Buying a House - Seth's Blog

A long post from my big brother Seth Godin on home ownership in the US (see, he's a real estate expert as well!) which is well worth checking out...

My response to it would be: he's got the nail on the head with the idea that buying a house is a decision which tends to be accompanied by much more emotion and other trappings than any other purchase, this is how it can sometimes go awry. But I'd seek to get away from the emphasis on capital gains, something that seemed to have the UK in a fever-like grip when I was living there ('you bought at the right time'...oh yeah? How do you know?).

As he indicates there are different types of people and if you're a play-it-safe employee then a mortgage presumably goes with the territory (it did when I was anyway); however, if you're a freelancer, entrepreneur or investor without a guaranteed income, it's much riskier (the banks know this all too well I expect). Lose your job and there are all sorts of checks and balances in place (like getting another job in the same field) which can mean that foreclsoure's far from inevitable. If you don't have a job in the first place you don't have that luxury.

One possibility is to consider renting; It ain't necessarily throwing away good money after bad; depending on the downpayment you make and the nature of your mortgage it can potentially be cheaper month on month than buying these days with a lot of legislation aimed at protecting the tenant (notably in the UK as another PMC contributor has been finding out) and managing agents if things do go wrong. There's that old paradox, the monthly payments for buying can be less than renting (though I guess that's all changed now) and yet you can afford to rent somewhere that is nicer than you can afford to buy...if you want quality of life then why stake everything on somewhere that's not as nice?

Doesn't mean you shouldn't have a mortgage, but the mortgage should be on something that is a real asset, ie something that generates some sort of income, however small. Unless you wanna take on a lodger, it means buying to let of course.

B2L investors are well known for paying less for a property than many homeowners (perhaps 'cos it's not an emotional decision for them) so your mortgage may end up being smaller for a comparable property, if you're patient.

But in any case, don't bank on capital appreciation, that's called gambling, and if you do make anything on a sale, treat it as the icing on the proverbial cake.

So there you have it, rent your own home and have a mortgage on an investment property...not quite was Seth was saying but we both agree that property ownership ain't a bad thing..


Disclaimer: the PMC knows nothing at all about real estate investing and was merely thinking out loud with this piece. 

Time Management Suggestions, Just Suggestions

This might be of use to some and not to others, and nothing original but I expect anyone still reading might find some benefit, even if it is teaching their proverbial grandmother to suck eggs.

First off, time cannot really be managed. We all have 24 hours in a day, that's the great leveller, and noone is treated unfairly here. Only activities can be managed. So far so good but that's not much consolation if you are so overloaded you spent most of the time with a perpetual throbbing headache and feel crushed with the weight of it.

One good method is the ABCDE method: A stands for tasks which have to be done. Using the pareto principle, these should make up about 20 per cent of the total (so resist the temptation to make everything an A task, or if you have a manager who'll try to intimidate you into thinking everything is an A task, quit your job and do something else). In other words, if you get those two done, then that's the bulk of it already in the bag no matter what else happens. A novel twist on that is the 'eat that frog' approach. This holds that, if first thing in the morning, the first thing you had to do was eat a slimy, live frog, in all likelihood that's going to be the worst that's gonna happen to you on an average day. That said, sitting and looking at it all day isn't gonna make the task any easier, and so best get it out of the way in one gulp. You can do this with your worst task. Instead of, like Ben Elton's farties, you let it build itself up into a nightmare of such epic proportions that you in fact never do it. Then it's not so much a frog as a rottweiler which comes and bites you on the arse. So just make the biggest, nastiest task your 'frog' for the day and eat it before you do anything else.

B tasks are the things that need doing but which aren't gonna have any major consequences (ie you're not going to get into trouble for not doing them nor are you going to set the world aflame in doing them). They should be done, but NEVER before an A task.

Then there come the C tasks. These are the really tossy things that are nice to do but really have no benefit. There are as many of these as there are people, I should imagine, but common ones include chatting to friends, playing Civilization (or Medieval Total War in my case) non-stop for about eleven hours, Facebook (of course - in fact that debases 'C' tasks to mention it) and, dare I say it, sometimes even going to the pub.
Anything that's left over (which will usually be buggerall) should be devoted to these.

D stands for delegate, something that very few people do well since many people seem to think they have noone to delegate to. Not so. Anything you can't do, or can't do well, get someone else to do it. I don't pull my own teeth out or write novels, and the same goes for little things too. If you can get someone to photocopy something for you, print off a map, cook, do practically anything for you, then take it (as every husband knows). Even in obtaining the know-how to do something - people usually love to show off their knowledge too and often without realizing it, the time will come when you'll be doing the same.

Finally 'E' = Eliminate (yes, Facebook here actually!) .. worthless tasks go in here. Not sure if they warrant the dignitiy of being listed and yet they might need to in the beginning since there are often so many of them. It's great to be able to tick off things you've done today by simply not doing anything


A major time waster for many of us is dealing with bits of paper, especially if you live somewhere like the Baltic States (printed out receipt stapled to card with till receipt for a computer mouse, anyone?) and by extension emails, in which case the TRAF formula may work. Trash (ie throw away), Refer (to someone else) Action (ie pay the bill now, not cos the buggers deserve paying but just to save your own time which is far more precious; either that or just don't pay it) - this is where the frog eating comes in again. File (but only in the very last resort - avoiding the colonic irrigation that is going through your files and chucking most of it out once a year (only to inadvertently throw out something really important)). Sometimes you find yourself having to be ruthless and a little bit bold in what you're gonna throw out (I guess, I don't actually do any of this!) but it could be worth it for your own sanity and sense of control (again, I surmise).

In a nutshell, self-discipline needn't mean wearing a hair shirt and flagellating oneself into the small hours, just a little bit of planning and sticking to the task can pay itself back many times over, even if, in being self-disciplined, you feel bad about making all the un-self-disciplined people feel bad about themselves!

There you go, there are smooth talking north americans in expensive suits / tans who'd charge you thousands of dollars just to essentially spin that info out for an hour

What Would Happen if Someone I Didn't Know Actually Ever Read This?

A question that's often popped up and then been dismissed on the grounds that, with more blogs in the world than there are people it's unlikely to happen. But supposing it did, that one little post I'd knocked off at breakfast time might be the one chance the PMC is gonna get to make any kind of impression.

This is something my big brother Seth Godin has already posted about, and he's even seen strangers looking at his blog in a cafe, oblivious to the fact that the blog's author was sitting but metres away from them. How cool is that?! Maybe one day it'll happen to us at the PMC (if we can sneak in and type in the URL on someone's laptop whilst they're distracted).

Saving Needn't Mean 'a V sign'

 There was a time when 'saving' for me really did equate to the above anagram, something so unspeakably dull and depressing that piggy banks existed purely to get smashed open.

I now realise that my former disdain for saving, whilst largely misplaced, was not entirely so, though for very different reasons than the rather short sighted examples given above.

Conventional wisdom (ever read one of the Alvin Hall books? Now he is conventional) had it that you saved 10 per cent of your income, regardless of what that was, presumably on the grounds that this was do-able for even the most weekend-oriented of people and, in due course would result in a nice little nest egg instead of  an unmarked plot on the edge of town.

Still, not very exciting. And it overlooks the fact that you can get taxed on savings. Furthermore, the continual erosion of the value of all the currencies is such that in real terms your savings can often be dwindling faster than you'er accruing them; that's before we even get on to pensions, which are often linked to the stock market, which we're advised always goes up, but in fact has an annoying habit of coming down at inopportune times. Since putting money on the likelihood of something improving over time is really gambling, you might be better off doing just that on a regular basis, it'd be more enjoyable anyway.

The best approach to this rather demoralising subject I've come across is this: get yourself not one, but rather three piggy banks (literally if you wish). One of them can be marked 'savings'. After all, it's no bad thing to have a little tucked away for a rainy day, something you can get your hands on quickly if need be.

Number two piggy bank is for 'tithing' in other words, giving to charity. If you're of a religious bent that could be through the organised religion you subscribe to; indeed alms-giving, zakat, is I understand one of the five pillars of Islam. If you're not, just give to a charity of your choice. I don't believe that there are many people out there who genuinely believe supporting a charity, provided it's done quietly without too much fanfare, and there may be some instant karmic benefits of forgoing a good chunk of your money.

Then the third one is for investing. Investing in something is where the fun really starts. Not for capital gains, that's gambling as already noted. But for income. Put some money in an investment trust for example, you should get some dividends on a regular basis (not a lot though). This is where you actually start to make money rather than share it or let it lie dormant.

Real estate is a big one for a lot of people and yet there are so many amateurs out there, I should know, I've been one until recently. But if you pay attention to your portfolio and live somewhere where you can have control over the properties (i.e. not in another country where you have to give fifteen per cent of the takings to an agent before anything even happens, then it's sixty quid every time a light bulb needs changing); even if you're not a DIY person (I'm not) you may know someone who knows someone who is...

Setting up a business is often seen as the only way to riches, at least by those that have successfully done it, but again that's not for everyone, the hard work, frustration, fact that nine out of ten businesses fail in the first five years apparently (so just set up ten businesses!). Buying a business that's already established at least takes away some of that effort and you can see from the recrods what's been going on there.

These last three are all for income, not capital gains but if you really share the contemporary obsession for the latter, why not go for silver; although its price can be quite volatile, it may continue to rise (for example it was 12 USD and ounce a year ago, and these days is fluttering around the 17-19 USD mark) whereas gold, as well as being much more expensive, is currently disproportionately high compared with silver, historically speaking (about 64:1 compared with the historical average of 47:1). In fact the PMC posted at length about this some months ago, so we ought to preach at the level at which we practice here!

Finally, how much do you put in? Many people are going to grate at giving ten per cent of their money to someone else (in the case of tithing) and even for saving and investing. The answer is to start small. You don't have to set aside fifty per cent of you take home pay and never go out again. You could start off with just one kroon, dollar, pound etc a day, or even less if you want, most people could probably manage that. What may happen over time is that it becomes habit forming, and that small amount per day gets bigger and bigger, in each of the three piggy banks, and, hey presto, one's presence on this planet suddenly has some kind of justification.

Disclaimer: the PMC knows nothing at all about personal finance and was merely thinking out loud with this piece.

Friday Afternoon Labour

Anyone still worrying about Estonia's population problems need go no further than the PMC - this afternoon/early evening there was a whole lot of wailing going on in the flat downstairs thus heralding the arrival of its latest inhabitant (and the third baby this year, in a house of 6 flats!). I haven't ventured down just yet, the noise was unearthly and just like on the telly, but hope everything's ok in any case..

One For Last Thing At Night..

A great clip from yet another one of my favourite bands of all time.. I can't help thinking that the clip could have ended up on Soviet TV as an example of the degeneracy of the west, or at least I hope that was the case.

Thought For the Day No. 12 - With the Rabbi Anders Weiss

.religious leader, psychologist, spiritual guru and arbiter of good taste..

 

Heaven is angry at us for our sins and the world is angry at us for our virtues.

Be more concerned with the quality of your friends than with their number (Facebook? - ed!)

Lev Tolstoy

Slow Down and Speed Up at the Same Time - Walt Gleeson

Canfield, Proctor, Nightingale, Zagler, Hill, Robbins, Tracy, Aaron... step aside please..there's a new success guru in town! Walt Gleeson is a highly successful, internationally renowned author of motivational books and CDs and other products. With a career spanning over half a decade, he has enthralled readers all over the world, from Alaska to Florida and from Hawaii to Rhode Island, with such titles as You Can Do It!, You Can Do It! Too, Literally Make Your House Work For You and Become a Billionaire Whilst On The Toilet, Walt is the Puumaja Crew's personal realization and fulfilment coach, whatever that is. 

Hi, Walt here again. I've suddenly decided that you'll be immediately successful, if you'd only do this one thing that your uncle Walt asks of you. I'm sure some of you won't (in which case you'll have no children and die in bad ways) but if you do, you'll definitely be joining the likes of me at the high table in due course.

What you gotta do is you gotta slow down, stop rushing around everywhere like a jackass, and start doing each individual task as it comes to you.

Remember, we all have the same number of hours in the day, even the President of the United States (actually due to a quirk in the constitution the President actually gets 25 hours, but most Presidents have used this extra hours sleeping). 

So don't be pleased with yourself if you 'multi-task', there's no such thing, it's impossible to multi-task, just as you can't have multi-anything.

Having said that, you must, must, go much much faster than you already do.

You complete peasant, I've seen you, sneaking a three minute nap in front of the TV after arriving home from a ten hour stint at work, or using the time that you five children are eating to quickly read the newspaper - loser! I personally don't have any children, but that actually makes me more qualified to lecture others that do, 'cos I can objectivitize and appraisalize the situation mroe easily.


So speed up, god damn you, make sure every task takes no more than two minutes maximum, and if you find yourself over-running this, I've found that hitting a metal tray over your head helps; you can buy one inexpensively at the corner store if you're reverting to your innate peasant tendency to look at everything in terms of how much it costs.

I hope this has clarified what you need to do if you don't want to end up a total loser on welfare in the ghetto, so start doing it immediately!

Walt