Category Archives: Economics

Unknown's avatar

You’ve Won The Lottery! Lump Sum or Annual Payments?

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Recently, a record Powerball jackpot of 1.6 billion dollars was won by 3 winners. That’s about $530 million dollars apiece. Wow! Unfortunately, I only won a measly $7, but at least that’s $7 to the good and more than probably most people won.

From what I’ve read, most people who win big jackpot opt to take the lump sum. Some do it because they want it all right now. Others because they want control over all the money and fear that if they pass on, nothing goes to their heirs. I don’t know if it’s true for all lottery type games and gambling overall, but I do know that in many cases, the rule is that annual payments stop upon the death of the winner, even if all the winnings haven’t been paid out.

And, if the winner is already quite elderly, this fear is even more legitimate.

However, unless I was very old and the annual payments wouldn’t be very much, I would

opt for taking annual payments! And, if you were one of the three winners, having won $530 million dollars from that huge jackpot, you should opt for the annual payments, too, and here’s why.

  1. You don’t get all of the money when you take a lump sum! Each winner of the Powerball jackpot will get their 530 million only if they take annual payments. If you take a lump sum, it will get it cut to around 300 million, and that’s before taxes are taken out. After taxes, you may be left with $150 to $200 million by some estimates.

  2. If you blow it all right away as many big winners have done, that’s it! No more money coming! Sure, the $180 million you’d be left with in the previous example is still a huge amount of money and you’d have it now. And, if you kept your head, you can certainly have the fact of never having to work again and yet having a very good lifestyle that you are in nearly complete control of, be your life. But there are lots of pitfalls, like friends and relatives and others coming out of the woodwork, many who may try to sue you for the money and really tangle up things for a long time, and making you hire attorneys and financial experts, all of which will cost you money, and, if you haven’t managed the money well, you could still wind up even more broke than you were before you won. With annual payments, you’ll have more money coming in the next year for 30 years. And you’ll likely get a much bigger percentage of your 530 million.

  3. You may not be able to have future payments go to your heirs, but those payments you do receive will still let you leave a great deal of money to them!

    Thirty years of annual payments from that 530 million that you won would come to $17.6 million per year. But of course there’s taxes. Let’s say, worse case scenario, you have 60 percent taken out for taxes. That would take it down to approximately $7 million yearly that you would receive every year for 30 years! Worried you may pass on after the first year’s payment? You’d still get to leave $7 million to your heirs. How many people do you know that can even leave that much or are in line to inherit that much money? I don’t know any.

  4. You have more money coming! The positive side as mentioned at the end of number 2 above, you have more money coming! You know all those problems that cropped up before when you first won? Like those friends and relatives you didn’t know you had suing you, and those nasty taxes? And your overindulgence, like that $350,000 Ferrari you bought? Well, next year, you’ll get more money, and the year after that, for 30 years! You’ll get smarter, learn how to pay your taxes and manage your money, you won’t be out buying a new Ferrari, and you’ll probably outdistance those nuisance lawsuits brought about by all those new-found friends and relatives from the woodwork.

So, if you do win big, think about taking annual payments instead. And first thing, see your tax people and get a trusted financial advisor first thing! You’ll be glad you did.

Happy playing and good luck!

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Unknown's avatar

When’s The Best Time for Christmas Shopping? October!

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What’s the rush? Christmas is still two months away! Right? Sure. But, the best time to go Christmas shopping is actually, now! That is, October!

Why October? Well, July may be too early, as you may not really know what to get for whom, yet and you may be too busy with summer activities.

But, why wait till December, or even Black Friday, when the crowds will be intense and things will get crazy and crowded very quickly. I know of at least one mall area in California that is a constant traffic jam from Thanksgiving through Christmas Eve! And I’m sure it’s not the only one!

Also, I’ve heard that those “sweet deals” that you see advertised during the holidays may be artificial, that is, their low prices may be only relatively low. What happens is that some retailers may slowly raise prices on items they believe will be popular for gift giving during the holidays, so that the holiday  shopping season lowering of prices on those items is really just bringing the price down to their normal level, and you’re not really getting a true bargain! I could be wrong on this, but it is something I once heard.

In October, the focus is on Halloween, which covers a smaller niche of items. Everything else will probably be normally priced and the crowds won’t be insane. You’ll be able to get a parking space less than 3 miles from the store! And it won’t take you 3 hours to get out of the mall parking lot when you’re done shopping!

And many stores will also be featuring Christmas decor by this time, so you can even get those items for decorating in October as well.

And perhaps best of all, you can smugly smile in December, knowing your Christmas shopping is done, as your friends tell their tales of struggle as they shop in the thick of the holiday shopping season!

So, think about shopping for Christmas now, in October. It just may make for a less stressful shopping season.

Happy shopping!

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Unknown's avatar

Ditch That Cover Letter?

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Every day it seems that there are one or more articles about what you need to get a job. Sure, there are those real obvious things that everyone knows to do, such as being on time for that interview and being courteous and polite, as well as those obvious things not to do, like knowing not to pass gas or talk trash about the company during the interview.

But some things are not so obvious and there can be a wide range of opinions as to whether it’s better to do, or not do, a particular something during the job hunt.

Recently, I saw an article online that questioned a need to have a cover letter with your resume. The article explained how some hiring managers and employers see a cover letter as a form of “kissing up”.

So, should you ditch that cover letter?

Maybe, and maybe not.

One thing I find about these articles is that they don’t really give a concrete “yes or no” answer, but instead point to possible trends of the moment. And it’s important to view them as such, rather than as a concrete answer either way.

This is because every situation is different. As to the article I mentioned above, regarding cover letters, it really depends on the employer. I’m sure many employers and hiring managers see the cover letter as a come-on and some may even be repulsed by a cover letter. On the other hand, many will see the cover letter as an introduction to the person the applicant is, not just a list of skills and accomplishments. Also, depending on how the letter is addressed, it can make the resume and the applicant, seem more “personal” to the prospective employer, particularly if the letter is addressed to the hiring person by name.

And this goes for any advice you read regarding job hunting. Anything you do during the job hunt will be viewed favorable by some prospective employers, neutral by others, and unfavorable by still others.

So, if an article says that it’s better not to submit a cover letter with your resume, it doesn’t mean that to do so is automatically wrong. It just may not have as much impact with as many employers as it once did.

So, if you feel more comfortable sticking with your current strategy in your job hunt, go right ahead and send that cover letter.

Good luck with your job hunt!

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Unknown's avatar

My Challenge to the High Paid CEO’s of the World

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Tomorrow is Labor Day, and I thought I’d make a challenge to the higher paid CEO’s of the world.

First, believe me when I say that I’m not talking about those CEOs who truly pay their employees fairly and who try to understand where their employees are coming from and that, the bigger the company, the more it is supported by the employees.

The CEOs I’m talking about and issuing the challenge to are those CEOs that you hear about in the news who are paid 100 times or more than their average employee, as well as those who pad their own salaries at the expense of their employees when they could easily pay their employees more without hurting their business’ profits. Some CEO’s of some large corporations may be paid as much as 1,000 times the salary of the average employee at their companies.

So, how do these CEOs get paid so much? Well, their salaries are determined by boards made up of other CEOs. So, there’s a “I’ll rub your back if you rub mine” mentality. This results in CEOs getting more and more raises, even in those cases when some of their companies perform ever more poorly every year! Oftentimes, its only when a CEO does something really egregious that negatively effects the other CEOs on the board does a CEO get fired or penalized in some way.

But, are these CEOs really worth 100-1,000 times the salary of their average employees? A lot of industry insiders and of course, fellow CEOs will say “yes”, because the companies are large and the decisions that a CEO makes will affect the entire company, plus, they say you would not attract the talent needed for the job, etc.

I’m not so sure this is true. In Japan, most large corporation CEOs make no more than 35 times the salary of the average employee. Yet, companies like Sony, Toyota, and Toshiba, and many other Japanese corporations, have all done well and have certainly made their mark worldwide.

So, my challenge to these CEOs is this:

If you can fill in completely for, and do the work of just 20, that right, just 20, of your average employees for just 1 month, without any ill effects to the company, or customers, both internal and external, to the point where they couldn’t tell the difference in terms of work quality, quantity, and adherence to the same deadlines and quotas, then you really do deserve that huge salary.

An example would be a CEO filling in for a unit of 20 people who puts together and coordinates accounts for the sales team, such as the one I was once part of about 12 years ago.

The challenge would be that the entire unit would be off for that month and the CEO himself or herself would come in and do all that the 20-person unit does for a whole month.

If that CEO can fill in as above, making sure each sales rep gets the accounts that they should get, with all the paperwork and information intact, in order, and on time, seeing that the accounts are delivered to the sales division by the deadline, making needed corrections to accounts, reassigning accounts when the division needs them assigned, seeing that the accounts are printed and collated, filing reports correctly, seeing that added materials for those accounts that require them are added to the paperwork for those accounts, double checking to make sure that the sales division has gotten exactly what they need,  plus, maintaining any machines that the unit uses, keeping track of and ordering supplies, making calls for any needed repairs, making calls and sending e-mails to investigate and address any problems, and working with and meeting with, division managers and other internal customers, without anyone who interacts with, or depends upon, that unit, not seeing any negative impact to them for that month, then that CEO certainly deserves that huge salary!

That’s my challenge to the high paid CEOs of the world. Will they accept? I doubt it.

And to those who think the CEO should be made to fill in for exactly 100 people or that number of people who would equal the CEO’s salary? Well, in a way, comparing the CEO to the average worker in their company is a little like comparing apples and oranges, so that’s why I lowered the number of people to 20. And if this still doesn’t convince you, try calling just 10 people you know and offer to take on all of their responsibilities for just 2 weeks. You’ll see!

Of course, a lot of CEO’s won’t even know of this challenge, but, if any of you happen to have the ear of one, or care to write or e-mail one, let them know about this challenge. If any do take it up, I’m sure they will learn a lot.

Happy Labor Day everyone!

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Unknown's avatar

Stop Smoking Already!

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I just can’t help it! When I see someone smoking, especially here in the beautiful Pacific Northwest, where I live, I just can’t get over it. At least, where I used to live, in Southern California, the air was often smoggy, (However, significant progress in the region’s air quality has been made over the years.) so, in a way, it somehow didn’t seem as bad when I saw someone smoking. But here, in the Pacific Northwest, with its pristine air, it just seems like smokers here are really robbing themselves of some of the best air on the planet!

But in reality, smokers rob themselves regardless of how polluted their local air is. Oh, I know, the rate of smoking has dropped, especially since the 1940’s, when it seemed every adult smoked. (Just watch an old movie from 1960 or earlier!)

But those who continue to smoke are still robbing themselves, and not only health-wise, but financially. And, those of us, like me, who are not smokers, probably know, or have known, at least one person who is. And you may have tried at times to get them to quit.

Unfortunately, the health threat argument often doesn’t scare a smoker into quitting. After all, cancer and heart disease aren’t like bears at the gate presenting an immediate and obvious threat in most cases, and when they do, it is often too late.

But, the financial drag of smoking, not even counting the financial side of the health threat, is significant and shows itself every time a smoker buys more cigarettes! Perhaps this argument can carry more immediate weight with some smokers. So here it is.

Now, a smoker might not think the cost of a single pack is enough to justify quitting.  Recently, I was in a store and was waiting to check out, and I noticed the prices of the cigarettes. The lowest cost pack was $4.70. Again, $4.70 might not seem like that big a deal.  But let’s take a look at an example below, starting with a price breakdown as well as a longer term view.

First, the breakdown. Let’s assume that a smoker smokes only half a pack a day. And buys a pack for only $4.00 even. A pack usually contains 20 cigarettes. That’s 20 cents per cigarette. Cheap? If the smoker smokes just one a day, then it is. But our smoker smokes half a pack, or 10 cigarettes a day. That’s $2 a day.

Now, for the longer term view.

In a week, that’s $14.

In a 30 day month, that’s $60.

In a 365 day year, that’s $730!

Just think of what an extra $730 can get you. In some cases, that could be an extra month’s rent or an extra 1-2 month’s groceries or an extra brake job on the car, or airfare, or a week or more at a hotel, and then some! Surely, you can think of a time in the past year when an extra $730 would have come in handy!

And remember, that’s just smoking half a pack of cigarettes a day! Many smokers smoke more than this, some, a lot more. And some, if not most, cigarettes run more than $4 a pack.

Using the $4-a-pack example above, a full pack-a-day smoker is looking at spending $1,460 yearly!  This amount of money can possibly buy you a pre-owned 1990’s vehicle that is in decent, if well-used, condition, in some cases! Just check out Craigslist for Ford Aerostar vans!

So, to smokers, look at this example to see how much you are spending to …kill yourselves.

And to those who are trying to get a smoker to quit to little or no effect, try this argument. Find out how many cigarettes or packs they smoke daily, and how much they pay per pack. Then, crunch the numbers and show them the results. I think they’ll be stunned.

To smokers, I hope you succeed in quitting! To those trying to get a smoker to quit, I wish you luck and hope that this argument works!

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And thanks for reading!  🙂

Unknown's avatar

Air blowers: A Symbol of Stupidity

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Lots of things can be a symbol of stupidity, but I do have one candidate that stands out for me. It’s the air blower.

Why? Well, I distribute fliers door to door and often run across gardening crews working on someone’s yard. And the crews are often using the usual equipment, including mowers, weed wackers, various pruning shears, brooms, and of course, air blowers.

The weed wackers and mowers are the most constructive, as the grass has to be mowed, weeds need to be cut back or out, and bushes and trees often need pruning. And the brooms are good for cleanup.

Air blowers are also used for cleanup. But what do they really do? They blow dust and debris all over the place, for one.  And some goes into the neighbors’ yards and driveways, and onto their cars, too.

Some people may say, “So what, at least they cleaned my place!”
But guess what happens? The crew that does your neighbor’s yard (And it could be the same crew you hired!) will use air blowers to do their cleanup, and some of that dust and debris that was blown from your yard to theirs, will be returned to you!

Stupid, stupid, stupid!

Add to this the noise. Always, I have observed that the air blowers were the loudest of all the equipment that the crew used.  They drown out the gas-powered pruners, the weed wackers, and even the lawn mowers!

So, why are air blowers used? I think it’s just “grown” on gardeners over the years.

It’s simpler and easier than using just brooms, for one.  And gardeners often claim that they cannot work without them!

Well, there have been gardeners as long as humans have had homes, for thousands of years. What did all those gardeners do before air blowers came along?

And, as for ease of cleanup, using a hose would be just as easy, far less dusty, and much cleaner. And the neighbors won’t be complaining about the coating of dust on their just washed cars.

Now, of course in areas where there is drought, such as California, using water is no longer an option for now.

But how about this: A vacuum cleaner. Not a real large truck mounted model, or the ones you use in your house, but one you can push with a large bag and its own motor.

This is not new. When I was in elementary school, before air blowers were used very much, a custodian would push a vacuum cleaner with a very large bag around the play yard every so often. It worked just fine. The vacuum had its own motor and was fully portable, and no louder than an air blower. It used no water and created no dust, nor did it just shuffle debris around that would be shuffled back when another section of the play yard was vacuumed. And it was small enough to be easily carried in a gardener’s truck.

I doubt this solution would be implemented, but, if you know a gardener, or have one working for you, you might give him or her this suggestion.

Maybe you can stop the dust and debris transfer this summer season.

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Unknown's avatar

Hate to Cook After a Long Day? Try This!

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You’ve had a long day at work and now you have to cook dinner and you’re tired. And you don’t want to go out, either. So, what to do?

Maybe try a meal delivery service! I worked for one for a short time last year, delivering meals directly to people’s homes along a route.

Yes, these services do exist, offering different plans for different needs. The company I worked for featured fully cooked dinners. No drinks are included and people sign up and can choose which days they want meals delivered, and can also have special consideration for food allergies and dislikes. The company also provided insulated bags on request. It provided a good service. Other companies will provide drinks or other variations of service.

Of course, there is a charge, and most companies have customers create accounts. And it may not be for everyone, either. But I can see how it can benefit those who have long workdays or just plain hate to cook.

Some may think this is only for senior citizens, but my clients included all types of people, young, old, families, single, and other multiple living arrangements.

So, if you don’t like to cook, or just don’t have the time, you may want to check out a meal delivery service. Bon Appetit!

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Unknown's avatar

State of the Art is Always Moving

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Here in the Portland area, antiques are a big business, and you can find lots of antique shops and you can also find antiques at flea markets as well. I like looking at antiques to see the things people used, as well as the precursors to many things we have and use today.

One of the things I’m struck by as I get older is, when I’m in an antique shop, I see more and more things that were once “state of the art”.

Last week, I was in an antique shop and saw this orange phone, pictured below, with a clear plastic dial. It was from about the early 1970’s. And I remember when these phones came out, as an upgrade from the phones which had a dial the same color as the phone and looked more antiquated when compared to the “clear plastic” dial phones. They, the clear plastic dial phones, were state of the art of that time and I remember thinking they were forward-looking.

Phone at Portland antique shop. Circa 1971

Phone at Portland antique shop. Circa 1971

Ah, but how time has really marched on. Push button phones came soon after, followed by hand-held phones with a central base. Then the first useable cell phones, like the large black Motorola phones of the early and mid-1990’s, arrived. Then smaller cell phones came out, each new version able to do more and be less bulky, followed by the blackberry and smart phones after that we now have.

(Yes, I know smart phones have gotten larger, but, they have stayed thin and light, and no doubt, one day, maybe sooner than anyone thinks, a smart phone that can have changeable size will be invented!)

And now, the smart watch has come out, though it may be too small to make a big splash just yet, however, with improvements, and technology that we haven’t thought of yet, it still can make a splash later on, even if it doesn’t now.

And the thing is, one day, even these, along with smart flat screen TV’s, tablets, kindles, dual purpose laptops, and the top of the line home theater systems now available,  will all find their way into antique shops, replaced with something we possibly can’t even imagine yet!

Today’s “state of the art” is tomorrow’s antique.

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Unknown's avatar

Why I Now Prefer Pre-Owned (Used) Cars

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I am now a believer in buying used cars. (Yes, I know, the term now is “Pre-Owned”, but I’m still hard-wired to say “Used”!) I bought my first, and current, used car in December, 2012, a 2007 Toyota Corolla, and it’s still going strong.

There are a number of things which I’ve learned that are better buying used, and I do mention cars being among them in my post, “Used vs New: Which is Best to Buy?” Now, here are the reasons why.

First, used cars are cheaper! This is true for most things, as a matter of fact, but cars are special, in that they are often the most or second most expensive item that people buy, and new cars depreciate greatly from the moment you drive one off the showroom floor.

In my case, for my previous car, which I bought new, I paid roughly $20k. I had the car for 7 years before it was totaled. That comes out to about $2,860 “paid” for each year I had the car. And mind you, I was able to pay the entire amount at that time, so I had no car payments to make and thus saved possibly $5k-10k in interest!

I paid $10k out the door for my current used car, which would have also been $20k when new, and have now had it for about 3 years come this December. At that point, that would be roughly $3,333 for each year. By June, 2016, I will be breaking even in comparison to my previous car, in only 3 and half years! When I’ve owned my current car for 7 years, the same amount of time I had my previous car, it will come down to $1,430 “paid” per year!

And another way in which I come out ahead: I paid $10k less for a good car, than what I paid 7 years earlier, despite inflation over that time! In a way, that’s $10k to the good for me!

Next, related to the first, is that you have less of an investment to lose. I’m given to understand that new cars will have the most depreciation within the first two years. So, with a used car two years old or more, it’s possible you’ve got a car that has had most of its depreciation. So if you decide to sell it down the road (pun intended!), you may recover a much larger proportion of the money you spent to buy the car and, in some cases, you may even come out ahead!

Then, used cars tend to be cheaper to insure. When I got each of my new cars previously, my rates always went up. With my current car, they didn’t.

Now, one thing is, you must do some research and also make sure you get any used car you’re thinking of buying, inspected by a trusted mechanic.  If you do, you’re more likely to reap the benefits I’ve just described.

But, even if you test drive a used car you like and are just satisfied that it starts and runs, you may still be saving money even if you do end up going to the repair shop a little more often in the beginning. (Do note, even if you do your due diligence, the used car you buy may need some work.)

Many say that buying a used car is buying someone else’s problem. But, think about this. If you’re paying $300 or more a month for that new car, month after month for 36-72 months, do you think that you’ll be paying that much every month in repairs for the used car you could buy instead at half the price? My bet is that you will not, especially if you do your due diligence when shopping for that cheaper used car. Just something to think about.

Finally, while I don’t plan on any big modifications on my car, I feel that I can modify the car as I please without that feeling of “messing new things up”.

So, these are my primary reasons for preferring used cars, and have made my motoring a lot happier!

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Unknown's avatar

Give Them A Break!

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If you are in business, or even if you have the latitude as an employee, there are less obvious ways to increase the chances for more business and a better reputation.

And one good one is? Give customers a break when the opportunity arises! No, this isn’t about offering discounts en masse. It’s about giving breaks in certain, usually individual, circumstances.

For instance, I build resumes for people on the side. I charge $30 for a one to two page resume and usually charge $5 for making changes later on if there are more than one change or if the change is somewhat substantial.

But, one time, a customer sent me his resume and wanted me to make changes as I saw fit. However, his resume was good as it was and I only needed to make a very minor date change that he’d told me about. So, since it only took two seconds, I let him know that there’d be no charge. He was pleasantly surprised by this and I’m guessing he probably told a person or two. Yes, I could have charged him at least my $5 minimum, but I chose not to. Why?

Because it creates good “Karma”. Maybe it won’t lead to more business, but then again it might, even if it’s just from him. You see, at the very least, he knows I’m not this hard case who will charge just for contacting me. And if he needs a new resume, he may just remember me.

When a business, especially a small business, does something like this, they do get remembered, even if it is after a while. And, when those customers who’ve gotten those breaks talk about it, even if it’s just a casual mention, it acts as free advertising.

And, if you’re an employee whose been given the latitude to cut people breaks at times, do it! It can mean a good comment for you on that comment card or online survey, or even a letter of commendation sent to your boss or someone even higher up, leading to a raise, promotion, or both, for you down the line. And, as an employer, it’s a good idea to give a trusted and proven employee just that kind of latitude.

As the recipient of some of these breaks, I do make mention of the good deals and breaks I’ve gotten, as well as a list of people and places to go to where I know I’m going to be treated well, instead of as just another pigeon to pluck! And, I’m quite sure that I’ve gotten some business as a result of my cutting someone a break.

And, speaking as a small entrepreneur, I know that any free advertising helps!

So don’t forget to cut some breaks if you’re able to. It can really help the bottom line, in more ways than one!

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