Young and Frugal

The Party Always Ends

Daniel — Wed, 17 Jun 2009 01:31:46 +0000

In the midst of what seems like endless economic chaos, I work for a company that is doing exceptionally well right now. So well that many people are getting caught up in it. Private equity firms are constantly knocking on the door, and it seems like I frequently hear talk of an IPO.

As the Treasury Manager of the company, and the writer of this blog, I try my hardest not to get caught up in it, though I admit it’s hard. As a personal finance writer, I preach to be conservative with your money: save, invest prudently, and keep an emergency fund; and as a financial professional in charge of all of a companies cash I act the same way, because if there is one thing I know, it’s that the party always ends.

Adorning the walls of my office I have hung constant reminders of this: vintage advertisements for Chrysler and Chevrolet. Every time I look up and see the ad for “The New 1967 Chevrolet Pickup” or the “Silver Anniversary Edition Chrysler New Yorker,” I think about what their management would have said at that time had someone approached them to announce that their company would go bankrupt. As much as I’d like to think they’d sit down and ask “how? when?” I have a feeling that they would have laughed it off. After all it was the heyday of the automobile!

Think about approaching an internet startup in 2000 (really, any startup will do), with the same information. Money was being handed out left and right, it was a huge party!, but the vast majority of them got caught up in the party and never looked at the bottom line. For a prime example, watch the movie e-dreams which follows the rise and fall of kozmo.com.

What about telling Bear Stearns in 2005? Worldcom or Enron in 2000? Blockbuster in 1999? All of these companies were at the peaks of their “Party” stage in these times, only to go drastically downhill a few short years later.

With all this said, I’m not against the “party,” in fact I love the party stage it’s fun and very exciting, but like any party, you have to party like the party will end, or else you wake up in the bushes wondering where your clothes went.

In personal finance partying like the party will end means saving, planning for retirement, and keeping an emergency fund, all while still enjoying your money. In the business world, that means always keeping an eye on costs (I just saved the company $15k by changing vendors for deposit tickets), managing the funds prudently (and safely), always striving for efficiency, and growing the business at a manageable pace.

If you stick with this advice, the party will last longer, and you’ll be prepared if it abruptly ends.

Entrepreneurship: Just Do It!

Daniel — Thu, 21 May 2009 20:44:25 +0000

I have a passion for entrepreneurship. There is something grand about the spirit of bucking the curve, going against the norm and taking your employment into your own hands.

To go along with my passion, I have a scatterbrain. I get a great idea and I jump in head first, only to realize I’m diving in to the shallow end; then before I have time to lick my wounds, I’ve got another great idea, something innovative that will change the way the world does business. All of my ideas end up spiraling into these grand visions before they are off the ground, and thus they fizzle out.

Recently, after quite a few failed concepts, I’ve learned my most valuable lesson about entrepreneurship: Entrepreneurship isn’t about what you are doing, it’s about doing it.

I learned this because my wife started a small bakery. Mary saw a need at our local farmers market, no one was offering baked goods. So she contacted the person who runs it and asked if she could sell some baked goods there. The next week we baked, set up a small stand, and were the only stand at the market to sell out. It was a hit and we made a few hundred dollars, all because Mary saw a need and filled it. It’s not a glamorous business, but it’s something that I am happy to tell people about because action has been taken and it works.

Now we have people asking us where else they can buy our breads, our customers are encouraging us to sell to local shops, and people tell us that they can’t wait for the next farmers market to buy some of our specialty breads and granola bars.

Lesson learned: entrepreneurship doesn’t have to be about starting the next Google, it could be about starting the next big bread company as well .

Why Is Money Taboo?

Daniel — Sun, 17 May 2009 20:57:10 +0000

Today my wife told me that she gets embarrassed when she is around and I try to haggle. I guess I can understand, I used to be like that too, and only over time have I grown bolder. With this in mind, I have to ask why is it that in America, money seems to be taboo?

In other cultures around the world, you are considered stupid or odd if you don’t talk money. In most parts of the world if you buy something without haggling the salesman will probably make fun of you for being a sucker as soon as you walk away. In America haggling is only considered acceptable in 3 scenarios. The first scenario is if you are buying something from a street vendor (like in New York), the second when you are buying something off of craigslist, and finally, haggling is OK when you are buying a big ticket item like a car or a house.

For some reason society has deemed it alright to negotiate and talk money in these scenarios, but if haggling is acceptable in these scenarios, why isn’t it acceptable in your daily spending? If just by asking for a discount you could get one would you go against this social norm?

I frequently go against this norm, it doesn’t always work, but when it does it feels great. Think about it from the salesman’s perspective, if 5% or 10% off will close the deal and allow them get on to helping the next customer why not? And if 10% off saves you $5 will it be worth the awkward moment? The worst thing that could happen is that they will say no.

Talking money does not only mean haggling, it means sharing your salary, something strictly forbidden in America.

In other cultures sharing your salary is not about bragging, it’s just normal everyday conversation. Xin Lu over at Wise Bread wrote a great post about how her Chinese culture influences her money habits. In the post she talks about how her father once helped a friend get a 20% raise, something that would not have been possible had they not been talking about salaries.

If by sharing your salary a friend could tell you that you are undervalued and try to help you get a higher salary is it OK? If you got a 20% raise I’m pretty sure you’d think so.

Recently I started a new job, and by talking about the offered salary and benefits of the job with someone else, that person helped me negotiate the offer I received to effectively be over 10% more than the original offer. Does it feel odd for me to know that someone else knows my salary? Yes a little, but the person who helped was glad to do it and I am extremely grateful to him for it. Sure, at the end of the day I was the one doing the negotiations, and yes, it was a bit awkward, but it was well worth it.

The point here is that Money shouldn’t be taboo. Not everyone is rich, and there is nothing wrong with that, but our culture has ingrained in us that money separates us and defines us. Nothing could be more wrong. Money is something that needs to be talked about by more people, finances cause people more stress than anything, and they are the number one cause for divorce; but if we would all be more open about money we might be able to help each other and it could all change.

Do you talk openly about money? Why or why not?

Failing Is Quitting Before You Give Yourself The Chance to Succeed

Daniel — Tue, 05 May 2009 01:00:29 +0000

It is a common belief that failure is the opposite of success, you either succeed or you fail, and there isn’t much of an in between. But is this really true?

Thomas Edison is credited with creating the filament in light bulbs that made them feasible for average americans to buy (no he did not invent the lightbulb). In order to find the correct filament he tried over 2,000 times before getting it right. If he stopped trying after the first few times, or even the first 1,999 times it would have been deemed a failure, but he didn’t, and thus it is considered successful.

I wish I was writing this after an amazing semester for the Entrepreneur Mentor Society of Dallas-Fort Worth (EMS) so I could rave about success, hard work, and The Power of Gradual, but unfortunately this isn’t the case.

This semester nothing happened with EMS Dallas except for a lot of talk, after all of the work I put into recruiting only 3 people signed up (ouch). Some people will call this a failure, and I will agree with them; for the time being it has been a failure. But I know that it isn’t the end, I will try again next semester, and upon trying again this stage will no longer be considered a failure, just a set back because failing is when you quit before you give yourself the chance to succeed.

My first attempt with EMS was not successful because I did not give myself the chance to succeed. I did not ask for help, and thus I did not succeed, however I won’t call it a failure until I quit. Over the past few months I developed a good network and I learned some valuable lessons, primarily that I can’t do it all myself and I need to ask for help. The next few months will be spent re-tooling the concept, and bringing on a student board with leaders at each University, for them to help recruit and share ownership in the organization.

I’m not quitting because I know there are a lot of people who I don’t want to let down, and a lot of students I don’t yet know who I have the desire to help achieve their entrepreneurial dreams.

An Open Farewell Letter To My Co-Workers

Daniel — Tue, 21 Apr 2009 03:47:10 +0000

I’ve never been much for the “standard” way of doing things, because I know if I put my own style behind it it’ll be more memorable. So this post is a blend of a standard blog post and a parting or “keep in touch” letter to my colleagues, in which I out myself as a blogger.

Today is the last day of my first job out of college. As I have written before (elsewhere on the site), I graduated 2 years ago as a cocky know-it-all, but I honestly don’t know if I learned as much in my four years of college as I have in my 18 months of work at a Fortune 500 company. Between the training I have received, the mentors I have found, and the day to day business interactions I have been able to participate in, I gained not only a great deal of knowledge which I will carry with me for the rest of my life, but also many close friends. I would like to take the opportunity to thank you all for taking me under your wings, teaching me, training me, and putting up with me on the days when I would endlessly quote lines from various movies or TV shows.

I also greatly appreciate the trust you placed on me and the encouragement you all gave me when I took on new projects around the office. This trust has served as my gold star that, as a member of Generation Y, I am stereotypically striving for. It made me feel proud to go into work and work harder to fulfill what you thought I could do.

For all of these things, and many many more, I thank you all from the bottom of my heart for making my time with you quite enjoyable.

For my fellow Gen-Y reading this, remember that you You Are Who You Associate With, and while you really don’t have much of a choice with who you surround yourself with at work (especially in your first job), you can only hope to be surrounded by as many good people as I have been surrounded with in my first job out of school. It’s important to remember that you are still learning, so don’t be afraid to latch on, ask tons of questions, and observe. You aren’t expected to know everything and most people genuinely want to help you succeed however they can. I have truly appreciated having this kind of support, and you’ll soon find that you have it too, you just have to remember to ask.

If you haven’t figured out by now, this is my website on which I’ve been chronicling my journey from cocky know-it-all to professional with more to learn. I mainly deal with the topics of business, personal finance, and entrepreneurship for Generation Y, and I don’t get “personal” on the site unless I can relate it to something professional. Jump in, kill some company time and have a look around if you’d like, but whether you do or don’t, please try to stay in touch.

One of the great advantages of blogging and social media is that it makes it very hard to lose contact with someone, so I encourage all of you to stay in touch. I am providing enough modes of contact for there to be no excuse not to.

Email: daniel at this domain dot com

My Facebook Profile

My LinkedIn Profile

Twitter: @danielpbowen

Coming soon-ish: DanielPBowen.com

Or, you can always Google Me (I’m number 2, but closing in on #1 thanks to my syndication on Brazen Careerist).

I hope to hear from you, and wish you all the best in whatever life hands you.

Daniel P. Bowen

The Opportunity Cost of Home Ownership

Daniel — Thu, 09 Apr 2009 01:50:55 +0000

I was recently called and asked to participate in a Gallup survey, and for some reason I agreed. Eventually, after wading through questions about political beliefs and the economy, the question about my personal happiness came around. I thought about it for a second, and didn’t have anything to complain about. I felt content with life so I answered “Yes, I am happy” and I finished the survey.

After I hung up the phone I kept asking myself, “Am I truly happy?” and “What could I do to make myself happier?”

…and thus a personal journey of self discovery began.

I could bore you with an endless array of what I found about myself, or I could answer it for you in a simple sentence that might contradict the American dream: the opportunity cost of owning a house at 23 sucks.

No, we aren’t hurting financially like many Americans. We bought a house that we could afford, we got a low interest, fixed rate loan, and we put down a good sized down payment (10%). We have an almost fully funded emergency fund, we are both employed, and we live a frugal lifestyle. The issue comes when I look at the opportunity cost of home ownership, or what we could be doing if we didn’t own a house.

The thing about owning a house is that no matter how much financial knowledge you have you can never really account for the opportunity costs of this often emotional purchase that is deemed a “necessity.”

I think about how much money we spend each month on our mortgage, taxes, insurance, utilities, and HOA dues and I cringe when I think about what else we could be doing with half of that money if we had bought a less expensive house, or even if we were renting. One of us could work while the other focused on entrepreneurial ventures or attended grad school. We could work for a year, save up, then quit our jobs and travel the world for a year. Even if we waited another year we could have saved up enough money to put an even larger down payment on a house, thus lowering the future monthly burden.

I look at our house as the reason why we have to work. I feel like I work a job not because I want to (even though I do), but because I have to, and this feeling of burden makes work seem like a chore instead of a learning experience.

So I challenge you, as you are tempted by a free $8,000 first time home buyer credit, to truly think about how much money you want to spend on a house, and the opportunities that you will give up as a result.

For the record, my wife disagrees with me. Her rational (and mine at the time of purchase) was that we bought a house in which we could grow into and start a family, while this is true, I believe that the only thing that would make me a happier person right now would be owning a less expensive house that wouldn’t feel like a burden.

Why I Don’t Have Cable

Daniel — Fri, 20 Mar 2009 02:51:36 +0000

For my entire life until we moved into our new house I had cable, nearly every imaginable channel, and I never fathomed my life without it. Whenever I turn on a cable channel I take a step back in time to a memory of years past. Speed Channel depicts my childhood years dreaming of cars non-stop, ESPN reminds me of my awkward puberty years when I was trying to find where I fit at school (hint: not with that crowd), and Comedy Central reminds me of finding my place in high school (acting and comedy).

In college I got a Tivo with lifetime service, which added fuel to the fire of my TV escapism. No longer did I have to plan my evenings around TV, my Tivo would allow me to be free from the agony of ads and timeslots, but my Tivo was smarter than me. It started recommending new shows that I might like. Soon I was staying up until 1 or 2am every night just to finish my TV Shows. My schedule began to conform to the shows that Tivo recommended and now I was back in the same rut as before except I was watching more TV.

Then something magical happened, something life altering, something fantastic… Hollywood writers went on strike. There were no new episodes for me to watch, and I found myself having free time.

This concept of free time is something that I had never felt before, I had always consumed myself with TV because it gave me a false sense of accomplishment. What would I do with this free time? Well, I became productive. I started working out more, I finished the many half-finished projects from remodeling the house we were living in at the time, and I started writing this blog. But perhaps the most surprising thing about all of this is that the only thing I missed about TV was the ridiculous antics on The Office.

Don’t get me wrong, it’s not like we don’t watch TV…truth be told the only shows I consistently watch are The Office and 30 Rock, and Mary swaps out 30 Rock for Private Practice; we just watch TV differently now. I have an antenna in the attic that picks up all of our local stations in HD, and I have a computer hooked up to the main TV. The computer enables us to watch whatever we want from the iTunes store or Hulu whenever we want, and we have our trusty Tivo set up in the bedroom.

Now Mary and I focus our time productively on being entrepreneurial. We each have business plans that we are working on, and we are working together to start selling some of our home baked bread at a local farmers market. Who knows, the lack of cable may not just save us money, it may make us money.

Have you ever thought about what you could do if you cut out TV? I bet it’d be pretty amazing.

The next paragraph is a bit of a rant, feel free to ignore:

I’m not against having cable entirely, I’m mainly against it’s pricing structure, much like gym memberships, cable companies take your money while giving little to nothing in return. In fact they don’t really give you anything except for the opportunity to spend your time watching TV. I would actually be willing to pay a premium per channel to be able to choose the channels I want, I don’t need 100 channels, I don’t even need 25, why not let me choose and make more on a per channel basis? But I digress…

You Are Who You Associate With

Daniel — Thu, 05 Mar 2009 04:08:26 +0000

Cliques are everywhere, they are unavoidable. As we grow up we float from clique to clique and we change “lunch table groups;” perhaps we were even members of a couple of different cliques at once. Our friends shape our reality and influence us beyond belief.

Even as we get older peer pressure is still extremely powerful. Have you ever noticed that no matter how old you are thugs hang out with thugs, executives hang out with other executives, and entrepreneurs hang out with entrepreneurs? The list is infinite! I wakeboard and I hang out with other wakeboarders, I’m ambitious so I surround myself with ambitious people… get it?

By surrounding myself with wakeboarders I am constantly pushed and encouraged to try new tricks, by joining a local running club I am pushed to become a better runner, and by making the effort to surround myself with entrepreneurs and others who think differently I am encouraged to take risks to follow my entrepreneurial dreams.

So take some time to think about what you aspire to be and do. Do the people you surround yourself with share these same goals and aspirations? Do they want to see you succeed? Do they push you to be come better at a mutual interest?

I’m not saying to dump your friends, I have many good friends who don’t share some of my most important interests, but think about the groups or “cliques” you belong to. What are they doing to further your career and aspirations? If nothing then make the effort to surround yourself with the people who will!

What if you want to be an entrepreneur, but all of your friends want to work their 9-5 for the rest of their lives? Go find an entrepreneur! They are in every city and small town. It doesn’t have to be the CEO of a large company, it can be the owner of the local hardware store; it doesn’t matter! Walk up to that person and explain that you want to be an entrepreneur and start asking questions, set up a weekly meeting, even ask them for a part-time job like Holly at WorkLoveLife did with a local coffee shop! These acts get your foot in the door to meet their entrepreneur friends as well as give you an understanding what it’s like to run a small business.

The internet is the most useful place to start. Search for local groups on Meetup or LinkedIn and find the group that fits your interest. For startup culture a local Dallas Entrepreneur, Alex Muse, co-founded a great blog group called SpringStage that is a coalition of bloggers who write about startups and startup life, it truly is a great resource. Use Twitter and start following those you admire; I love how I’m able to follow Guy Kawasaki and Lance Armstrong, both are people I greatly admire!

What are you waiting for!? Surround yourself with the people you want to be like and others who share your passions to ensure that you make your own dreams come true!

Know Your Insurance Coverage and Save Big!

Daniel — Wed, 04 Mar 2009 02:55:32 +0000

The following is a guest post by my wife, Mary. My comments are in bold.

Health Insurance is a privilege, something that shouldn’t be taken for granted, but also something that is earned by many as a benefit of being employed by a company that shells out thousands of dollars per employee to subsidize the insurance and ensure that their employees are taken care of. Despite whatever plan an individual chooses the basic concept remains the same; pay co-pay up front to obtain services from your doctor of choice (either in-network or out-of-network).

I consider myself to be a healthy person who exercises, maintains a good weight, eats well balanced meals, and listens to my body. But along with these habits comes another money saving and sometimes even life-saving choice to have annual physicals with my primary care doctor. In physicals the doctor runs blood work, checks for cancer and overall health. Being in my twenties, my health is something I want to stay on top of in order to treat any possibly issues now before they could become a huge roadblock. Aside from that any early sign of cancer could save my life, let alone $$. Unfortunately, this is something that many Americans opt out of to cut costs but something relatively inexpensive considering the potential health complications that could spiral out of control if not caught sooner rather than later. Preventative Healthcare is not something that should be taken lightly, even if you think you are healthy.

Reference: Florida Health Insurance Quotes

At my most recent physical this past December I paid my $25 co-pay and left as usual. Surprisingly this past week I received a bill from my doctor’s office for 2 lab tests totaling to $160. I was about to call their office with my Flex spending card in hand when I thought that maybe I should speak to my insurance company about why they didn’t cover these 2 tests. They didn’t seem out of the ordinary to me and I was “in-network.”

After spending a total of 30 minutes between talking with my doctor’s billing office and then my insurance company, the insurance company finally admitted their “mistake” and I was able to save myself $160. I was furious that my insurance company was “cherry picking” my health bills. When challenged the operator from the insurance company actually agreed that if I had not called to dispute the charges I would end up flipping their bill because of a “mistake.” So although having health insurance is a privilege, just realize your health care provider might try to cut corners any way they can and it is up to you to clean up their mess.

Mary’s story exemplifies being “On The Ball,” one of The 7 Effective Habits of Highly Frugal People . By knowing what our insurance covers, she successfully challenged a charge and ended up saving us $160!

23 Things I Know at 23 That I Pray I Remember At 43

Daniel — Thu, 19 Feb 2009 03:42:24 +0000

When I graduated college I knew it all. I was ready to take on the world, and then I got knocked down quite a few pegs when it took me 5 months to find a job.

Since that time I have learned a great deal, and I admit to not knowing half as much as I thought I knew when I graduated. But on top of learning a great deal, I’ve seen a great deal. I’ve seen my older coworkers be too comfortable in their positions, I’ve seen them take themselves too seriously, and I’ve seen them continually be out of touch with the real world. I’ve seen what it’s like to work for a large company, and I’ve seen what it has done to the creativity of my coworkers. So in their honor, I’ve compiled a list of 23 things I know at 23 that I pray I remember at 43.

Just because your salary grows doesn’t mean your lifestyle should
Physical fitness is the best way to mental health
Don’t stop dreaming
The Industrious Gain Wealth, While the Wealthy Remain Industrious
Allow your inner Michael Scott to show Edit: I know he’s an idiot, but he always puts people first. That’s what I meant.
Think Different
Welcome other ideas
Look down, that’s the furthest you’ll fall. Look up, how high will you fly?
If you don’t let people blow you away, you’ll never be impressed
Make time for the things you love, they make you who you are
Laugh
Don’t be afraid to say no
Stay in touch with college students, they are where innovation comes from
Dream Big
Public Companies are where innovation goes to die
Share ideas: If you’re scared you’re going to get screwed you’re never going to get laid
If someone wants it more, let them have it, if you want it more, compete for it and prove it.
Observe behavior
Keep It Simple
Stay flexible and open to change
Stay Informed
Surround yourself with those you strive to be like
I can (still) Change the world

What do you want to make sure you remember in 20 years?