Does Your Smart Phone Control Your Life?


Are They Growing Up While You're on Your Phone?

Are They Growing Up While You’re on Your Phone?

I captured the image to the left at a playground near a beautiful lake the other day.  Devoid of cell phone, I noticed the beautiful water, the birds in the trees, and watched my daughter playing in the sand thinking that there are not going to be many more years before she’ll be done with playgrounds and be off with friends.  A mother was also there with her two children, but she was oblivious to everything, instead being intently focused on her smart phone.

A similar scene is going on all over America and doubtlessly all over the world.  A mother looking at something probably unimportant on a smart phone while her children play and grow up.  Sure she’s outside in a beautiful area, but she might as well be sitting on her couch or at her desk at the office because he attention is focused entirely on her device.

In France a law has actually been passed that restricts how late a boss can send emails and texts or call employees about work.  This was done to avoid the increasingly common practice of texting employees at home or wherever they are.  This action, coupled with the employees feeling the need to respond (it’ll just take a moment), destroys the home/work balance that is really important for individuals and families.  Employees have gone from working eight to ten hours a day (ok, six to seven hours in France) and then spending the rest of the time in their day with their families to being always on call, being regularly interrupted for things that could wait until the next day.  This is particularly bad for salesmen and product support employees since customers expect to be able to reach people at any time and often call personal cell phones at all hours.

In the old days only missile silo commanders needed to leave a number where they could be reached at all times.  Now this is true of middle managers and even rank-and-file employees.  It also used to be that people would get called at home when there was a pressing need, but this was rare and only done when really necessary.  Also, because most people would leave work at about the same time, there was rarely a reason to call.  Now everyone has a cell phone with access to work emails, so some dash off an email or text to other employees during evenings or weekends.

Meal times were also held sacred.  Now, due to the prevalence of cell phones, calling at all hours for any reason is considered just fine.  Also, rather than not calling during traditional meal times for fear of interrupting another’s dinner, many people call others while they themselves are eating.  Go into any restaurant and you’ll see many people ignoring their dinner companions while they text or talk on the phone.

There are some instances where people are required (or strongly encouraged) by their employer to carry a cell phone and be always reachable.  Often, however, this is self-imposed.  People are constantly checking any text that comes in, having feeds from Twitter and FaceBook, and always answering the phone no matter what they are doing.  (In fact, when I talked to this mom briefly after I took the picture, in the three minutes during which we talked she replied to two texts and took a phone call.)  Behavioural scientists have shown that this is in fact an addictive behaviour with individuals showing signs of withdrawal such as nervousness, irritability, and depression when they are without their mobile devices; hence the nickname, CrackBerry.

Personally I don’t carry a cell phone.  I normally meet with a great deal fo surprise when I tell people this.  There are a variety of reasons, however.  The first is that when I am away from my desk and out of the house, there are very few times that I want people to call me.  I am normally busy driving or doing something and don’t want to be pulled away from it to take a call.  Sure I could turn off the ringer or let it go to voicemail, but people are expecting to be able to always reach everyone all of the time, so I’m sure doing so would offend some people.

The second is that I really don’t see the need for the expense.  There are never any calls that just can’t wait until I get home, and up until recently pay phones were widely available for the few times a year when I wanted to make a call when I was out.  Even now, with payphones disappearing due to lack of business, I can still generally borrow a cell phone for the rare times when I need one.  I just don’t see paying a thousand dollars a year or more for the few times a year I need to make a call when away from a phone.

The final reason is that I know I would become addicted just like everyone else.  At work I can’t help but check and reply to emails when they come in regardless of what I’m doing.  With this blog I stop and check for comments and views each time I pass the computer, even though I rarely get comments.  I just know that if I had a cell phone I would be staring at the screen just like the mother in the photo.

As I’ve tried to explain to my son, there is just something about being where you are.  When I’m in the park, I want to be fully in the park.  When I’m at home with my wife, I want to be fully there.  When I see friends, I want to be fully with them.  When I’m camping, I want to be cut off from the outside world.  I don’t want to be there but be worrying about things at home or making plans for the next week.  I don’t even want to be catching up with a friend.

Below is what I was witnessing while the mother was looking at her smart phone screen.  Besides missing out on time with her son, she was missing out on this beautiful sunset that would end a day that would never come again.  Happily soon after this she put away her phone and walked down by the lake with her son.  Perhaps with a lot of personal control, people can carry a cell phone and yet not have it control their lives.  Then again, casual smokers exist, but they are rare.

 

 

What Else She Was Missing

What Else She Was Missing

 

Tax Day Again. Ready for the Fair Tax Yet?


So today is tax day in America yet again.  Sometime in the last few months you probably had to gather your receipts, W-2 forms, and 1099′s.  You had to buy some tax software or set up a meeting with an accountant.  Either way, you were out at least $100 because the forms are too complicated to someone to just fill out.  You then spent several hours away from your family filling in information.  You probably also had to call various places for receipts, send money or letters of authorization to transfer money into IRAs and HSAs before the deadline.  You then needed to go to the post office and stand in line to send in your forms, or sent them in electronically despite warnings from the IRS that many tax returns are being stolen each year when filed electronically and the information used for identity theft.  You do all this because the law says you need to in order to pay your taxes.

If you’re like most people, you probably also got a big refund check back.  You may look forward to receiving that check, and maybe you use it to pay down a credit card bill or just blow it on something, but realize that is your money that the government had all year long without paying you a dime of interest.  Maybe you paid credit card interest all year because Uncle Sam was holding onto that money.  At 15% per year, that’s $600 per year you are losing if your refund is $4,000.  Even at $2000 per year, that’s $300 you are losing.

There is a better way and it’s called the Fair Tax.    With the Fair Tax you would receive your entire paycheck each month with no deductions taken out so your paycheck would be at least 20% bigger.  You wouldn’t pay a dime in taxes until you bought a new item, at which point you would pay a sales tax.  That would be the end of your obligation as far as taxes went.  You wouldn’t need to save any receipts.  You wouldn’t need to file anything.  You would pay at the cash register and then go on with your life.

One argument against a sales tax is that it is regressive since people who make less spend a higher percentage of their income.  This is also addressed in the Fair Tax with a prefund.  Each year (or each month) everyone who works would get a deposit in their accounts from the government to cover a portion of the sales tax they pay.  Fo example, if the Fair Tax is 20% and you wanted to make sure no one who made less that $30,000 paid anything in taxes, you would issue a prefund of $600 per year to everyone.  Then the prefund would cover the taxes on the first $30,000 you spent.  Only those spending more than $30,000 per year would then be paying taxes.  You could set the prefund as high or as low as you wished depending on how much you needed to collect in taxes and at what income threshold you wished people to start paying taxes.

Another argument is that people don’t want to be paying a 20% sales tax (an estimate for the sales tax that would be needed to raise the same amount of money as is currently raised through the payroll taxes and income tax).  Realize first of all that you are already paying 12% or more of your income out before you get your check.  Including the employer match for Social Security and Medicare, you are paying around 20%.  This is not just on the money you spend, but also on the money you save.  It is also expected that because retailers will no longer need to spend as much money on tax planning, and because they would no longer pay income tax on their earnings, that prices would fall, perhaps by enough to cover most, if not all, of the sales tax.  It is very likely that the government will be raising the same amount in taxes while you are paying a lower percentage of your (increased) income in taxes.

If this sounds great to you, go to www.fairtax.org. learn more, and learn how you can help get the Fair Tax passed.  Let’s have 2013 be the last year you need to spend time away from your family filling out forms.

To ask a question, email vtsioriginal@yahoo.com or leave the question in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Should You Return a Mistaken Tip? Probably.


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I’m not sure how to react to this story.  A waitress at an IHOP in Virginia was fired when a customer mistakenly (he said) gave her a $200 tip and she refused to return it when asked by her management several days later.  You can read the whole story here.  Note that it appears that after the story broke the restaurant agreed to give her the job back.

In the story the credit card receipt clearly shows a $200 tip.  If it had just said 200, or $200, I could have believed that the customer forgot the decimal point.  The receipt, however, says $200.00.  The receipt is not totaled, but still I think the intent to leave a $200 tip is pretty clear.  I suspect the gentleman got home and his wife west ballistic after finding out about the tip.  At that point I suspect the customer called the store and said he meant to leave a $2.00 tip.

On the customer’s side, whether it was a mistake or not, I think he should have just left the tip as it was.  If he had realized the mistake immediately, or perhaps soon after he left the restaurant, that would be one thing.  If the waitress had already taken the tip home and perhaps paid for a bill or bought something with the money, that’s another story.  Keep in mind that it was only $200.  A lot of money, but probably not a life’s savings.  Perhaps the customer could have eaten at home for the next week or couple of months to make up for the big tip.

Perhaps it would also make up for some poor tips he’d left in the past.  A $2.00 tip on a $25 bill is pretty skimpy.  If the service was adequate he should have left at least $3.50 or $4.00.

The question then becomes, should the waitress have agreed to return the tip when asked?  I would say yes, probably.  If the tip was genuinely a mistake, or giving the tip actually produced some sort of hardship for the customer, the right thing to do would probably to have given the tip back.  Note that doing so would probably have caused the waitress’ tips to increase when word got out about her being so obliging.

Then again, I could be swayed the other way.  It wouldn’t be workable if everyone could come back and ask for a tip back days after it was given.  I also don’t think the waitress is morally obligated to give it back since I think it was given freely.

So what do you think?  Should she return the tip?  Should she do so, but should IHOP give her a spot bonus for doing so?  Do you give $2.00 tips on $25 purchases?  What do you think is a proper tip?

To ask a question, email vtsioriginal@yahoo.com or leave the question in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

 

Don’t Panick!


In Hitchhiker’s Guide to the Galaxy, each celestial hitchhiker would carry a guide with him or her.  Emblazoned on the cover of that book were the words, “Don’t Panic.”  Perhaps investors who have been watching the market fall over the last couple of days should take the same advice.

It is actually at times such as this a good idea to just sit pat and relax.  In fact, it is after the large market drops that there is a potential to make the biggest gains.  One could have made a huge return on stocks from 2009 until 2013.  Likewise, there were huge gains to be made from 2003-2005, 1992-1996, and 1980-1984.  Buying in after the stock market crash of the 1930′s would have been a great idea, as would buying after the crash in 1987.  Many times stocks will recover to their previous highs within a year or two after a downturn,

Unfortunately, most investors do just the opposite.  When stocks go up, they rush in to buy.  When they go down, they sell in a panic.  In fact, there are people who look at what retail investors are doing and sell when they start to buy stocks and buy when they start to sell.

This doesn’t mean, however, that you should make a huge purchase of a stock just because it has declined a few points.  Just because stocks have gone down a little doesn’t mean that they won’t go lower.  The act of trying to buy a stock as it declines in value is called “trying to catch a falling knife.”  Many people who try this trick soon find that just because a stock seems cheap compared to where it was recently doesn’t mean that it can’t go lower.  Sometimes stocks were way overvalued and have quite a way to fall before being reasonably valued again.  Sometimes they also become very undervalued and stay that way for longer than you would think.

The best thing to do if you have some cash on the sidelines is to buy in slowly.  Make a small purchase, wait a few days or a few weeks, and then buy a little more.  Do this each time there is another decline.  While you may not buy shares at the lowest possible price, at least you’ll be paying less than you would have a few days ago.  By purchasing in installments you won’t have the psychological effect of taking a loss and starting to wonder if you made a mistake in buying the shares.  Many people who see a stock continue to fall panick and sell out right before the stock was about to rebound.  If you keep some cash on the sideline, you will be hoping for the shares to go lower since that means you can buy some shares at a lower price.

It is also a great time to save up some cash from your job and buy some additional shares as you can.  Perhaps also put some money into your IRA for next year (or put some money into your IRA for this year if you haven’t already.

Just remember to not panick. If you find yourself worried, there is nothing wrong with just ignoring the market for a few weeks.  Things will be just fine.

To ask a question, email vtsioriginal@yahoo.com or leave the question in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

An Emergency Fund is the First Step to A Strong Financial Future


A survey revealed that 4 in 10 Americans did not have $2,000 available in case of an emergency.  This means that if their car broke down, the air conditioner went on the blink, there was an emergency room visit, or a paycheck was delayed by a week they would need to go borrow money on a credit card or from another questionable source such as a payday loan store.  This type of borrowing has a way of feeding on itself.  You put a $2,000 transmission on a credit card with plans of paying it down quickly, but then you’re paying interest on the credit card in addition to your regular bills.  Next thing you know, something else happens, and then you take a vacation, then there is a wedding in the family.  Before long, you’re looking at $50,000 in credit card debt and no way to pay it off.

Many of the new health insurance plans under the Affordable Care Act also have huge deductibles and out-of-pocket maximums.  An appendicitis or car accident could easily result in out-of-pocket costs of $10,000 or more since many plans have deductibles of $7,000 or more.  Nevermind that  the health insurance bill was sold under the idea that no one should go bankrupt because of a medical emergency.  Given that 4 in 10 don’t even have $2,000, an accident or illness could still bankrupt many people even with insurance.

This blog is all about investing and I think investing is critical to becoming financially independent.  Establishing an emergency fund is far more important than starting to invest, however, and should come even before putting away money for retirement.  Without it you’ll end up selling stock or cashing out a 401k plan to pay a bill.  You’ll end up sending lots of money away to pay for interest on credit cards and consumer loans that could have gone towards paying cash for cars and investing for your future.  With an emergency fund, a broken down car is an inconvenience.    Without one, it is a crisis.

To start an emergency fund you obviously need to live on less than you make for a period of a few months.  The best thing to do is to start putting away $300-$500 per month when you first start your first job.  As you get a raise, start putting a little more away.  A good emergency fund will contain 3-6 month’s worth of expenses, or somewhere between $6,000 and $12,000.

Note the emergency fund should be for just that – emergencies. There are no emergency vacations or emergency things you need to acquire. It is for things like a lost job, a car repair, or a critical home repair.

After you have an emergency fund together, don’t stop there.  Keep siphoning off some of your income and investing in individual stocks or mutual funds.  Also, start putting money into a retirement account such as a 401k and into kid’s college accounts.  As your investment account grows you can reduce your emergency fund a little, but keep at least 3 month’s worth of expenses in it.  If you need to spend any of it for any reason, be sure to replenish it as quickly as possible.  Not doing so is inviting trouble.

Emergency funds should also be grown in times of trouble.  If you know that lay-offs are likely or certain, start putting more money away and building your safety net.  If you have money int he bank you’ll be able to search and find a good next job rather than taking whatever you can get.  You’ll also be in a better position to negotiate salary and benefits.  A strong negotiator needs to be able to walk away.  An emergency fund will give you that option.

To ask a question, email vtsioriginal@yahoo.com or leave the question in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

 

Time to Get Your Taxes In


The deadline for filing your state and federal income taxes is looming.  Sure it’s spring and you need to do some spring cleaning, plant your garden, paint your windows, break out your yard furniture, and do a thousand other things, but you’ll face a big penalty if you don’t spend several hours in a dark room in front of a computer filling in minutia of your finances into TurboTax.  At least the advertisements for the software make it seem exciting, like your writing an autobiography of your life instead of doing mind-numbing fill-in-the-blank for hours on end.

It doesn’t have to be this way next year.  If we were to pass the Fair Tax, there would be no need to fill in any forms.  You would just pay a sales tax when you bought a new item to the store you bought it from.  You wouldn’t need to keep any receipts.  You wouldn’t need to remember to send a check to an IRA or an HSA before December 31 or April 15th.  You wouldn’t need to calculate your income, figure out if you could deduct a child or a home improvement, or segregate a part of your home as a home office.  April 15th would just be another beautiful spring day.

Better yet, you would get a check from the government instead of sending a check to the government.  You see, the Fair Tax, in order to prevent it from being regressive, meaning to prevent people at low-income levels from paying a greater portion of their income in taxes than wealthy individuals, would include a provision by which everyone would receive checks from the government, probably once a month, to cover a portion of the taxes paid at the register.  If everyone received $10,000 per year and the tax rate were 20%, no one making less than $50,000 per year would be paying a dime of taxes even if they spent their whole income.

And don’t let that 20% number scare you.  Remember that you would receive your whole paycheck, instead of the portion that is left over after FICA and Federal withholding, so your check would be bigger to start with.  Stores would also not need to spend a lot of time doing tax accounting and tax planning, so they could lower their prices.  Some predictions are that the entire 20% would be erased since prices would fall by 20% due to the savings.

The Fair Tax would also encourage saving.  If you spent less than $50,000 per year, you would get to pocket a portion of that $10,000 the government sent you.  Compare this with current tax policies that encourage people to overspend on houses so they can deduct the interest or buy new windows and electric cars so they can get a tax deductions.  Wouldn’t it be better if people were saving so they would have money available to take care of themselves when they lose a job or need to go to the hospital instead of these costs falling on society since everyone spends every dime they get?

Want to make it even better?  How about collecting the Fair Tax at the state level and then having the states decide what functions they want the Federal Government to do and what functions they want to do for themselves.  If they decide they’d like the Federal Government to take care of interstates, they’d send a portion of their money to the Feds.  If they found the feds were wasting the money, they could hold back and do the roads themselves instead.  If the Federal Government had less money, and if they had state legislatures, who are made up of people you can actually find at the grocery store and question about a dubious vote, you wouldn’t see these pork barrel projects in individual states to buy votes or spending hundreds of millions of dollars on vacations for senior government officials.  Of course the states could decide this is needed and send the money for it, but I’m thinking they would be inclined to hold onto it instead of sending the President and 100 of his closest friends to Europe.

If this sounds good to you, contact your Congressman and your Senators and tell them you want the Fair Tax.

To ask a question, email vtsioriginal@yahoo.com or leave the question in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Your Investing Questions Please


In honor of the book release, The SmallIvy Book Of Investing, Book 1:  Investing to Become Wealthy, I’d like to take any questions on investing and personal finance that readers may have.  Note I can’t give specific investing advice, so please don’t ask “I have $5,000 to invest.  Where should I invest it?”  Instead I’m looking for questions like “What are some good ways to invest for college?’ or “What kind of asset mix is good for a thirty year-old in a 401k?” of “Is it better to pay off a house early, or keep the mortgage and invest while you pay it off?”

Please leave questions as a comment to this post.  Thanks!

 

SI