tend to have a fairly good selection of books (at least the ones around here do), and the books there, while not new, are in fairly good shape about half the time. Once in a while they’re pretty much brand new. Prices here tend to be between $.75 and $1.00 for paperbacks (both trade and mass market) and $2.00 for hardcover.

  If, on the other hand, you go to a Library, there your luck gets better (especially if you live in a “good” area like Weston or Southern Ranches). The books sold at libraries go from OK to brand-spanking-new, and the prices can’t be beat: $.25 – $1.00 for mass market and trade paperbacks (depending on where you go) and between $.50 – $3.00 for hard cover, depending whether the library uses a flat price (usually $1.00 per book) or whether it prices according to how recently the book was published.

  On the average, the books I’ve gotten lately run at about $.75 a piece, and I’ve been able to expand my library by adding a few collections I didn’t think I’d be able to add. For example, I now have almost all of the “Jack Ryan” books from Tom Clancy in hard cover, and they’re all in like-new condition. (I’m only missing The Hunt for Red October.) I’ve also acquired a large number of Stephen King books (mostly hardcover, though some paperback), as well as books by Michael Crichton, Robert Heinlein, Kim Stanley Robinson, Peter F. Hamilton, Robert Ludlum, Amy Tan, as well as a number of biographies, self-help, and reference books. Now, I know some people will say “Hey, you know that nothing of that money goes to the author?” to which I reply “If it wasn’t for these libraries and thrift stores I wouldn’t even have tried most of these guys. Also, this money is used by the people I buy from for good purposes (helping the community and buying more books) which is how I justify buying second-hand books from these sources. Besides, when I finish reading a book, if I’ve liked it, I’ll talk about it to everyone around me. That’s gotta translate to sales somewhere, right?” (Trust me, if you’re looking for a mouthpiece, I’m the guy you want to talk to.)

  Now, there are a lot of authors you’ll find and a lot you won’t in thrift stores. The ones I’ve found the most of include: Stephen King, Tami Hoag, Mary Higgins Clark, Robert Ludlum, Tom Clancy, John Grisham, Michael Crichton. In addition, I’ve found a lot of Star Trek and Star Wars universe books, as well as some Dragonlance (mostly Weis/Hickman) and Forgotten Realms books (though surprisingly few by R. A. Salvatore or Troy Denning; Dear Troy, more Dark Sun, Thanks.). Finally, in every book store — almost without fail — I’ve found a copy of Lee Iaccoca’s biography. (I even sent one to a friend in Malaysia, Pelf, which I got for a grand total of $.35 in a Tampa Goodwill.) What I haven’t seen many of are books by Robert Heinlein, Frank Herbert, Michael Stackpole, Richard Dawkins, Carl Sagan (other than Contact at any rate), Larry Niven, Ben Bova, Anne McCaffrey, Neil Gaiman, Robert Kiyosaki or Donald Trump. I guess the good stuff people keep for themselves, unless you’re talking about the Iaccoca biography: that one’s just so popular that you can’t help but see it everywhere, in light of the fact that most people don’t realize its true worth. Also, I’ve yet to see any Harry Potter books in thrift stores. (This from a guy planning to buy the whole darn collection once it comes out in a boxed set. And no, I don’t care if Harry dies, even if Steven King asked Rowling not to kill him off.)

  Now, if you’re looking for new authors thrift stores are NOT the place for you. Stick there with Barnes and Noble’s and Amazon. But if you’re looking for books by widely read authors with established careers and lots of best selling books, then take a peek at what thrift stores have to offer.

• Writing: Interesting that for someone who hasn’t been blogging, writing has been a big concern. Nevertheless, it is true that this is one of the reasons I haven’t been blogging. I’ve been honing in my writing skills by working on fiction. Specifically, I’m writing a novel. For the record, the story I’m working on now didn’t start as a novel. It was supposed to be a short story, 10,000 words. Yet here I find myself, 20,000 words later, realizing that I could easily put in a few thousand more. Might as well just make it a full 100,000 worder, no?

  Anyway, along with my writing I’ve enlisted the help of author Michael Stackpole. Inasmuch as I wish I could tell you “yeah, a best selling author’s been coaching me on how to write a damn good book and get published”, the truth is I’ve been getting help from the guy via his newsletter for writers (The Secrets) and his podcast (also titled The Secrets). You can grab the podcast for free at his site, Stormwolf.com (which has just recently been totally redesigned). You can get the newsletter from there, too, but it costs $2 per issue, or you can get a 25-newsletter subscription for $25. For me the newsletters have been worth it, since they’ve helped me fine tune a number of issues within my writing which are apparently commonplace among beginning novelists. Anyway, I recommend you listen to the podcast and maybe pick up a copy of one of his books. (I believe his most famous book is I, Jedi, though personally I really liked A Secret Atlas and will be reading its sequel Cartomancy fairly soon).

  (By the way, Matt and Quantum, if you’re reading this, trust me, you two will be the first to receive copies to the text. I’m looking for your feedback most of all.)

  For the record, whenever I’ve told people that I’m in the process of writing a book, they all decide to give me the same piece of faux-sage advice, usually speaking in hushed, patronizing tones as if to tell me some sort of deep secret while laughing under their breath: “There are only [X] number of plot lines: Man against self, Man against man, Man against…” Frankly, I’m getting seriously sick of these people, since not a one of them has ever written as much as a bathroom-wall graffiti poem. To quote Stackpole on this point:

  Lots of people try to reduce creativity down to numbers and patterns and motifs to suggest, for whatever reason, that it’s all been done before. The fact is, for example, that there are probably only a half-dozen routes for driving a car from Phoenix to Chicago, yet every journey from Phoenix to Chicago will be different for the people making it. So it is with stories. They may follow the same basic plot lines and have similar characters, but the differences are what will make one story more memorable than another.

  Are there a lot of books that are hopelessly similar to others? Sure. Why? Because the authors got lazy or just didn’t have the skill needed to raise that story out of the ordinary to the extraordinary. I think that is where each author owes it to himself and his readers to push himself to excel. They day I stop doing that is the day I stop writing. Every writer may be using the same bricks to construct her story, but that doesn’t mean the final product has to look anything like someone else’s story. That’s where true

  [Source] Also, I’d like to punch these people in the face. Repeatedly.

• Work: I know I don’t often talk about work here, and I’m not about to start now, but if I can pinpoint one thing that’s been keeping me from writing lately, this might take the cake. There’s a big conference coming up soon and I’ve been tasked with a few presentations, so I’ve been pretty busy with those. It’s only gonna get worse from here, at least until next week. Then, mercifully, it all cools down for a little while.
• Money: While most of us equate work with money, that’s not what I’m talking about. Lately, The Wife and I (especially The Wife) have been on a learning kick when it comes to finance. Though our finances aren’t too bad, we realized that we’d been doing some seriously stupid things with out money recently. We learned this after buying the game Cashflow 101 by Robert Kiyosaki (the Rich Dad, Poor Dad guy) and running through it a few times. After seeing how much money we’re letting slip by and how much we could be doing with what we have, we decided to start taking action towards improving our financial position. Translation: the acquisition of assets. (Funny enough, I wrote about that before, but seeing as The Wife is now full throttle into it, the subject has taken on a completely different dimension.)

  Once we awoke to the fact that we could do more with what we have, we started looking for places to learn about how to diversify a bit and increase our asset base. We got advice from friends who are a in much more stable financial position than us, in addition to signing up for a few workshops in order to learn about not only business, but also programs designed to help young entrepreneurs. (Many of these are government programs like the Community Development and Building Grants (CDBG) which are great for me, since they’re very closely related to the field I write manuals for.) As it happens, next week will be a killer one for the both of us: Saturday and Sunday we’re at a 2-day conference in Orlando; Monday night we’re at a grants workshop; Tuesday we’re at a business building and networking workshop; then the following Saturday and Sunday we’re at another 2-day business educational seminar. Lots of learning. Very exciting.

  Of course, all of this really started when we bought Cashflow 101. At almost $300.00 this is by no means a cheap game, but between that and Monopoly (I recommend the “Here and Now” edition), you can learn a ton about not only business, but about your own attitudes regarding business.

Alright, so that about does it. Reading, writing, work and money have conspired to keep me from the blog. From the looks of things, it may yet be a bit sporadic over the next two weeks, but I’ll try to keep the content coming. I have a few pieces in the back end that need to be cleaned up, but are ready to go, and I might post up one of my first endeavors into fiction (a horrible little short story full of clichés and bad humor about God being pissed off at humanity and taking it out on Florida. (Yes, it’s supposed to be funny, in a Terry Pratchett sort of way. Hopefully it’s not too horrible.)

By the way, if you don’t get the title reference, let me help you out. Hint: I saw it on Digg.

Iacocca: An Autobiography

For the record, if you’re too young to know who Iacocca is, check out his Wikipedia page, then go and get his biography. In short, he’s one of the most respected business leaders in American history.

The first item is a video from Fortune by way of CNN.com in which he analyzes the current situation in Detroit, especially the bonuses for company CEOs, which are now in the hundreds of millions. (Don’t forget that Iacocca took a $1 a year salary while in Chrysler and based his salary on the performance of the company.) You can find the video here: Lee Iacocca Fortune Interview (About 4 minutes long).

The second item comes by way of his new book, Where Have All the Leaders Gone?, in which he goes for the jugular against corrupt politicians and the lack of good leadership today from business leaders and politicians. Here’s an excerpt:

A leader has to show CURIOSITY. He has to listen to people outside of the “Yes, sir” crowd in his inner circle. He has to read voraciously, because the world is a big, complicated place … If a leader never steps outside his comfort zone to hear different ideas, he grows stale. If he doesn’t put his beliefs to the test, how does he know he’s right? The inability to listen is a form of arrogance. It means either you think you already know it all, or you just don’t care.

A leader has to be CREATIVE, go out on a limb, be willing to try something different. You know, think outside the box … Leadership is all about managing change—whether you’re leading a company or leading a country. Things change, and you get creative. You adapt.

A leader has to be a person of CHARACTER. That means knowing the difference between right and wrong and having the guts to do the right thing. Abraham Lincoln once said, “If you want to test a man’s character, give him power.”

A leader must have COURAGE. I’m talking about balls. (That even goes for female leaders.) Swagger isn’t courage. Tough talk isn’t courage … Courage in the twenty-first century doesn’t mean posturing and bravado. Courage is a commitment to sit down at the negotiating table and talk.

You can read the complete excerpt at the Borders website. Obviously, there’s a LOT more — and it’s ALL great. Make sure you read it. If you don’t plan to buy the book, at least save that page to your hard drive and read it, over and over again.

A note to anyone going to read the rest of the excerpt: it’s political. Highly so. If you’re a fan of the Bush administration or are easily offended by criticism of the president or his administration, do yourself a favor and ignore the link. In fact, here’s a taste, though you should feel free to skip it if you’re easily offended read it anyway:

Am I the only guy in this country who’s fed up with what’s happening? Where the hell is our outrage? We should be screaming bloody murder. We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, “Stay the course.”

Stay the course? You’ve got to be kidding. This is America, not the damned Titanic. I’ll give you a sound bite: Throw the bums out!

You might think I’m getting senile, that I’ve gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore. The President of the United States is given a free pass to ignore the Constitution, tap our phones, and lead us to war on a pack of lies. Congress responds to record deficits by passing a huge tax cut for the wealthy (thanks, but I don’t need it). The most famous business leaders are not the innovators but the guys in handcuffs. While we’re fiddling in Iraq, the Middle East is burning and nobody seems to know what to do. And the press is waving pom-poms instead of asking hard questions. That’s not the promise of America my parents and yours traveled across the ocean for. I’ve had enough. How about you?

I’ll go a step further. You can’t call yourself a patriot if you’re not outraged. This is a fight I’m ready and willing to have.

My friends tell me to calm down. They say, “Lee, you’re eighty-two years old. Leave the rage to the young people.” I’d love to—as soon as I can pry them away from their iPods for five seconds and get them to pay attention. I’m going to speak up because it’s my patriotic duty. I think people will listen to me. They say I have a reputation as a straight shooter. So I’ll tell you how I see it, and it’s not pretty, but at least it’s real. I’m hoping to strike a nerve in those young folks who say they don’t vote because they don’t trust politicians to represent their interests. Hey, America, wake up. These guys work for us.

Before you decide that the link isn’t (or is) for you, remember one thing: it’s not a Republican/Democrat thing. In fact, to once again quote Iacocca, “don’t tell me it’s all the fault of right-wing Republicans or liberal Democrats. That’s an intellectually lazy argument, and it’s part of the reason we’re in this stew. We’re not just a nation of factions. We’re a people. We share common principles and ideals. And we rise and fall together.”

Enjoy the reading.

1. Involve your kids in everything you do, as best you can.
2. When working as part of a team, make sure to learn everyone’s name and a little bit about them. A little recognition will do wonders for morale.
3. Unity does not mean absolute obedience, it means absolute togetherness.
4. Any business works like dating a pretty girl: you find her, clean yourself up, then ask her out — not once, but until she says “Yes”. [Edit: This is how I tricked The Wife into marrying me.]
5. Any business you want to succeed in you have to become a professional at. Treat it exactly like you would a professional career. Remember: 3 and 4 digits is hobby income; 5 and 6 digits is professional income. Become a pro.
6. Think about this: when you’re spending time, are you wasting it or investing it?
7. Disassociation from the wrong people is just as important as association with the right people.
8. A few hundred “hellos” will help build every business. Networking is key.
9. Respect comes from the pursuit of success.
10. Trust is at best a very fragile commodity. It takes long to build, and once it is broken it is hard to re-attain it.
11. It is not about how many people respect you, it is about how many people you respect.
12. When working with people, do you do what you do for money or friendship? The first is useful, yes, but without the second you’ll never have pull with people.
13. Friendship is the only catalyst for stick-ability and growth. If your business has turned into a revolving door, check the friendship factor.
14. Ask yourself: “Is my heart open enough”? (Are you empathetic with people, no matter where they have come from? Are you non-judgmental enough that people will trust you?)
15. Always be open and honest. You need something? Tell people the truth as to why you need it. (This requires that you’re honest to yourself.)
16. While you should build friendships, you cannot let people you lead get too close. If they know all your flaws you’ll never be able to teach them anything.
17. Married folks: Are you writing down and working towards your goals as a couple?
18. It is important to know what your needs are, what’s important to you, as well as what your spouse’s needs are, and what’s important to your spouse.
19. What good is it to get your business goals accomplished if you lose your wife in the process?
20. Men: Make a decision every day to stay in love with your wife. It is important for you to know your wife like you knew her when you first started dating. This now, like then, is a choice. Don’t take anyone — especially her — for granted.
21. Pornography will take down even the greatest of men. It is an addiction more nefarious than even drugs or alcohol, since it can usually be better hidden and — thanks to the Internet — a lot more accessible.
22. Learn to have balance in your marriage. Stay fit for each other; work out together. Go to counseling if you have to in order to make sure your relationship works.
23. Couples: Work with each other’s strengths. Complement each other’s weaknesses. Learn what your spouse needs and wants. Don’t love your spouse because you need them, need your spouse because you love them.
24. This is especially for guys, but ladies listen, too: watch where your eyes go. As man thinks in his heart, so is he. Adultery is not a sin of the flesh, it is a sin of the mind.
25. Keep balance. Do what you need to in order to stay sane, and meet your own needs. You may have to be off balance once in a while, say for 90 days while you’re working hard towards a specific goal, but get back in balance as soon as you can. What good does it do a man to gain the whole world, but lose his soul in the process?
26. Don’t use your spouse as an excuse not to follow your dreams. Work things out as you see fit to get them done.
27. Economic freedom does something to the human spirit that can’t be done with anything else.
28. You have to change your thinking before you change your lifestyle (or reality). You have to guard your attitude, because attitude determines altitude.
29. When you talk bad about people, that reveals your character.
30. When you stop fighting for what you want, what you don’t want will take over the territory.
31. When you do not have a goal and no plan of action, then you have no faith in your dream.
32. What your degrees are or how many you have — it doesn’t matter. WHat matters is whether you have a dream. Your job as a human being is to awaken the dreams of people you come in contact with.
33. Aren’t you tired of putting things in the back-burner, just to watch them burn? Why do you do what you do? Why don’t you do what you don’t do?
34. There is no difference between the man who knows how to read and won’t, and the man who doesn’t know how to read. Knowledge and ability are all about the application thereof.
35. It’s easy to handle things when everything is good and positive. But what counts is how you act when you receive negative.
36. All people are creators. Every time they open their mouth they’re creating their own realities. As are you.
37. To create a new reality, first change your beliefs and your actions.
38. At the end of the day, always ask yourself “How did I move closer to the future I envision and want for myself today?”
39. Work shouldn’t feel like work: it should be an “I get to do this” instead of an “I have to do this.” This is one of the signs you’re doing or not doing what you’re supposed to be doing.
40. A story on focus from the Mahabharata: A teacher told his archery students “There is a deer over there. I want you to shoot it in the eye. The first student steps up and the teacher asks him “What do you see?” The student answered, “I see a deer with a forest behind it and –” The teacher stopped him. “Don’t shoot. You won’t hit it.” The second student came up and the teacher asked him “What do you see?” The student answered, “I see a deer, I see its head and I see an eye.” The teacher said, “Don’t shoot. You won’t hit it.” The third student came up and the teacher asked him, “What do you see?” The student answered, “I see an eye.” The teacher asked “Nothing else?” “No,” answered the student. “I see an eye.” This is the type of focus that it takes to do anything of worth.
41. Unity is not the absence of an opinion, it is the absence of rebellion.
42. If you’re not having fun working your business, sit down with someone you trust as a coach or mentor who is growing, and talk to them about whatever is going on.
43. Have the courage, as a leader, to look at yourself if someone you trust and respect tells you that you should, in order to grow.

How to Get Rich

Be a General

• If you are careful when finding employees, management becomes a lot easier.
• Keep the big picture [your ultimate goal] in mind while attending to the daily details. This can seem like a balancing act, but it is absolutely necessary for success in running a company.

Stay Focused

• I work as had today as I did when I was a young developer…

Maintain Your Momentum

• No matter how accomplished you are, no matter how well yo think you know your business, you have to remain vigilant about the details of your field. You can’t get by on experience or smarts.
• No matter what you’re managing, don’t assume you can glide by. Momentum is something you have to work to maintain.

Get an Assistant

• [An assistant allows you to leverage your time in the best possible way. A good assistant will allow you to get to the important things faster, while keeping the non-important things from cluttering your radar.]

Remember: The Buck Starts Here

• Set the standard. Don’t expect your employees to work harder than you do.
• Winners see problems as just another way to prove themselves. Problems are never truly hardships to them, and if you haven’t got any problems, then you must not have a business to run.
• Regard your company as a living, breathing organism, because that’s what it is. Those figures you see on your spreadsheets will reflect the health of that organism. Watch out for bad cells while allowing good cells to flourish.
• Having a passion for what you do is crucial. If you can’t get excited about what you’re doing, how can you expect anyone else to? If your employees can see and feel your energy, it is bound to affect them.

Don’t Equivocate

• [Call things as they are. If something is good, say so. If something stinks, say so.]

Ask Yourself Two Questions

• Is there anyone else who can do this better than I? … If your competition is better than you are, you need to offer some quality they lack.
• What am I pretending not to see? … Before the dream lists you into the clouds, make sure you’ve looked hard at the facts on the ground.

Bullshit Will Only Get You So Far

• I never try to dissuade people from quitting. If they don’t want to be here, I don’t want them to be here, either.

Every New Hire is a Gamble

• Do you work wholeheartedly or halfheartedly? Are you just going through the motions and hoping no one will notice? The only person you ever fool is yourself. You can’t fool others, even though you might think you can.

Ideas Are Welcome, but Make Sure You Have the Right One

• I like people who don’t give up, but merely being a pest is detrimental to everyone. Once again, fine-tune your discernment. Know when to ease up. Keep your antennae up for another idea and a more appropriate opportunity. Sometimes we hesitate with good reason.

Focus on the Talent Instead of the Title

• Very often, your resources are greater than you might think. I don’t like it when people underestimate me, and I try not to underestimate anyone else.
• [T]ry to see beyond a person’s title. you can find talent in unlikely places.

Manage the Person, Not the Job

• Nearly all men can stand adversity, but if you want to test a man’s character, give him power.

Keep Your Door Open

• Learning begets learning. I’d rather be stimulated than passive. You can’t wear a blindfold in business. A regular part of your day should be devoted to expanding your horizons.
• Learn something new, whether you think you’re interested in it or not. That’s the opposite of having a closed mind — or a closed door.

Think Big and Live Large

• The possibilities are always there. If you’re thinking too small, you might miss them.
• [W]hat’s the difference between losing $100,000 or hundreds of millions of dollars? Either way, you’ve lost, so you might as well have really gone for it.
• If you’re going to think, think big. If you’re going to live, live large.

PART II: YOUR PERSONAL APPRENTICESHIP (CAREER ADVICE FROM THE DONALD)

Take Control of the Job Interview

• [If you know you can do a job, don't be afraid to ask for the chance to do it, even at minimum wage, for a trial period. Action is worth a lot more than words, and your actions will prove to them you're the person they're after.]

Ask For Your Raise At the Right Time

• The best way to ask for a raise is to wait for the right time. It also indicates to your boss that you have a certain amount of discernment and appreciation for what he might be going through.

Be Tenacious

• At times, just about every executive will appear impatient, but to build something that endures, you have to take the long view.

Play Golf

• Being an entrepreneur, even within a large company, is a solitary game.
• [T]urn your passion into profit. The results of that passion will reward you in more ways than you ever could have expected. Passion is enthusiasm on a big scale. It is all-encompassing and consuming. People with passion never give up because they’ll never have a reason to give up, no matter what their circumstances may be. It’s an intangible momentum that can make you indomitable.

Brand Yourself and Toot Your Own Horn

• If you’re devoting your life to creating a body of work, and you believe in what you do, and what you do is excellent, you’d better damn well tell people you think so. Subtlety and modesty are appropriate for nuns and therapists, but if you’re in business, you’d better learn to speak up and announce your significant accomplishments to the world — nobody else will. [Gnorb's Note: From personal experience, this applies only when you are building something from the ground up. When you're part of a system, edifying the system will usually result in the system edifying you in turn, since people with just as much credibility (and more) as you will be the ones tooting your horn. Inform the system of your accomplishments and the system will inform the world of them. Leverage whatever tools you have in the process of self promotion.]

Go with Your Gut

Being an entrepreneur is not a group effort. You have to trust yourself. You may have superb academic credentials, but without instincts you’ll have a hard time getting to — and staying at — the top.

Be Optimistic, but Always Be Prepared for the Worst

• The ups and downs are inevitable, so simply try to be prepared for them.
• [Get a couple of stone tablets and carve this into them. Into the first, carve "Problems are Always Solvable." Into the second, carve "Problems are Unavoidable".]

Look Closely Before Changing Careers

• Anyone with more than a little curiosity and ambition will at some point be tempted to try a different challenge on new terrain. Take the risk, but before you do, do everything you can to learn what you’re getting yourself into, and be as sure as you can that you’ve got the right mindset for the job.

Avoid the Handshake Whenever Possible

• It’s a medical fact that [shaking hands] is how germs are spread. I wish we could follow the Japanese custom of bowing instead.

Pay Attention to the Details

• If you don’t know every aspect of what you’re doing, down to the paper clips, you’re setting yourself up for some unwelcome surprises.

Connect with Your Audience (The Art of Public Speaking, Parts I & II)

1. Think about your audience first. The rest will fall into place. Granted, having useful information will help, too.
2. Involve your audience. They will appreciate being included.
3. When you’re speaking, it helps to be prepared…if you read every day, you will already be prepared.
4. Be a good storyteller…Storytelling is a skill, so work on it. It’s helpful to listen to comedians. The good ones can teach you the art of great timing.
5. Think about the common denominator.
6. When you are on the podium, you are the entertainer.
7. Study Regis Philbin.
8. Be able to poke fun at yourself.
9. Learn to think on your feet. Memorable public speaking involves a good deal of spontaneity. [If you're not good at it, learn. Knowing your topic inside and out also helps. A lot.]
10. Listen in your daily life.
11. Have a good time…Before you speak, remind yourself that it doesn’t matter all that much. Don’t feel that the weight of the world is on you. Most people in the room don’t care how well or poorly you do. It’s just not that important. It’s merely a speech — not an earthquake or war. You’ll have a better time and be a better speaker if you keep it all in perspective.

Change Your Attitude

• If you have the right attitude, you can get where you’re going, fast.
• Having a high frequency will attune you to a wavelength that exudes confidence and clear-sighted enthusiasm. I’m a firm believer that this is half the battle of any enterprise.
• [M]y productivity was increased by a large percentage simply by learning to let go of negativity in all forms as quickly as I could. My commitment to excellence is thorough — so thorough that it negates the wavelength of negativity immediately.
• Negativity is also a form of fear, and fear can be paralyzing.
• Very often, negative thinking stems from low self-esteem. You have to work on this yourself.
• [S]ee knocks as opportunities and as insight into whoever is doing the knocking.
• [F]aith over fear. Faith can overcome the paralysis that fear brings with it.
• People who persist have courage, because often it’s a lot easier to give up.
• Maybe you’ve gotten to the point where you think you can’t get through another day. That’s shortsighted of you. You’re missing the big picture. You’re on the runway, but your fuel supply is the problem. You won’t get off the ground without it. Fed yourself some positive thoughts and you can take off at any time.
• Get going. Move forward. Aim high. Plan for takeoff. Don’t just sit on the runway and hope someone will come along and push the airplane. It simply won’t happen. Change your attitude and gain some altitude.

Start Visualizing Positively

• Keep a book of inspiring quotes nearby, so you can change a negative wavelength the moment it descends on you. Here are a few of my personal favorites:
  • Know everything you can about what you’re doing. — Fred Trump
  • I know the price of success: dedication, hard work, and an unremitting devotion to the things you can to see happen. — Frank Lloyd Wright
  • A leader has the right to be beaten, but never the right to be surprised. — Napoleon
  • He who looks outside his own heart dreams, he who looks inside his own heart awakens. — Carl Jung
  • Imagination is more important than knowledge. — Einstein
  • Continuous effort, not strength or intelligence, is the key to unlocking our potential. — Winston Churchill

Read Carl Jung

• As a safety factor, I very often see other people as a revolver that could be pointed at me. They are the gun. I, however, am the trigger. So I speak and tread carefully. It’s an effective visual aid to avoid conflicts, and I was unwittingly among people who were actually psychos underneath their dignified personas. We never know what will trigger another person’s killer instinct. It can be something that happened when they were five years old. So avoid being the trigger, and the revolver will not be a threat.
• You have to know yourself as well as know other people to be an effective leader…reading the work of Carl Jung [is] a step in the right direction.
• Reading Carl Jung will give you insights into yourself and the ways in which you and other people operate.

Have an Ego

• Having a well-developed ego, contrary to popular opinion, is a positive attribute. It is the center of our consciousness and serves to give us a sense of purpose…”Show me someone with no ego and I’ll show you a big loser.”

Keep Critics in Perspective

• There is constructive criticism, and then there are is destructive criticism. Here’s how to assess both types:
  1. First of all, consider the source. Should this person’s opinion even matter to you?
  2. If it does matter to you, take a few minutes to consider whether anything helpful can result for the criticism. Others can often see things that we have overlooked. Use their keen eyes to your advantage.
  3. Critics serve their purpose. Sometimes they serve a larger purpose, and sometimes they serve their own purpose.
  4. Everyone has an opinion. In most cases, it’s not worth the paper it’s written on.
  5. If the opinion is worth the paper it’s written on, and it’s written on a paper people are buying and reading, then realize that if people didn’t find you interesting enough for public consumption, they wouldn’t be taking the time to criticize you. Think of their criticism as a compliment, proof of your significance.

Homework Is Required and There Will Be a Test

• People who think achieving success is a linear A-to-Z process, a straight shot to the top, simply aren’t in touch with reality. There are very few bona fide overnight success stories. It just doesn’t work that way.
• Every industry and profession has its bottom line for what is required to succeed. If you can’t stand to practice every day, being a musician is out of the question. If you hate to exercise, being an athlete is not for you. In business — every business — the bottom line is understanding the process. If you don’t understand the process, you’ll never reap the rewards of the process. You’ll never last long enough to achieve your ‘overnight’ success.
• We can learn from our mistakes, but it’s better to learn from our successes. When I hear people say, “Well, it was an interesting experience,” I can usually safely assume they are deferring to something that didn’t work out the way they’d planned. I don’t find my goof-ups to be amusing or interesting.
• We all know what it’s like to pretend to study. There are some courses in school that just don’t hold our attention. If you are choosing a career, keep that in mind. What most holds your attention? [What do you like about your business or profession? What do you not? How can you turn this into an advantage?]

Again, these were just a few of the nuggets I got from Trump’s book How to Get Rich. There was a ton more information in there, so if I were you I’d pick a copy up and start reading it. Even if you’re not in business, and even if you don’t like Trump, you know he knows his stuff, and his stuff is a lot more than just real estate and casinos.

Business School Podcast for Free: America’s leading business schools — Wharton, Duke’s Fuqua School, Harvard — are all making courses available for download via iTunes. (If you expect me to tell you why this is good, you’re wasting your time. Go check it out now.)

The Perfect Mark: Ever wonder if anyone actually ever falls for those emails we all get promising to make you rich if you help out some Nigerian widow stash US$45-million in your bank account? Wonder no more: the answer is yes, and who they ensnare might surprise you. This New Yorker piece is an actual story about a guy who, in his greed and pride, fell victim to these scammers and ended up in jail for it. [Source: Black Marks on Wood Pulp. Also, reminds me of this previous Gnorb.NET piece on avoiding CraigsList scammers.]

Becoming Human: So, how did we get from where we were 4,000,000 years ago as simple, knuckle-dragging Australopithecines to the current state of Homo Sapiens? This very interesting Flash video shows you where we came from and how we got here.

Washington’s Farewell Address Translated into Modern English: In the course of human history, not many have had quite as strong an impact as General George Washington, the first President of the United States. His farewell address is agreed upon by historians to be one of the finest in all American politics, since it deals with issues we struggle with even unto this day. The problem is that since it is written in 1790’s English, most people today can’t really understand it, which is why xkcd undertook the task of translating the piece into modern English. One his commenters upped the ante, reposting a modern day translation of the American Declaration of Independence.

The Height of Hubris? Ever seen the movie Gattaca? In it, the main protagonist is a lowly, genetically inferior human trying to get to space. In the process, he begins transforming his body, one of the ways being limb-lengthening surgery. In this BetterHumans piece, Simon asks whether his personal desire for such a surgery (available from a reputable source for as low as US$20,000 in China) is hubris, or whether he really is justified in wanting to make himself taller. After all, “The majority of CEOs are over six foot, the taller US presidential candidate tends to win the election, and people earn more money, on average, with each extra inch of height.” Here, he outlines reasons for and against the surgery. A very interesting read, especially for those interested in Transhumanist topics and cosmetic surgery.

The Last Question: So, we’ve seen where humans came from and where we are. Now, where are we going? Sci-Fi legend Isaac Asimov tells a short, trillion-year tale of how this whole human experience might end, and maybe how it began. “The last question was asked for the first time, half in jest, on May 21, 2061, at a time when humanity first stepped into the light. The question came about as a result of a five-dollar bet over highballs, and it happened this way…”

Multi-Touch Monitors: This is seriously cool. In this video, Jeff Han and Phil Davidson demonstrate how a multi-touch driven computer screen will change the way we work and play.

Holy Crap! Is This Real?! And now, for something totally different.

Online Game: Dodge: Simple and Addictive: Does it get any better than that? It’s the kind of game that keeps you as entertained as a stoner watching a side-loaded washing machine. Whoooa…. hey, nachos!

Well, that does it for this week. You can check out the previous episodes in the Le Linkage category of Gnorb.NET.

This has been one really screwy week. I’ll start with last night and sort of jump around from there.

For a few weeks now, The Wife and I have been talking about rearranging the furniture in our apartment. While the setup we have isn’t all that bad, the desire for a home-office area has been a pretty strong one.

Currently, our home office area consists of a bookshelf, a desk, and two storage racks in the storage closet. Unfortunately, everything’s not all in one place: it’s strewn about the apartment, with the different items in very different places within the house, none of which are really easily accessible. Living in an 800′ compartment, this arrangement just screams I look nice, but I’m just sort of ‘here’.

The biggest problem with this arrangement is that it makes it hard to track some client-related materials which, by their lack of prominence, are costing me money in the long run. Not good.

As such, we’ve decided to rearrange the furniture in our apartment so that it is more business friendly.

The first step in all of this was to buy a better laptop for business use. As I’ve mentioned before, our 600MHz PIII Inspiron 8000 running Windows ME just wasn’t cutting it anymore. Mind you, it makes a great laptop for just taking somewhere and writing, so it’s not all bad (especially when I load VidaLinux (VLOS) on it), but it isn’t up to the task of doing things like running Money 2006, Word 2000, Excel 2000, WinAmp video, accessing a wireless connection, and running Firefox all at once. If those seem like stringent standards to you then sorry to inform you, but you’re obviously not a computer geek. Not that there’s anything wrong with that.

We ended up picking up an Inspiron 1501 for about $1200. It came with a $300 discount, so we were fairly happy with it, and includes a AMD Turion 64 x 2 TL-50 (1.6GHz/512KB), 1gig RAM, 120gig hard drive, 9-cell (5.5 hour) battery, Microsoft Office Basic 2007, PC-cillin Antivirus (2 years, I think), Windows XP Home (no Media edition available in business computers), 2-year at-home service, accidental damage protection, and a car/air power plug. We figured that while this isn’t exactly a graphics and multimedia powerhouse, we don’t exactly expect to be playing World of Warcraft: Burning Crusade or anything nearly that graphics intensive on it, so it’s fine with us. (I might get Civ IV, but only for those long plane rides, and when I’m really really bored.)

In addition to the new computer, we needed to get a couple of bookshelves. This would give us more storage place for our (my) ever growing collection of books, as well as some of the customer-related materials. A couple of weeks ago went down to Target to pick up a couple of bookshelves which matched the bookshelves we already had (since we also bought those at Target) and picked them up on special for $15.00 each. Unfortunately, this was two weeks ago: after we bought them, the boxed bookshelves sat behind the couch, gathering dust until last night. I’ll come back to these.

The past couple of weeks at my job have been pretty stressful. With a software release upcoming, the job of the technical writer has shifted from documenting existing software, to keeping up with the constant last minute changes from all the programmers, to making sure he knows about the last minute changes so he doesn’t spend hours documenting something which no longer exists. As annoying as this sounds, this isn’t inherently bad: I enjoy the excitement, and since I actually like my work (most of the time), it’s not something I mind. Last week, however, things went from stressful to annoying: because of the quickly arriving deadlines, in order to get the job done (and get it done right) I had no other choice than to stay late every night, usually until about 10:30pm. (To put in in perspective, I normally work from 8:30am to 5:30pm, so the extra time was about 4-5 hours, depending on the night.) Add to that my weekend work time of 8 hours on Saturday, 4 hours the previous Sunday, and I’m sure you can tell last week was a pretty long week for me.

(By the way, if you’re wondering why I haven’t written all that much, this is the biggest reason why: I’ve been at work. A lot.)

On the bright side, I seem to have gotten a lot more work done from the hours of 5 to 10 than 8 to 5, which is why I got to thinking that maybe I should ask my boss to hook me up with a laptop. Heck, I can do most of my job from home anyway, if I can do it at night, then all the better: I hate working during the day, preferring instead to work when it’s dark. (The later, the better.)

Another bright side is that I got to watch a lot of sci-fi shows and movies via WinAmp (Shoutcast TV, actually): Lost in Space, The Matrix, Swordfish, War Games, The Day the Sky Exploded, Stargate SG-1, and a few others. While I’m not much of a TV person, the infusion of sci-fi was a welcome one. I needed to do something to relax.

As all of this was going on I was informed that my “uncle”, Berto (my maternal grandmother’s brother) had just passed away. He was the closest thing to a maternal grandfather I had, the man who taught my dad about the pizza business (the primary source of income for our family for the first decade of my life), and the closest thing to a father my mom ever had. My mom took an immediate flight to Puerto Rico when she found out, but the death was especially hard in light of recent events: her aunt (my grandmother’s sister), who she was also very close to, died in December. Here’s the reall scary part: all of them — my grandmother, her brother and her sister — all died of diabetes. Needless to say that this makes for a very uncomfortable reality for my mom, as well as for the rest of us: Puerto Ricans have something along the lines of a 25% rate of occurrence in diabetes, and even with drastic changes to our diet, there is still a very large possibility we’ll end up with the condition.

Anyway, so back to the job: Friday night I finally got where I wanted to get as far as documentation was concerned. I could have gotten further ahead by going in yesterday (Saturday), but decided that I needed to spend some time with The Wife. Frankly, I couldn’t have picked a better day: 75^oF, just a couple of clouds in the sky, and soft winds. The perfect Florida day. I got up early to go work out, then got to spend some time in the steam room, the sauna, and the jacuzzi. I was tempted to spend a bit of time out on the beach: the white sands and deep blue water were particularly inviting. But it was almost 10:30am by this time (I had started working out at 7am) and I wanted to spend time with The Wife, even if she hadn’t yet woken up.

While yesterday was fun — we went out to eat and went to a couple of places for fun — I was really excited about what we would be doing at night. Remember those bookshelves I talked about earlier? Well, the plan was that we would go ahead and build those, then re-arrange the furniture into whatever new configuration we decided. This is when things got ugly.

Now, a disclaimer: I suck at manual labor. SUCK. Badly. Harder than a Hoover. And I hate it: I hate building computers, I hate working on cars, and most of all, I hate — haaaaaaaate — building bookshelves using crappily written instructions. (I also hate computers, but that’s another matter entirely.) Nothing brings out my anger more than having to build something like a computer or a bookshelf. That’s because since I suck at it, I usually do it wrong. Seriously, I’m a pretty talented guy, but when it comes to stuff like this, I stink out loud.

So, three hours after I started, I finally finished the first bookshelf. Unfortunately, it was wrongly built, since all the shelves were upside down, and the bookshelf looked hideous. Frankly, I didn’t mind all that much — after all, they were going to be covered in books — but The Wife… she likes her style. So, in order to make her happy. I tried to take the bookshelf apart. This turned out to be a rather huge mistake, since cheap Chinese particle board doesn’t exactly take well to being taken apart. Before I knew it, the bookshelf had already broken. In frustration, I decided to help it along by destroying the rest of it with my mighty hammer.

Man, that felt good. It left me with a shattered, useless bookshelf, but man… that felt good. I should smash up stuff I’m angry at more often.

Scratch that. No I shouldn’t.

About an hour later — after I had cooled down some — I started building the second bookshelf. By now it was midnight, and I couldn’t get to sleep. The Wife decided to help me out, probably for my own safety. In about 30 minutes we got the bookshelf done. While we didn’t get to re-organize the house like I wanted, that little act alone was enough to give me a small measure of peace, enough to sleep, at least.

This morning I got up around 8:30am. The first thing I wanted to do is write a bit and catch up with my life. I have a number of blog entries I want to get out, but most importantly, I need to start working on a story I’m writing for a book I’m collaborating on with other 9Rules members. Seeing as I’ve also been chosen as/picked up the role of managing editor (I guess) I have to get a few things moving with the book. Last thing I want is to see a project like this fall to the way side because of laziness and excuses.

With that I’m off to do my life thing. Plans for today include buying a new bookshelf to replace the smashed one, cleaning up the house (which looks like a bomb exploded in it), upgrading to Wordpress 2.1, and continue working on the 9Rules book project.

[Edit: During the process of moving the second bookshelf so I could clean up the remnants of the first, that one, too, broke. I really, really hate this.]

My favorite answers came to questions #4, #8, and #11: “…it’s a productive way to spend my chill time…”, “…I was destined to succeed, and I kept focused on that…”, “…don’t give up…” Check out the interview to understand these disembodied quotes.

(Thanks to fellow 9Rule member Edward Mills (Evolving Times) for the tip.)

Now, dear reader, here’s one for you: If you could ask Donald Trump anything, what would it be?

The Story
The Wife and I went into a local gym for information about their services. I’ve been working out for a while using the small gym our apartment complex offers for residents to use and although I’ve been fine with it until now, I find myself in need of a wider variety of equipment. (Not to mention the fact that every so often the the gym’s equipment, especially the cardiovascular equipment, is in short supply. I guess two treadmills, a elliptical glide and a stationary bike just don’t cut it during the 6:30am rush.)

We started out by asking for an information packet at the front desk. With apparently none available, we were instead sent to see Josh. (I later found out that this gym just didn’t have any information packets, just sales presentations.) When we met, we explained to Josh that all we wanted was information: we weren’t looking to make any decisions that day. This was followed up by a basic sales question: “If you felt you found just the right thing, would you be willing to make a decision?” Well of course if I found “just the right thing”, I’d make a decision in a second, so I said “yes.”

NOTE: Bad move on my part. As a buyer, if you say you’re not looking to make a decision, stick with that answer. You can always change your mind. However, I was made to feel that if I didn’t answer “Yes”, then my information would have been very limited.

Now, the right thing for me at this time would have been a plan where I’d pay about $30/month for usage at least 5 days a week starting at 5:30am. I already have a trainer (Mr. Renato), already take a great multivitamin/phytonutrient supplement, and didn’t have much time to indulge extra luxuries such as classes. This never came up, however, since he never once listened to what it was that I wanted, presuming instead that the one of the packages he tried to cram down my throat was “just the right thing” for me. I hinted at this often enough, even to the point of telling him directly “this is what I’m looking for,” but he never got the message. More on this as the article goes on.

Salesperson Mistake: Not listening to what the customer is telling you. When asked, people will always tell you what they want. You just have to be able to listen, not just shut up while you wait your next turn to talk. Sometimes what they say isn’t as important as what type of questions they ask, since that’s usually a better indicator of what they’re looking at and for: it tells you what they’re observing, hence what’s important to them. Also notice their body language, notice when they’re interested and engaged, and when they’re not really paying attention. Adjust your presentation accordingly. Finally, remember: SILENT and LISTEN are made up of the same letters.

As Josh took us through the gym, we thought it was great: pools, steam rooms, saunas, about 100 different classes, and — of course — personal training. It was like being in a spa. It had everything anyone could ever want! But was was overkill for our needs at this time. (Key in on those last 3 words, “at this time.” They’ll be important through this story.)

By the time we got into his office we were convinced that this was a great gym, and that we would seriously think about it. That we would think about it never really came up, since Josh was insisting that the sale take place right there and then, again making us feel like if we weren’t definitely making a decision, we wouldn’t get any information. Nevertheless, since we wanted more information, and since I offered the possibility of a sale at that date, which Josh gladly gave it us. They had diet plans, vitamins, and adhered to the most rigorous physical fitness standards in the country. It was pretty impressive until he mentioned that those “physical standards” meant that we would be locked into at months of physical training sessions at least twice a week at about $65 per session. (Did I mention I already had a trainer? I told him this various times.)

By this time it was obvious that this guy was displaying one of the top flaws found in too many a rookie sales person (and some veterans, too). This is the flaw they’re most often associated with, whether rightfully so or not: the attitude of “you have my money in your pocket.” This type of attitude sees the closing of a sale as an end and not as a beginning. This is a fatal flaw in the sales profession, since a sale can always be the beginning of a relationship which can lead to the holy grail in sales: referrals.)

By this point, I decided to call a complete stop to the matter. I wanted as much information as I could get — that’s what I was there for. The final straw was when we talked about pricing. He quoted me some prices — all of which were ridiculously high — focusing on only two of their packages: the very best (and most expensive) and the most limited (the least expensive). This made me feel like I could only choose one of the two, that any of the other middle packages were not an option. Now, I didn’t have much of a problem with that since he was just trying to control the flow of information to his favor (not something I agree with, but something I understand). What I had a problem with was what he did next: when I finally told him I would think about it, that I would need to take the numbers home to think (we were talking about amounts over US$2,000), he quickly grabbed the pricing sheet and threw it away. Apparently, taking the numbers home was not an option: I could only have the information right there and then. This made it blatantly obvious (as if it wasn’t already) that the only reason he was being so forthcoming with the information was that he was expecting to make that sale right now, whether by hook or by crook. (More the later than the former.)

There are two sales philosophies most people will encounter. The first philosophy — the one everyone likes, but people rarely see, or associate with salesmen — is the attitude that “I’m here to assist the customer get the best possible solution, and I’m convinced what I have to offer will likely fill that need.” The second philosophy — the one everyone hates and mostly associates with salesmen — is the attitude that “I’m here to close the sale.” This is what I like to call the “Tinman Sales Philosophy”. Josh was definitely one of these tinman.

(The reason I call this the “Tinman Sales Philosophy” is because there was once a group of salesmen who sold siding for homes. These folks were called Tinmen, and the way they would operate is by going to a customers home, making the sale for new siding, and collecting half the money right there. After they collected the money, the Tinmen would get to work: They would essentially rip out one of the walls in the house. After they were done ripping the wall out, they would cover the hole and tell you that they would complete the job once you paid the other half. Needless to say, this left a lot of people with a very bad opinion regarding salesmen, most of who are actually not only great people, but a positive influence in our economy.)

Anyway, a few weeks after the incident, I got a call from Josh. (This is called the “follow up” call.) During the conversation he was basically dismissive and rude, trying again to just get the sale: not to have me come in again, not to give me more information, not to broker a better deal, just to make the sale based on numbers I could no longer remember. Needless to say, I kept the conversation short this time, telling him that I wasn’t at all interested in what he was offering. Instead of asking the one question which would have possibly have saved him the sale, he simply hung up.

By the way, for you salespeople, the question you always always always want to ask is “WHY?”. You always what to know why a person is doing anything. This way you can address the problem, if it is addressable. For example, suppose you ask a person why they don’t want to join your gym. The first answer they may give you is “Well, I don’t have the time” or “it doesn’t fit into my schedule.” While all this is well and good, a followup response like “if we could figure out how make the best of your schedule in order to let you maximize your time here, would you be ready to make a decision?” might have one of two results. The first result is that the person would say either “yes” or “no” and simply leave it at that. The second result — the more likely of the two — is that the person would then come out and tell you the real reason they don’t want to make a decision to proceed.

When dealing with a salesperson, people will often give two reasons why they decide not to do something: a reason that sounds good, then the real reason. The only way to get to this is by asking questions — especially why — and then listening. Josh never really did any of those things.

If you’re in sales and you find yourself struggling (or being too polarizing, like I later found out this fellow had been fired for being) I would suggest that you check out the book How I Raised Myself from Failure to Success in Selling by Frank Bettger. The book is a foundational work on the art of salesmanship, and has taught me not only about how to properly listen and find out a person’s “why”, but also about different sales tactics, and how not to trap people (or get trapped) into believing that I, the salesperson, care more about myself and the sale than the customer’s needs. While caring more about myself and hard-balling customers into making a decisions may be effective in the short run (it may get you sales to someone who’s genuinely looking), in the long run it will not help generate leads.

(By the way, if you deal with salespeople on a regular basis, I also highly suggest reading this book, since it will teach you how to spot a good salesperson, someone who actually cares about the long-term status of your relationship and satisfaction, and how to spot a Tinman.)

With that, I’ll bring this to a close. Hopefully this post will help you deal — if you have to — with a bad salesperson in the future, and curtail any bad experiences they may be setting you up for.

Matt, an old friend of mine, has an ability to pick out social issues and put forth points so convincingly that there is little middle ground left to be in. You either agree with him or you don’t. More often than not, I get trapped into posting incredibly long replies to his posts — often longer than the posts themselves — and with his last post, it was no different. Basically, the post argues that we should de-emphasize government funded space exploration and instead take on more planetary issues, like child hunger. What follows is my response to his post. (I figure that if I spent a good chunk of time posting it there I might as well post it here, too.) If you’re interested in this issue, drop me a line here, or better yet, drop by Matt’s blog and share your thoughts.

This is a particularly interesting issue for me because of recent developments within the business community regarding space exploration.

On one hand, I am of the opinion that both space exploration and colonization are moral imperatives. These are missions which we as a people have a moral obligation to pursue and complete. With our level of advancement, it would be not only illogical but also deeply immoral to future generations for us not to continue on this pursuit. Contrary to your statement, space stations on the Moon and manned missions to Mars are not only reasonable, practical, and achievable, they are a mandate upon our generation from future generations.

Like you, however, I find that the weaponization of space, while understandable, is neither desirable nor logical at this time. Nevertheless, it seems as if human history is littered with examples of advancement through weaponization, and this may be no different.

That said, I also find that the current status of space exploration is deplorable at best. We are currently talking about going back to the moon like it is a much more monumental task than it was in 1969, when computers at NASA were much less powerful than the PC I’m currently using to type this message. There has been almost no advancement in the human space exploration program within the past 40 years, save for the pressure now being laid upon us by the Indians and the Chinese. The Russians are doing the right thing by transforming themselves into the first commercial space agency, and it is time that we do the same. The example of Burt Rutan and Richard Branson, where they’re basically laying in the groundwork for commercial space exploration should be followed. Whereas we’re currently spending billions for one flight at taxpayer costs, Americans can get 10 times the value for the dollar by letting the private sector do this. A profit motive will always bring out the genius of men to a greater good, if their profiting depends on the greater good. Nevertheless, NASA won’t see it this way, since it is usually hard to get people to understand a matter if their paycheck depends upon their not understanding it.

Regarding feeding starving children: this is a sticky subject for me. While I could understand that doing this would be a good thing, generally speaking, foreign aid of any sort weakens a population’s political will, thereby separating them from their government, thereby creating a status quo in which the government does not respond to their populace, since the populace doesn’t demand change. It was this demand for change that created the governments of today, transforming Europes monarchies into modern day democracies (starting with the US, then continuing on in France and South America). Yet, by taking that opportunity away from a people, we condemn them to a corrupt and lazy government. Unfortunately, countries which find themselves to be oil rich also tend to follow this pattern, where the government holds on to its power simply because of the level of money being poured into it. As harsh and evil as this may seem, the question is what’s in it for the American tax payer? After all, if he’s footing the bill for feeding a starving kid somewhere in Africa, where’s the return on investment?

Personally, I don’t believe there needs to be a return on investment, that life itself is to sacred to even look at such a thing. But while the person may believe that, the populace as a whole may not, since they may not agree as to which causes are worthy our tax money. So again I ask, where’s the ROI? After all, helping starving kids in the middle east hasn’t helped us much (except in Iran, oddly enough, where the younger generation would welcome relations with the US in a second, as would the younger generation here welcome relations with Iran in a second, if the elder generation wouldn’t keep getting in the way) and in both Asia and Africa, it has created a humanitarian crisis of epic proportions. Why should a government of one nation take care of the people of another? This should be left to individuals.

As a government, I support the investment of economic infrastructure in order to empower people (and not their governments), since this will lead to the rise in the power and clout of the individual, and it will also lead to better relation with that government — more trade means more economic opportunity, which leads to more unity among the countries’ populaces. As for humanitarian aid, I’m firm in the belief that private organizations should engage in this, and that governments should not worry about taking care but for their own people. (Even then, the help offered to people should be limited, based on their ability to build a future: an elderly man would need much more help than a 30-year old homeless man, since the younger of the two can still do something with his life, but I digress…)

In the end, Matt, while I do agree with both of your issues, the correlation between the two is a weak one. A stronger case can be made that we should be creating more economic opportunity in the space arena and allow federal agencies to benefit from private industry’s developments. That would not only make the government smaller (and more dependant on its people, instead of the other way around), it would also make the new technologies much more accessible to developing nations, thereby strengthening their own economic infrastructures and allowing them to take care of themselves (with maybe a little nudge in the right direction from investment and humanitarian programs.)