‘Boots’ theory

‘Boots’ theory of socioeconomic unfairness

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Vimes  ‘Boots’ theory of socioeconomic unfairness

 

The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

From ‘Men at Arms’ by Terry Pratchett.

Vimes is the Commander of the City Watch, the police force of the Discworld’s largest city, Ankh-Morpork. Night Watch another novel in the Discworld series is one of my all time favorite books.

My take away from this is to purchase items that will last. I recently bought a new gym bag for 40$, The store had one for 25$ but was not water proof and was made from cheaper materials. I would rather buy one 40$ bag then two 25$ ones any day. There is a difference between being cheap and frugal. Don’t equate the lowest price with the best price. The long term savings for many products is not always clear but there is some truth to the saying “you get what you pay for.”

 

 

How to set up a DBA

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How to set up a DBA

Based on previous posts you may think by DBA I am referring to a Database Administrator, but in this case DBA is an abbreviation for “doing business as.” I recently open up Tevunah Consulting and want to share the experience of creating a DBA. If you’re a sole proprietorship, you need a DBA to register your business name. Once you have registered a DBA, you can open bank accounts and conduct other business activities using the business name rather than your own name.

What is needed

  1. A name
  2. Find relevant forms
  3. Mail in the forms and money order
    • Usually the clerk requests you to send a stamped return envelope
  4. Publish notice, if required

Cost

  • $35 Money Order
  • $2 Notary fee
  • $1.18 for envelopes and stamps
In total $38.18, just under $40 to register a DBA in Nassau County. I suggest a DIY approach instead of Legal Zoom as they charges $99 + state filing fees for the standard package. In NY outside the 5 boros the total would be $159. Filing yourself would save $121.

Disclaimer

I am not a lawyer, talk with an attorney and/or CPA to learn more about what are your best options to start a business.

Life Insurance

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I spent a summer working as a Financial Representative Intern, which boiled down to me calling people and trying to sell them life insurance and annuities. From the internship I learned about the different types of Life Insurance and what the differences are.

Life insurance can be divided into two basic classes: temporary and permanent. and within these classes are sub-classes that exist for a better fit of one’s needs.

Term insurance

Term gives life insurance for a… you guessed it a specified “term”. The policy does not accumulate cash value. Term is cheaper for the same amount of coverage compared to whole life.

There is also renewable term in which you can keep renewing your policy without getting another physical every renewable period. If you are over 80 the chances of being able to buy term is low.

Permanent life insurance

Permanent life insurance is permanent as long as you pay the premiums.  A permanent insurance policy accumulates a cash value. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, but it’s a loan, to get your policy back to normal, you would have to pay back what you borrowed plus interest. Similar to a 401(k) borrowing from your insurance policy is not recommended.

Who needs Insurance?

You don’t need life insurance if you are single with no dependents. But if you have a family that depends on you, then you may want a life insurance plan that can take take care of them when you are gone. Also note that the older you are the more expensive insurance is for the same amount of coverage. Another class of people that insurance makes sense for is the ultra wealthy, who would want to minimize estate taxes. The main purpose of life insurance is to provide for your dependents when you die, not as an investment vehicle while you are alive.

One piece of advice you see online is “buy term and invest the difference.” I agree this is a smart idea, on the condition you have the discipline to invest the difference. Now this changes if you work in the industry, by having the internship and 10-55 certified I was able to keep half of the first years premiums. I personally have a small 65-life plan with Northwestern Mutual. I make one annual payment, and got categorized in the highest health bucket, both of which reduces how much you need to pay for the coverage received. Not only being a great sales tactic, the lower fees will explain why when you speak with a financial representative he or she will usually have a multi-million dollar policy.

[One summer does not make me an expert, and I recommend further research before making insurance decisions.]

 

[Book Review] I Will Teach You To Be Rich

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I Will Teach You To Be Rich

A great book on personal finance, the title is a bit of a turn off, but the content is real, and I had great results following his advice.
“One of the key differences between rich people and everyone else is that rich people plan before they need to plan.”
The book is broken into “Six Weeks of Action Steps”

WEEK 1:

You’ll set up your credit cards and learn how to improve your credit history (and why that’s so important).
I use Credit Karma to check in every quarter, and I get an email alert if any large changes happen. Ramit shows that having excellent credit can save hundreds of thousands of dollars over a life time on your mortgage, by being proactive in trying to up my score I have a 760+ Credit Score. There are also sections on how to get out of Credit Card debt which thankfully I have never been in.
Current Credit cards:
  • Capital One Quicksilver: 1.5% cash back on everything, no annual fee and no foreign transaction fees. This was my first card as I had a Checking account with Capital one
  • Chase Freedom: Rotating rewards, highlights are 5% back on Amazon and groceries, no annual fee
  • Chase Sapphire Preferred: I got this card because I knew I had a large purchase coming up and wanted to get the sign up bonus. 95$ annual fee after the first year, but I did the math and the card is worth the fee with the amount of purchases I make on travel and dining.
In the last two years I have earned $2,000 in rewards.
Set up Autopay, this was a no brainier for me, automate whenever possible. I never miss a payment and check in every month to see that nothing on a high level looks wrong.

 

These are the factors that determine your Credit Score
  • Credit card utilization
  • Payment History
  • Derogatory Marks
  • Age of Credit History
  • Total Accounts
  • Credit Inquiries
Ramit then writes about paying off debt aggressively.  For my student loans I set up autopay which reduced my interest rate by 0.25%. Also he shows how an extra $100 a month can save years off repayment.

 
WEEK 2:

You’ll set up the right bank accounts, including negotiating to get no-fee, high-interest accounts.
“We need to set up accounts at a reliable no-fee bank and then automate savings and bill payment.”
I switched from my normal “Smart” Saving account at .05% APY, to the Capital One 360 Savings at 0.75% (2016 Numbers). Also my Checking account went from 0% to .20% APY.
$10K at .05% over 5 years would show 25$ in growth, compared to $382 at .75%. A win of $70 a year for a 10 minute call sounds good to me.


WEEK 3:

You’ll open a 401(k) and an investment account (even if you have just $50 to start).
At work I’d always take full advantage of the match offered for the 401(k). I opened an IRA with Betterment as they have no minimum to start. A diversified portfolio, clean UI, and great customer service.


WEEK 4:

You’ll figure out how much you’re spending. And then you’ll figure out how to make your money go where you want it to go.
Use Mint! Find out where your money is going.
Negotiate a raise: Youtube Playlist. After a quarterly review I used the tactics in this book for a $10K salary raise.
 Ramit is against the cut back on lattes to become rich strategy.
“Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t”

 
WEEK 5

You’ll automate your new infrastructure to make your accounts play together nicely.
Discussed above, I am a big proponent of Autopay.

WEEK 6

You’ll learn why investing isn’t the same as picking stocks – and how you can get the most out of the market with very little work.
More informational than directly actionable for me, would suggest reading “A random walk down wall street” for more on passive investments..
Title I will Teach You to be Rich
Author Ramit Sethi
Genre Personal Finance (Ranked #1)
Pages 266
Cost  $7.88 Kindle
First Published  2009
Reading Time  4 Hours
Rating Worth the buy; Pays for itself

 

There is more information in this book like how to choose the best funds, buying your first car, planning for a wedding and other big ticket items. I enjoy Ramit’s style and he writes great content that’s free.

For more information see his blog at  iwillteachyoutoberich.com

Amazon Link: I Will Teach You To Be Rich

 

2016Q1 Book Review

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2016Q1 Book Review

My reading list for 2016 Quarter one. Every quarter I like to read a mix of genres skipping around fantasy, business, and self development

Doing Good Better

How effective Altruism can help you make a difference. This book had a great content and has changed the way I think about charity and making a difference. The Author William MacAskill has a framework of his five questions to ask before donating.

The five Questions

  1. How many people benefit, and by how much?
  2.  Is this the most effective thing you can do?
  3.  Is this area neglected?
  4. What would have happened otherwise?
  5. What are the chances of success, and how good would success be?

Using the quality-adjusted life year metric on where to give the most effectively. I made a donation of 50 nets to the AMF againstmalaria.com to help prevent malaria in Africa. A takeaway I enjoyed from this book is earning to give as a great way to impact the world compared to working at a non profit.  My personal charitable practice is 10% of my post tax income to charity, with the bulk going to a local synagogue, then charities that have a 100x Multiplier effect.

Flashboys

Heard a lot about Michael Lewis and this is the first book I read by him. I enjoy his story telling and the way he structured his chapters. Flashboys takes you into the world of High Frequency trading,

Great read, didn’t know much about HFT before. Could have been better by being more balanced instead of an all out attack on HFT.

“The world clings to its old mental picture of the stock market because it’s comforting; because it’s so hard to draw a picture of what has replaced it; and because the few people able to draw it for you have no interest in doing so.”

“Once very smart people are paid huge sums of money to exploit the flaws in the financial system, they have the spectacularly destructive incentive to screw the system up further, or to remain silent as they watch it being screwed up by others. The cost, in the end, is a tangled-up financial system. Untangling it requires acts of commercial heroism—and even then the fix might not work. There was simply too much more easy money to be made by elites if the system worked badly than if it worked well. The whole culture had to want to change. “We know how to cure this,” as Brad had put it. “It’s just a matter of whether the patient wants to be treated.”
― Michael Lewis, Flash Boys

The Magician

Every Quarter I like to read at least one fantasy book. This is the second book in The Secrets of the Immortal Nicholas Flamel Series. This was a quick and fun read to get me out of my head. I am a big fan of mythologies and this series is worth reading.

 

Jewish Meditation

I’ve been hearing more and more about mediation these past few years, and bought a 12 month subscription to Headspace in 2015. I did get some benefit from the guided meditation but felt I was ready for an unguided experience. This book is filled with applicable and useful techniques for people that are interested in learning about meditation.

Impact from this book

  • Mantra Meditation: nearly every day for 30 days
  • More mindful while praying

This is a book I’ll be revisiting from time to time.

Zero to One

Kept hearing about this book on the Tim Ferris podcasts, the library didn’t have this book available in the kindle format and I thought it was worth the purchase.

The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.

 

Questions Thiel says “Every business must answer:”

  1. The Engineering Question Can you create breakthrough technology instead of incremental improvements?
  2. The Timing Question Is now the right time to start your particular business?
  3. The Monopoly Question Are you starting with a big share of a small market?
  4. The People Question Do you have the right team?
  5. The Distribution Question Do you have a way to not just create but deliver your product?
  6. The Durability Question Will your market position be defensible 10 and 20 years into the future?
  7. The Secret Question Have you identified a unique opportunity that others don’t see?

Ended  up being worth the purchase and would recommend to any entrepreneur

Amazon Links

  1. Doing Good Better
  2. Flash Boys
  3. Jewish Meditation
  4. The Magician
  5. Zero to One

Online Learning

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“I have never let my schooling interfere with my education.”
-Mark Twain

Online Learning

     I believe most learning happens outside the classroom, and have learned more of my day to day skills for work online than at college. I started with Prof. Gilbert Strang’s classes on Calculus reviewing for AP calculus BC. I had a great teacher, but at the time I could not concentrate during class. I needed the ability to pause and rewind parts of lessons. I ended up getting a 5!
     During Undergrad I supplemented most of my Math classes with the MIT OpenCourseware and the great Statistics 110: Probability class by Joe Blitzstein. Having the lectures on demand helped me review any topics I had trouble with and give me extra problem sets. My Linear Algebra Professor called me out after a test because I solved the equations in a way not covered in class. When I told him I was taking the class from MIT he recommended the lectures on Eigenvalues to the class. I was able to get world class education online, and have regular in person office hours which was a great combination.
     During my Senior year I had thoughts on becoming an Actuary but wasn’t 100%, so to improve my chances on getting a job I knew I had to learn to program. I took a programming class at Geneseo on Java and felt like I learned nothing. I did not stop there since back in elementary school I remember playing with “Turtle graphics” and was fascinated with the ability that I can write commands on the screen and see the output executed exactly. I wanted to recreate that feeling and was pointed towards Python
I wrote 20 short programs in Python yesterday. It was wonderful. Perl, I'm leaving you.
I started with codecademy’s Python class and like many other once I finished I went “And now what?” I got my feet wet but not at the level I’d be comfortable putting python down on my resume. Well I used MIT for my major, why not for computer science? I highly recommend 6.00.1x as an introduction to computer science. Much harder than codeacademy and goes into how to think like a computer scientist rather than focus on syntax.
     While I worked at Integrated Media Solutions I was tired of having to use the “Portal” which was a UI built to access client data. At the time I did not know SQL very well; Just a high level, but was determined to learn so I could save hours every week avoiding a manual data pull. I took the a Stanford MOOC about on data bases
 but would now recommend taking the course codecademy’s learn sql. Learning SQL was instrumental for getting my next job at adMarketplace. I learned enough to pass the coding test during the interview, and then really leveled up during my first month at work. Another boost for my transition to a more data heavy role was from teamleada.com I was fortunate to be one of the early users and thus able to interact with the founders and get a free code review.
 I took the Machine Learning class by andrew Ng, but it was a bit too premature. Another great part about MOOC’s is that I could just stop at lecture 3 and return a year when I was ready. Another great class I would recommend to an aspiring data scientist is Analytics Edge by MIT, which was great for an introduction to different analytical techniques, and real world examples.

So Why go to college?

I do not go as far as James Altucher to say College is waste, there are many benefits a brick and mortar college provides that MOOC’s currently fall short on.
  • Collaboration: I had one MOOC that had the class divided up to do a group project. With the high attrition rate from online classes this did not turn out well. the lack of accountability had most students not showing up.
  • Network: When I meet fellow alumni I have an instant connection about professors and the the school I spent four years in. Sure I have forums to foster a relationship with MOOC’s but as of now I don’t feel close with anyone I took classes with.
  • Curriculum: This is changing fast, when I started it was difficult to find out which classes should I take and what order. Now you have Udacity micro degrees or Coursera specializations which help guide students. One con is you get students that are less well rounded if they only take specialization classes instead of general education classes.
  • Parties

[Book Review] The Magic of Thinking Big

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The Magic of Thinking Big

The Magic of Thinking Big has been mentioned on the Tim Ferriss Podcast multiple times, which bumped the title on my to read list. I am big fan of books that have action summaries at the end of each chapter which condense the steps to take.
Some of my favorite advice
  • Get advice from successful people. Your future is important. Never risk it with freelance advisors who are living failures
  • Make people feel important, Call People by name
  • Tune in Channel P, the Good Thoughts Station. Find qualities to like and admire in a person
  • Blend persistence with experimentation. Stay with your goal but don’t beat your head against a stone wall.  Try new approaches

“Think little goals and expect little achievements. Think big goals and win big success.” – David Schwartz PH. D

Title The Magic of Thinking Big
Author David J. Schwartz
Genre Sales & Selling (Ranked #5)
Pages 238
Cost  $9.00 Paperback
First Published  1959
Reading Time  3 Hours
Rating Worth the buy
ℵ
A book on thinking big, positive and proactive goals to help you grow.
The top two lessons I took from this book were tune into the “Positive Channel” and an important question to as myself during the rise of the machines “What is the human way to handle this?”
As well as something perfect for someone with Analysis Paralysis: “Nothing happens just by thinking. Do not worry about problems. You can handle them as they come. Successful people handle problems as they arise. You cannot buy insurance on all problems. Start now.”
20X your potential

20X Your Potential: Hell Week

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On February 8th I started Ramit Sethi’s “20X Your Potential: Hell Week”

 

Day 1: Pushing your physical limits

First day’s challenge (choose one):

  1. 1,000 push-ups for time
  2. 21-minute plank hold (to see what this looks like check out this video here)
  3. 20X STRETCH BONUS CHALLENGE: Both the 21-minute plank hold AND 1,000 push-ups for time
  4. Quit: Ring the bell, say “I’ll do this later,” close the tab, and go on with your day

I chose first one of a 1,000 push ups, and initially failed when I attempted this on Monday. I started at 10 PM and did not have enough time to complete the challenge, I got up to 300 pushups before heading to bed. I felt sore for days. On Sunday I revisited this challenge when I had more time and got up to 700 pushups before my arms gave out.

Day 2: Embrace the suck

STEP 1: Think of your “someday” goal. We all have them. Maybe someday you want to make a million dollars. Maybe you want to start a business. Maybe you want to visit every continent. We ALL have the goals that we’ve thought, “that’d be nice.”

STEP 2: Visualize your goal or problem in detail. What does it look like? What do you feel like? What are the tastes, sounds, and smells? (For me, this was showing up to host an event where nobody came. I felt like a vacuum had sucked all the air out of the room.)

STEP 3: Listen for your mind to start telling you why you can’t do this. “This isn’t the right time.” “I’m not the kind of person who…” “She can do it, but I don’t have…” When you hear it, acknowledge it, and redirect your thoughts to positive ones, “If this were possible, what would it take?” “If I were perfect, what would I do?”

STEP 4: Embrace the suck. This is where most of us tend to shut down because we’re uncomfortable. We’re uncomfortable about what we’re asking of ourselves. So instead of working through it, we file the goal away to deal with it “later” — the equivalent of ringing the bell to quit, since “later” means “never.”

STEP 5: Once you have a clear picture of your goal, eliminate the noise by using Commander Divine’s box breathing technique for 12 minutes. (Click here for even more detailed instructions.) I warn you, 12 minutes will seem like an eternity.

STEP 6: After 12 minutes, take out a piece of paper and write out how you feel about your goal or problem with your mind clear. Then come up with ONE step you can take TODAY. It could be to make a phone call or buy a book or even writing out the problem and it’s components. You MUST take at least one physical action.

For me the some day goal is to start a business that earn 5K a month in Semi-passive income in addition to my normal job. I’d create a system that gives me freedom, where I am not always trading time for money. Part of the 5K would come from Rental properties. My thoughts are, what if this is a bad time to buy real estate, I don’t know enough. What if I fail?  I don’t have enough capital. What does this take: Working hard in the short term. Doing the research, and creating value. If I were perfect I would know the exact property to buy, put a down payment and start collecting a check. The box breathing technique was helpful, I have started Mantra Meditation a week prior and had some similar effects. I feel like the best time to start is now, and waiting won’t help. The goal is achievable and if anything is too small

My next step: I went to Zillow and made a property inquiry on a home in Geneseo.

Day 3: Master your emotions

This was the most challenging day for me. Today’s goal was to call a friend and ask for brutal feedback. I had a pit in my stomach and wanted to skip this day.

I did end up calling my friend and really happy I did. There a very few people I can be open with and once I was done with the call I felt very relieved

Day 4: Relentless focus

For two hours today, take a vow of silence.

No talking, internet,  phone,  sleeping, or reading

I did not end up completing this on the day of the email, and moved this to Saturday.

I am Shomer Shabbat, and this is a day I normally do not use electronics, but could use the extra headspace. I cleaned my room; making my bed is an easy win to the day. I also did twenty minutes of meditation. The two hours felt extra long as most saturdays I take a long nap in the middle of the day. I will write about my Shabbat experience in the future and why even without the religious aspect leaving a day to unplug is great for the rest of the week.

Day 5: Build a warrior spirit

Do a major act of service.

I know this is Hell week but this was a great day.

I made a donation to the AMF https://www.againstmalaria.com/

I donated 50 nets to help prevent malaria in Africa. This charity was recommended in Doing Good Better by William MacAskillI a fantastic book, I will blog about Effective Altruism in the future.

The second charity was for the Special Olympics through the Annual Rochester Polar Plunge. I chose this cause after seeing my college friend raise money on Facebook.

ℵ

Thank you Ramit and Mark Divine for a great week. This week reminds me of something my High School track coach said.

“Put up your hands as high as they will go”

“Okay now stretch up a little higher”

Every single hand went up a little higher despite being told to put up our hands as high as they will go a second prior. This week has been about that stretch. At 500 push ups I wanted to quit, than 600, and finally ended at 700, as that would put me at a weekly total of over 1000. Did I fail? Yes but I’ll keep going and revisit that challenge. Embrace the suck had a great ending of forcing me to take a real step and not be stuck in analysis paralysis. I am believer in giving Ma’aser a tithe that Jews give to charity. My main charity is the local Kollel, but I do want to branch out to Charities that fit the 100x Multiplier spoken about in Doing Good Better.

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