Free Money Finance

Is Writing a Book a Good Career Move?

This piece from Smart Money asks an interesting question: Is a book the new business card? It's a question that's addressed to entrepreneurs in the article (which they answer "yes" -- that you can get a jump on your competitors by writing a book), but I want to approach it from a career standpoint. Will writing a book help you advance your career?

IMO, the answer is "maybe." It depends on the career (business professionals, medical personnel, tradesmen (plumbers, electricians, etc.), professors to name a few) can likely enhance their profile by writing a book. For others (manual laborers, unskilled workers, etc.), not so much. But if you're in the right field, writing a book can benefit your career in many ways including:

• It will help you crystallize your thoughts. Probably the best benefit from writing a book isn't for the reader, it's for the writer. He gets to determine what's really important to him, outline his philosophy, and work through all the issues he's probably been grappling with for years. It can help him determine what's important and what's not and direct focus on the key factors that will bring him success. If the book writing process does nothing more than this, it's a great success.

• It can establish you as an expert (or more of an expert) in your field. I haven't written a book in my field yet, but I did used to write articles for several trade magazines in my industry and I can tell you that by doing so my expertise, credibility, and stature in the industry grew tremendously. In fact, writing those pieces was key to me receiving an industry-wide award one year. People put a significant amount of weight on the written word, and if you can write anything that makes sense in your field, your credibility WILL grow.

• It can help you find a job. You could hand a book to a potential employer (assuming it's good, of course), and it's likely he'll be impressed. And if this doesn't suit you, you could list it on your resume as a professional accomplishment. Not too many people have written a book and it's something that will certainly make you stand out (in a positive way) during a job search.

• It can help you develop a side income. One of my suggestions for making more money is to use your current job skills to make money -- by freelancing at night or by teaching those skills to others. Having a book will be a marketing tool that can help you achieve both. Again, it helps establish credibility and can get you work (as a consultant) or a job (as a teacher.) In addition, you can sell the book to clients (for their staff -- at a discount) or to students (as a textbook) and make even more money.

There are some other benefits to writing a book, but these are the main ones to me.

Anyone out there ever written a book for career purposes? What happened? Or do you think this idea is worthless? Let me know your thoughts below.

A Good and a Bad Experience

From the start of this blog I've documented both good and bad experiences I've had doing business with all sorts of companies. I recently had one of each with two companies and thought I'd share those with you.

The good experience was at Best Buy. We're looking for a new TV, and a friend suggested we go to Best Buy and look at all the options they had available (he didn't say we should buy from them, simply look at the various alternatives since they have a wide selection.) While there, a young and knowledgeable salesman talked us through the options and answered all of our questions. In all, he spent 30 minutes with us and gave us a ton of what we felt was good information. I don't know if we'll buy a TV there or not, but simply by interacting with him, my impression of Best Buy went up dramatically.

The not-so-great experience was at Applebee’s. Let me start by saying that we don't usually eat at Applebee’s. But since my son and I received gift cards there for working a soccer tournament, we had to spend them. So the family went off to a local Applebee’s for a weekend lunch. The experience was "fine". Nothing major happened that caused a problem for us. But we left with two impressions of the place: bad food and too expensive. IMO, you can get much better food at a much lower cost at about a hundred different places. The trip simply reminded us why we don't usually eat there.

How about you? Have you had any good or bad experiences with businesses lately?

The Cost of a New Home

As many of you know, we've been looking for a new house for three years now (this is the third summer we've been "shopping".) From the beginning, we said we'd consider moving if we could find a great place at a big discount. Now after looking for quite some time, I'm not sure it's "worth it" for us to move after all. Let me tell you why.

What we're really looking to upgrade on is the location (city of residence) as well as the outside (acreage) of our current home. We'd like to live in a nicer township (with better schools, closer to church and friends, etc.) as well as have a bit of land to do some gardening, have a place for the kids to run around, have a dog (yes, an expense, I know), etc. We like our current house and have said several times that we'd be satisfied if we could simply move our current home onto seven acres in the township we want to live in.

But it's not that simple, of course. In real estate, every property is different from every other one. And we can't move our home (I guess we could, but we're not going there.) So we're looking for the combination of a nice house, a decent amount of land, and a location that's in our targeted area. Oh yeah, and we want it at a discount (as noted above.) Finding such a place is turning out to be a lot harder than we expected.

Granted, we're being picky. But why not be picky? We have a house we like, that's 100% paid for, and that’s in a neighborhood that's "fine." So we can afford to be choosey. And we have been. In all our searches, we found only one place that we liked enough to place a bid on, but the sale didn't go through (FYI, it sold this spring for $20,000 below what we were going to pay for it.) But we did learn a lot from the process.

To give you a feel for our situation, here's a quick summary of what we're facing:

• Homes that are comparable to ours in the city we like on the acreage we want are about $250,000 more than the value of our current home at current market rates. Is the extra amount worth paying? More on this later.

• NO ONE that has a home that meets our criteria is in the desperate/"let's unload it at any price"/foreclosure sell-off phase. No one. And rest assured that after three years we know the area well, what's being offered, and what's being sold. There's nothing that's met our discount criteria out there (even the home we bid on was much more than we wanted to pay and certainly was nowhere near a firesale price.) Now these homes are dramatically discounted from their one-time values, of course, but we're not really looking for that. We're looking for an almost unbeatable deal that's below current market value. Again, we're being picky and only buying if the right opportunity comes along.

• That said, we did see two homes recently where the seller's agent simply said the price was "write up an offer." One of the homes had been on the market for $750k (an outrageous price) and was down to $499k. The other was similar. But even a lowball offer is going to put these homes $150k above the value of our current place unless we go with the we're-too-embarrassed-to-even-bid-this price. Besides, we're not so sure that we like either of these homes anyway.

So now that you know what we're up against, let's look at the costs of a move and how they could impact our finances. Here's a quick review:

• As I noted, any house that meets our criteria, barring a miracle purchase, will cost between $150k and $250k more than our current home.

• If we move, I estimate we'll have $20,000 in one-time costs associated with the move. This includes everything from work on the new house we'd likely want done, paying movers, buying new items needed for the new home (for instance, our 15-year-old push mower isn't going to do the job on three acres of lawn), etc. This estimate is obtained from a detailed budget I laid out when we thought we were going to move to the last hose. So while it could be off one or two thousand dollars, it's not off by much.

• A new house like the one we're thinking of would add about $5,000 extra in expenses to our budget. Taxes will be more, heating will be more (most places are heated with propane), yard care will be more (someone will need to plow the usually long driveway in the winter), and so on.

Now we can afford this, but the question is do we want to pay this much? After all, the cost is pretty high. For instance:

• Assuming the cost of the house is $150k more than the value of our current home, we'd have almost $400k less (assuming an 8% return) in net worth after ten years by buying the home (I'm assuming we'd invest the difference.) Over 20 years, we'd have almost $935k less.

• If the cost of the house is $250k more than the value of our current home, we'd have almost $600k less (assuming an 8% return) in net worth after ten years by buying the home (I'm assuming we'd invest the difference.) Over 20 years, we'd have almost $1.4 million less.

• Now, of course, the new home would increase in value (theoretically), so some of these losses would be offset. Let's say the home would appreciate at 4% per year versus the 8% if the money was invested. At $150k cost of new house over old, we'd still be out $86k after 10 years and over $330k after 20 years. At $250k incremental cost, the numbers are down $144k after 10 years and $552k after 20 years.

• That said, the gains in the house are very illiquid while the amount, if invested, would be very liquid. Big difference.

The biggest financial impact of this decision is how it affects the year in which I could retire. Even at $150k extra cost, I'd need to work several more years than I would if I kept and invested the money. At $250k, I'd have to work much, much longer.

So, where does that leave us? First of all, we need to think about the costs associated with the move. If we can get the low price we initially planned for, the cost isn't that big of a deal given we'd pick up the benefits that made us start looking in the first place. But if we have to pay a premium versus our plans, it's likely not worth the cost. I'd rather have the money, the financial flexibility, and a much earlier retirement.

Working Longer Hours Early in Your Career is a Good Investment

In my pot titled Do You Work on the Weekends?, I had one reader leave this comment:

Investing time in you career seems to be similar to investing for retirement, extra work early in life pays a lot more dividends than trying to catch up at the end.

We've already discussed the power of saving early and often and what it can do for your investments. Is the commenter correct in saying the same holds true for an investment of time and effort early on in your career?

IMO, he is correct. To distinguish yourself early on in your career has benefits that last a lifetime -- more promotions, more pay increases, more opportunities, etc. And my experience is that the sooner you get the ball rolling in this direction, the sooner these things start happening and the longer they have to compound.

And working longer/harder is one way to distinguish yourself. You have to deliver results, of course, but assuming you're just as good as someone else, if you work 50 hours a week and he works 40 hours, you should be delivering 25% more than he is. And what better time to do this than early in your career? You're young and single (probably) -- you have the time and energy to get your career off to a great start. When you get older, you'll want to work only "average" hours since you'll have other interests, a family, and so on.

It kinda works like this: You get a job. You put in extra time and effort to do well. You get noticed. You get promoted and earn more. You put in more time. You get promoted and earn more. And the cycle continues. Eventually, just like with investments, your career goes on auto-pilot and grows all on it's own -- without the super-human need for longer hours. It's like a self-fulfilling prophecy. You do better because everyone "knows" you're better after a time (even if others are now working longer/harder than you.)

At least this is my experience. I worked very long hours for many years. As I established myself, I had to work less ("only" 45 hours a week or so) to do well and keep my career humming. But the seeds for this success were laid 20 years ago as I worked 60 to 70 hour weeks for months on end.

What do you think? Is this true or not? What's your experience?

Help a Reader: Dressing for Success

Here's an email I received recently from a reader:

You write all the time about advancing and managing your career and I have an interesting question that I am having a hard time digging up some information on in relation to this issue.  Here is the issue: 

I am a 26 year old woman.  I have managed to stumble into somewhat of a successful career by working hard and developing a great reputation.  I am now interviewing for positions that have traditionally gone to those with roughly 20 years of experience, or more, working with CEOs, etc of various organizations.  I can do these jobs; I am fully qualified.  I worry about reverse age discrimination.  Do you know of anything I should be doing (other than dressing professionally) that can assist me in interviews?  I was thinking potentially there was something I could do so that I don't look 26, maybe at least in my 30s?  (other than dying my hair gray?!?!)  It's hard finding advice on how to look "older"!  Do you have any suggestions on resources I could go to to read up on this?

Or should I just dress professionally and hope for the best?

I sent her some advice, but what thoughts do you have for her?

Is This a Valid Saving Tip?

Family Handyman magazine says in its July/August issue that you can save $50 on your car insurance by shopping early. Not too early, mind you, but not too late either. Their thoughts:

Everyone should shop around for new insurance rates every three years. Insurance companies reward early shopping (30 days before renewal is perfect) by giving better rates. Last-minute shopping (less than 10 days before the policy expires) makes insurance companies think you're irresponsible, and that will be reflected in a higher quote.

My thoughts/questions on this suggestion:

1. Let's start with the fact that I LOVE the idea of shopping around for car insurance and I've featured the tip many times on this site. So I'm 100% with them on the idea of getting different estimates to compare rates.

2. But is there really a "good" time to do this and is 30 days that time? Is 10 days really bad? Of course you don't want to wait too long or else you may be forced to stay with your current provider just to maintain coverage, but does this savings for 30-day people versus 10-day people really exist? Anyone know for sure?

We usually start calling about three weeks before renewal time. Not sure if this is good, bad, or in the middle based on the suggestions above.

I'm confused...

Best of Money Carnival Up Now

Just a note to let you know that the latest edition of the Best of Money Carnival is up at My Life ROI. Congrats to all participants and especially the winning post, Why I Invest with Vanguard. (I even made the top 10 with my post How You Grow Your Income by 10% or More a Year.)

Check it out -- lots of great posts in one spot!

My Jobs, Introduction to the Real World

A few days ago I continued my career history by detailing the jobs I had while in graduate school. Today I want to continue this series by sharing the first job I held after I graduated.

The fact that I had this job at all was somewhat of a miracle. I had wanted to work for this company since I started my studies in undergraduate school. The professor classified them as "the best" company that did what I wanted to do and I wanted to be part of "the best". In fact, I picked my graduate school because I knew this company recruited there.

But for some reason, I missed the sign up to get an interview with the company when they were on campus (they were very popular and were talking to both undergraduate and graduate students for a variety of positions.) So I went over to the room they were interviewing in and asked the scheduler if I could squeeze my way in to talk with someone. She had mercy on me and got me an end-of-the-day slot (not a great time as everyone would be tired, but beggars can't be choosers.) I impressed the interviewer enough (somehow -- I knew NOTHING back then about interviewing) to get to the next stage, an hour-long quantitative test they required all potential employees to take. I was done by 6:30 pm or so.

A couple weeks later, I received a phone call from them and they wanted me to fly down to their headquarters. I did a couple weeks after that, ran through the interview grind, and somehow (again, I didn't know anything about interviewing, though I did hear once I was hired that my test score had been one of the highest that year and that made a big impact on them) by the end of the day I had a job offer. I was such a greenie that I accepted it that day. Ugh. But I had done what I set out to do -- gotten hired by the company I wanted in the field I wanted. I was now part of "the best."

Once I started my job a few months later, I learned an amazing amount at this company, as you might expect, including the following:

• Work is hard. I thought my pace was tough in grad school, but it was only the beginning. This company was a leader in its field and it expected its employees to commit their lives to its success. I was single then and had no friends in a new city, so working seven days a week was ok with me. After all, I wanted to succeed no matter what!

• Fortune/luck can go both ways. As I've noted previously in this series, I'd gotten several lucky breaks up to this point. Now fortune turned the other way. I had five bosses in a year and a half, one that barely spoke English. It was a nightmare trying to accomplish anything with the revolving boss door. It also hurt the personal development of those that reported to our various bosses.

• I could succeed among the best. I was given the highest performance rating possible at my first review. I was on my way to success and the top!

• Success is fleeting. As I got to the top, I got a bit cocky and didn't mind the details as I had before. I had two major projects go down in flames (one my fault and another mostly the fault of another department.) And not only minor flames, but nuclear warhead-type flames. "What goes up, must come down" was true for my performance at this company.

• Free thinkers aren't always appreciated. I tried to bring some new, innovative ways of doing things to an old, "this is how we do it" company. It didn't go over well, especially in light of the flame ups.

• Bad results gather momentum. Once I had gone from "star" to "loser", it was very difficult to turn the tide. Even after I received a major company award for one of my projects (a "free thinker" idea BTW), I made no progress with those higher up in the organization. In fact, my award (given by a level higher up than those in my direct area) seemed to reinforce with my bosses that I "just didn't get it."

• Dating someone you work with is a bad idea. To make matters worse, I started dating a woman who worked on the same business I was on. And not only was she also branded as a "loser" too, but my bosses' boss HATED my girlfriend. This didn't go well for me, especially when my girlfriend quit the company and burned several bridges.

• Good friends are like a cold drink in a desert. A successful friend at the company came to me and asked if he could speak to my boss about my future. I told him I'd appreciate that. He came back a few days later and said I had no future with the company. At least I knew -- I now needed to start looking for a new place to work. Years later, I supported this friend financially (as part of a group) as he took on some charitable work. It was my privilege to do so.

• Sometimes it's too little, too late. As I was interviewing, my last boss came on the business and was the best I had while there. He asked me to not think about leaving but to put in an effort to stay -- he said he knew we could work it out together. While I appreciated his thoughts and commitment, I knew the handwriting was on the wall. If I'd only had him a few months earlier...

• Despite all the bad that happened to me at this company, it was the best resume builder I could have imagined. Just having worked at this company, even though it was only for two years, got me job offer after job offer. Even today, twenty years later, when I tell people I worked for this company, they are impressed. Simply having worked there, despite the fact that my time wasn't successful (people know that this company is known to be a very trying environment), has been the biggest factor at making my career a success other than me working hard through the years. It's been invaluable and a key reason I've been able to grow my income as I have.

As you can tell, my first job was an education in and of itself. I'll post in a few days on job #2, one of the jobs where I had the most success in my career. Unfortunately, "what goes up, must come down" held true at this company as well. Stay tuned.

What Constraints Should Churches Put on Helping the Needy?

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Here's a comment left on my post titled Is the Welfare State the Fault of Christians?:

At my previous church, they would provide people with whatever they needed; food, clothing, a place to live, etc. However, there was a requirement that the person(s) would have to also work. If they did not have a job, the church would help find them one.

From what I have heard of other church programs, they operate in much the same way.

I thought this would be a good conversation starter on the topic how churches should offer financial assistance. Here are my thoughts:

1. I agree that people should work to receive assistance if they are able to do so. Why? Because if a man is not willing to work, he shall not eat. And if they can't find a job, then the church can help them find one (as noted above) if that's possible. In addition, those receiving assistance could help out around the church doing various needed tasks (which always seem to exist at a church.)

2. The needy should submit a budget and be receiving financial counseling as part of the support process. My church requires this. Otherwise, how do they know that the church simply isn't supporting someone's wants (cable TV, eating out, etc.) rather than their needs (food, clothing, and shelter)? Of course the person getting counsel could simply lie about their financial situation and who would know? But still, it's somewhat of a safety-check.

3. The assistance should be for a limited time period. The person that needs the financial assistance should not grow dependent on the help.

4. Should the person be a regular member/giver of the church to receive support? This is a tough one and I know that different churches handle this one differently. My take is that there are two ways the church should help the needy:

• By giving to/supporting/running their own charity that feeds the poor/needy with no questions asked. My church has decided that we should not run our own service like this (though we do have a small food pantry), so instead our congregation supports a local ministry that feeds the homeless, needy, etc.

• Members (not just attenders) of the church that need financial assistance. If they have been givers in the past and are now in a rough spot, then they certainly should receive help. If they have not been givers, they can still be helped IMO, but their future commitments and budgets should set aside a place for giving so that others can be helped once they are on their feet.

Anything I missed? Agree or disagree? What are your church's policies on helping people financially?

Are You Saving More?

Reports are all over the web that Americans are saving much more now than they have in recent years. In fact, we're saving almost 7% now! Given we were at or near 0% not too long ago, this is a HUGE change! Guess there's nothing like a major recession to get people cutting back. ;-)

Are you saving more?

We aren't. We've always been good savers and are simply maintaining what we've done for years. So our saving hasn't gone up or down -- it's remained constant.

How about you?

What is Money?

Here's a long but interesting comment that a reader recently left on my post titled Money is a Tool. I felt it was worth sharing with everyone since it's likely to spark some discussion:

• What is money? With all the literal and varied interpretations of what is money all about, let me point my views about it.

• Money is just a medium of exchange. You need money to transact business and exchange from the goods or services you want to buy or have.

• Money is just a medium for barter. To facilitate the transaction of business or trade you use money. Bartering as a means of transacting business is slow, obsolete and burdensome.

• Money is a certificate to pay the settlement of debt. Money is the universal symbol to pay debts, moral damages, even heal personal wounds and to erase wrongs committed by others.

• Money is an employee. Yes, money to some is regarded as employees since it can work for you to create more money. When in reality sometimes money is better than an employee because it does not create labor unrest and does not provide personal problems.

• Money is just like manure. Money is just like manure, you stuck it in one place it smells, you spread it, it prospers and turns to be just like a fertilizer to grow more plants.

• Money is just like a friend. Money is just like your friend, spend it and it is like discarding your friend. Saving money is like keeping your friends. The more you save it, the more friends you will have.

• Money is an instrument to spend it and acquire goods or services. In its basic sense, the only purpose of money is to spend it and to acquire the service you want to have in your life.

• Money is the oil that makes life run smoothly. With all the wrong notions of money, money can make our life run smoothly. It can pay our bills, food, vacations, education and luxuries in life.

• Money is just for enjoyment. Money according to some pragmatist was only invented with the sole purpose to enjoy it, nothing more nothing less.

• Money is a storage of wealth. Money could be saved for greater benefits it will provide in the future. It is a mode of delaying instant gratification for future long lasting and prosperous future gratifications.

• Money is just like a hall mark card. Money that we part is merely just like a card with beautiful writings and dedications in it with the exchange of something else - stuffs, services rendered and luxurious goods for the rich to acquire.

• Money is just an energy. Yes, money is just an energy that is why it is called the currency and since everything in this earth and the entire universe and galaxy is made up of ever changing wave of energy. Concentrate upon it and it surfaces, neglect it, it turns into waves of energy again.

• Money is just a dirty peace of paper with the pictures of long dead persons. For the common Tao, money is just a piece of paper with some pictures and inscriptions upon it which is in itself in essence also correct.

• Money is just like your leg or arm, use it or lose it. Money is just like your legs or arms if you do not use it then it becomes useless.

• Money is like the earrings and jewels that rich men give to their wives. Money is precious, they are like the diamond earrings that the rich give to their wives that is why it is very costly.

• Money is neutral. Money is neither good nor bad, it stays neutral. It can be good when it serves as utility and useful purpose and bad when use for evil designs.

• Money is wealth when used for utility purposes. When money is used for public service and for the betterment of the nation it becomes wealth.

• Money is God in action. Money use for tithing and returning it back to God is the recognition that everything belongs to Him. We are merely the stewards of God's money and His creations.

• Money is the extension of your own self. Money is the reflection of who you are. If you are charitable when you have only few of it then that will be your nature when you have plenty of it. If you can manage money with very few of it then your can be entrusted with plenty or perhaps millions of it.

• Money is power. He who has the money is powerful. Money answers everything. Money speaks. He who has the gold rules. Money makes the world go round.

• Money is not real, it is the representation of something else. Money in itself is just a plain piece of paper. It is the people who place meaning into it that makes it valuable.

• Money is receipt and receipt is money. You must print receipt to acknowledge the receipt of money and goods or services you have delivered. Ancient times acknowledges the deposit of gold and silver by issuing receipt which can be loaned for more gold which is the symbol of business transaction.

• Money is commodity. If you have commodity you can sell it in the market for money. If you have money you can buy commodity or services.

• Money is just a servant. The more money you have, the more it can serve you, other people, the community and the world that we live in.

• Money is a tyrant master. Money can be a tyrant master if you are indebted with so many debts and obligations. You become the slave of money if you borrow money you cannot afford to pay because you will be burdened with financial obligations to pay together with the surcharges.

• Money is a tool. Money is just a tool to acquire goods and services. It is neutral, not good not bad. It is just a tool for you to acquire economic goods without which life's activities can be drudgery.

" MONEY SWORE AN OATH THAT NO ONE WHO DID NOT LOVE MONEY SHOULD HAVE HER." OLD IRISH PROVERB

10 Ways to Save Money and Still Keep Cool

Family Handyman magazine listed 10 ways to save money and still keep cool in its July/August issue, and I thought I'd tell where we stand on all their suggestions. Here goes:

1. Replace your old air conditioner. Think we may do this this year thanks to the available tax credits.

2. Switch to CFLs. We're in transition from regular bulbs to CFLs.

3. Install a programmable thermostat. We have one and use it all the time. We even use the "vacation setting" when we travel to save even more.

4. Clean or change AC filters monthly. I check ours monthly, but only change them when they are dirty enough.

5. Fix leaks in AC ducting. On my list BIG TIME! I know we're losing a lot of cool air along the way and I need to seal up the ducts I have access to.

6. Block out sun with window shades. We'll probably be getting new windows this year, thanks to the available tax credits.

7. Keep cool with shade. This is one big advantage of the trees getting bigger around our house -- they block a lot of the sun's rays.

8. Check your AC system’s efficiency. We have our unit checked annually since it's rather old.

9. Use fans and raise your thermostat. We have ceiling fans, persona fans in our bedrooms, and our big weapon, the attic (whole house) fan.

10. Tune and clean your AC regularly. Oops. didn't know this needed to be done. Is this part of our annual check-up? I need to find out.

Overall, not a bad score for us. But let's face it, I live in Michigan and cooling isn't the big expense here -- it's heating! ;-)

How do you score on these ten suggestions?

The Psychology of a Layoff

The following is a condensed excerpt from $100K to Nothing: Layoff:My journey from a six figure income to the unemployment line in the worst economy of our time by Dan Holt. You can find out more about the book at his website.

My father, and pastor, told me that losing my job was not unlike the loss of anything special and close to you. He told me I would go through the five stages of grief, first introduced by Elisabeth Kubler-Ross in 1969: denial, anger, bargaining, depression, and finally acceptance. While I do not rate the loss of my job anywhere near the loss of a loved one, I could begin to see myself going through some of the stages when I wasn’t too deep in them to realize what I was doing or how I was feeling. Before I get into my personal grief process after losing my job, I want to share with you some examples of the stages:

1. Denial – While it’s hard to stare your boss back in the face and say “no I haven’t been laid off,” it has happened. More likely, it was going home to the family and smiling through dinner, only having to explain to your spouse the next day why you weren’t getting ready for work. Or maybe you just convinced yourself that you were on vacation or a sabbatical. That sounds better, I’m just taking an extended leave to learn new skills.

2. Anger – It is never a good idea to express your anger verbally, or even worse physically, when you hear that you have been laid off—no matter how tempting it is. You don’t want to burn bridges with the people that may be your most valuable references to potential future employers.

3. Bargaining – This is typically the response that the manager will hear. Most laid off employees will briefly skim stages one and two and go straight to bargaining. “Please don’t do this,” “What about my family,” and “Just give me two more days to show you that I’m indispensable” are the most often phrases managers hear. This is not a huge mistake. You are human, you should get at least a chance to try to change your manager’s mind (even if, as in my case, he just distances himself and quickly hangs up the phone.) Don’t confuse this with begging. You are not asking anything out of the ordinary. Remember, though, if your company is downsizing and you have been chosen, you are not likely going to change your boss’ mind.

4. Depression – Most laid off employees do not get depressed because they no longer have to work seventy hours a week for a company that could care less about them. Rather, the most common triggers are: not being able to see your friends at work anymore, feeling like you weren’t good at your job and that’s why you lost it, and feeling anxious and unhappy about the prospect of having to conduct another job search. This is a very unstable mental state—somewhere between having the blues and experiencing a full-on bout of clinical depression. It can cause a down spiral where your depressed psychological state leads to not landing a job, which helps you sink further into depression. Have your friends and family help you stay on top of the symptoms and red flags, and don’t hesitate to see a doctor.

5. Acceptance – Yes, I realize I lost my job and will no longer be working with 90% of the friends in my life. Yes, I am actively searching for a new job with the geographic limitations induced by the medical conditions of myself and my family. But no, right now I don’t think I will ever fully accept that in a few short months I went from one of the hardest and smartest working members of my team to being the dispensable guy. Maybe in a few years, but not now. My advice is to not strive for acceptance of this traumatic event, but rather to move on with your life, find a new job, and then deal with acceptance when you are in a much better place.

Although the psychological factor is not the only obstacle to overcome in unemployment, it is one of the most crucial. If you can stay on top of your emotions, you can land a job that is fitting for you and meets your goals. If you can’t, you could end up settling for a job you dislike; or worse, ending up in the dreaded third category the Bureau of Labor Statistics tracks: Not in Labor Force (which includes unemployed citizens who are no longer searching for employment.) While coping with the psychological harm of a layoff is different for everyone, there are a few guidelines you can follow:

• Remind yourself you are not alone. There are 14.5 million people in my shoes. It’s hard to remember that when I’m scouring job boards for hours alone on my computer. Also, remember that there are people getting hired every day.

• Find an outlet that makes you forget that you’re unemployed. Continue to make bowling night, go out to dinner occasionally, or go see a movie in the theater—whatever it takes to make you feel the same way you did when you were employed.

• Handle the stress that a job search and draining emergency fund bring. Take a walk at night. Limit your job search to 1 hour on job boards before a break. Meditate. Do yoga. Use whatever techniques worked when you faced stressful situations prior to your layoff.

The goal of coping is to move on. For me, increasing the intensity of my exercise routine and adding some fun activities when I get stressed greatly helps me cope. Whatever it takes to get you to that point is worthwhile when compared to how you will feel and how you will act when you get there.

Star Money Articles and Carnivals for the Week of July 6

For weekday updates of what I find to be some of the most interesting personal finance articles on the web, follow me on Twitter. For now, here are some pieces I found especially worthwhile and some of the carnivals Free Money Finance was in this week and my posts that were included:

• This week's Best of Money Carnival was held at Bible Money Matters. Winning post was Powerful Ways to Improve Your Life.

• EDITOR'S CHOICE! Carnival of Debt Reduction - The King of Debt

• AllFinancialMatters has a huge how to roundup.

• The Sun’s Financial Diary trades carbon emissions with ETFs.

• Lazy Man and Money discusses alternative streams of income.

• BripBlap tells how to get a job on Wall Street.

• My Dollar Plan tells how to get control of a budget.

• Money Smart Life discusses Quicken Online Mobile.

• The Digerati Life tells where to get some cheap vacation deals.

• Smart Spending discusses retiring in a small town.

• Carnival of Pecuniary Delights - 10 Pricey Cities that Pay Off

• Festival of Frugality - How to Save $200 on Your Car Insurance

• Carnival of Money Stories - My Jobs, Pre-College

Enjoy!

P.S. Carnival Hosts -- If my post is in your carnival in a given week, please send me the URL to the carnival and I will include it in my weekly roundup.

Help a Reader: House Trouble

Here's a question left recently by a reader:

My husband and I have retired in the last year. We have built a new house and have a large mortgage. Needless to say, our old financial advisor did not advise about saving for the house and we started building when the "recession" hit. We lost $60,000 in our investments and we had planned to put $100,000 down and do most of the work ourselves. We did a lot of the work ourselves, but we had to hire a contractor or we couldn't get a loan to finish the house.

Our current financial advisor has most of our money tied up in annuities.

How can we get our house paid off early? We have a 30 year mortgage. And are annuities the right place for our money?

Details are kinda sketchy and the ones that do exist don't sound good. Got any suggestions for her other than "cut spending" and put that towards the debt?

Three Things I Think About When I Think About Bernie Madoff

The following is a guest post from Peter Passell, author of Where to Put Your Money NOW: How to Make Super-Safe Investments and Secure Your Future.

The greatest financial fraudster of all time has gone to the slammer, and isn't scheduled to be released until he reaches the age of 221. That's OK by me. Bernie Madoff, after all, was no Robin Hood. Sure, he stole from the rich (the struggling middle-class need not apply). But he stole from the poor, too, slurping up billions from the endowments of charities. And apparently the only beneficiaries of this vast involuntary transfer of wealth were family members struggling to maintain the lifestyles of the rich and infamous.

End of story? Not quite. While it's hard to imagine that anyone else is running a Ponzi scheme on this scale, I would argue the human weaknesses that made it possible for Madoff to keep the scam going for decades -- greed, gullibility, laziness, money-driven politics -- explain why most investors, most of the time get less than their money's worth. At very least, then, the Madoff fiasco should remind us all of some unhappy truths about investing in America.

Government regulation is no substitute for personal vigilance. If you rob a bank, the chances are excellent you'll be caught -- and quickly. Indeed, the clearance rate on bank heists is so high that only unshakably optimistic crooks even try. How, then, was it possible for Madoff to get away with so much bigger a crime and for so long? One important reason is that modern business depends more on cultural constraints (as in, "I'm not a thief") than on regulation (as in, "I'd never get away with the theft") to keep it honest. And, unfortunately, the investment business attracts lots of folks who aren't deterred by the injunctions they heard in Sunday school.

But surely, regulators will now be more vigilant. Don't bet on it. The sort of regulation that could reliably deter the bad guys on Wall Street would be immensely intrusive and costly. And when push comes to shove, it's not likely that either Congress, or regulators appointed with the tacit approval of big political campaign contributors, will have the stomach do what's necessary.

The bottom line: You don't always get what you pay for. If you want to invest in anything other than government-guaranteed CDs and bonds, you've got to stay on top of who's got your money and where.

If it's too good to be true, it isn't. Most investment scams are of the get-rich-quick variety -- as in "I'll double your money in three months." Madoff, by contrast, attracted big sums by offering something that seemed far more reasonable. No secret land deals in Wyoming for the former chairman of the NASDAQ stock exchange, no once-in-a-lifetime opportunities to profit from the coming boom in ruthenium (look it up, yourself . . . ). All he offered were 10-15 percent returns, year after year, regardless of the state of the stock market or the global economy.

You've got to give the devil his due here. The promise of low-double-digit profits without risk was just plausible enough to attract the sort of investment advisors who served clients by dressing well and mixing a terrific martini rather than by providing timely intelligence on matters financial. Meanwhile, Madoff was able to make the cash payouts needed to keep investors believing they were getting what they paid for as he was able to increase funds "under management" by a modest amount each year.

On closer look, though, the promise of a steady 10-15 percent was hardly more plausible than the promises of more conventional investment cons. For while plenty of investors do average annual returns in the low-double-digits, they only manage it by taking substantial risks. And the fact that Madoff never had a losing year should have been a dead giveaway.

How did he get away with it, then? Like all successful scammers, Madoff understood that almost everybody secretly feels entitled to something for nothing -- and many are ready to deny reality to get one. To paraphrase Groucho Marx: Who you gonna believe, me or your lying eyes?

The scandal isn't what's illegal, it's what's legal. Yes, I stole that line from the great pundit Michael Kinsley. And yes, what Madoff did was illegal. But his most excellent adventure should not be allowed to obscure the reality that the $50 billion or so that Madoff lost on behalf of clients over the last few decades was far less than the sums that the financial services industry takes from investors every year for nothing much in return!

How dare I, an economist and (within reason) a believer in free markets, make such an outrageous claim? Try this on for size: In 1997 the after-tax profits of financial services companies was roughly $100 billion (a record high to that date). Over the next ten years it averaged a bit more than $170 billion -- even after adjusting for inflation. So what did we get for the extra $70 billion annually? Wall Street sliced and diced a lot more "product," managing everything from a great wave of corporate mergers to the issuance of hundreds of trillions of dollars worth of old- and new-fangled financial derivatives.

But it's hard to see what extra investors got from the deal. And when you look closely, you can see what they didn't get. Corporations paid hefty fees for securities issues -- fees that never seem to go down in spite of what appears to be heavy competition for their business. Meanwhile fund investors paid humongous sums to shuffle assets in what economists call "zero-sum" games in which the gains of some came out of the pockets of others.

Bernie Madoff is gone, may he rest without peace. But the financial world that spawned Bernie is alive, and will soon be well enough to take your money with gusto.

My Jobs, Graduate School

A few days ago I continued my career history by detailing the jobs I had while in college. Today I want to continue this series by sharing the jobs I held while in graduate school.

While I was getting my MBA, I had two jobs. The first was during the school year (both years). It was an assistantship where I ran the university movie theater as well as supervised some dances in the student union. I had to work EVERY Friday and Saturday night from 6 pm until 11 pm or so (sometimes later), but it paid all my tuition, room, and board (I think, but not sure on this one) as well as $300 a month (a fortune to me) and gave me some great work experience. Here's what I learned from the job:

• Luck matters. Like the assistantship I had as an undergraduate, the people hiring for this assistantship wanted someone to make a longer than one year commitment. The previous assistantship holder was graduating with an MBA, he'd done a great job, and they wanted a two-year commitment from a new MBA student. I happened to fit the bill.

• The interview is important. The one thing that sealed the deal for me was the interview. I hit it off with the hiring manager and a few days later I had an offer. It was the event that determined my future since I may not have attended that school (or maybe any school at all) without that assistantship.

• You need to sacrifice for what you want. I was 22 years old and had to work EVERY Friday and Saturday night. Talk about a social life killer (though I could have gone out once I got off.) But I was thankful for the job and what it provided for me. Besides, I was driven like mad in grad school and a social life wasn't high on my priority list. In my mind, I left the school world and entered the career world when I graduated from my undergraduate school.

• All jobs have perks. Despite the fact that I had to work every weekend, I had the weeks relatively free (simply had to pick up the movies and prep them for the weekend.) This allowed me to focus on my studies. Also, I could study while the movies were being shown. (BTW, I was ALWAYS studying in grad school and needed all the extra book time I could get.)

In the summer between my two years in grad school I got an internship in Indianapolis at a good-sized company. It was my first "real-world" job and I learned a lot from it including:

• Working with my brain was well worth it. I made something like $2,500 a month -- A HUGE amount for me at that time. I knew what the average salaries were leaving grad school, but somehow they didn't really register until I saw that first check. I was rich! (Then, once I got my first job after school, I found out that lots of bill -- for things like housing -- come with the nice, new paycheck. Bummer.)

• It's a different world from school. We learned one thing in school but in the real job world, many things worked completely differently. This is one of my biggest beefs with MBA programs -- they prepare you for a hypothetical world of business that does not exist. That's why, over time, the value of your business experience will trump the value of your education (it's more practical, relevant, and meaningful).

• Politics is part of the workplace. Wow, this was an eye opener. I didn't expect Days of Our Lives to play out in the work world, but boy did it. It was like a soap opera combined with political intrigue. And since I was "only" an intern, I was confided in by everyone who wanted to tell their side of the story. Then again, since I was pretty green then, I'm sure I missed a lot of what was going on.

• Business can be boring. I like working in the business field, but the company and the products bored me. I learned that I needed to find a good company with some products I could at least be generally interested in if I wanted to maintain my sanity.

So that's it -- we're now through with all my pre-college and college jobs. In the next post (in a few days), we'll start to tackle the "real" jobs I've held as my career starts and takes off.

Five Money Dilemmas and What I'd Do

CNN Money recently told what they would do when presented with five money dilemmas. I thought I'd let you know my responses to these compared to Money's thoughts, so here goes:

Problem #1: Your investments are in the tank, your annual bonus is a thing of the past, and you need to cut back on expenses. Problem is, tightening your budget can create pain for someone else.

My response: If you cut back as far as you can and you still have to make painful cuts (in this case a housekeeper versus a home for your dad versus classes for your kid), I'd start by protecting my family first. I'd cut the housekeeper (why have one in the first place?). Next would be the special class for the kid. She can always get another one, but the last thing I'd do is move my dad out of his home simply to save myself some money. I would offer to have him live with me, but if he didn't want to do that, I'd try all I could to accommodate his request above all the others.

Money's response: They agreed with me about the family part, but they preferred the class for your kid over dad keeping his home.

Problem #2: So how do you respond when your neighbor says that his sales commissions are down 40% and he has to postpone removing his dead tree that's threatening to fall on your garage? Or when your brother tells you that he can't pay his share of the 50th-anniversary party you're giving your parents? You know he's strapped, but you think he could chip in if he tried.

My response: I have little sympathy for those who have a tough time telling a need versus a want (for example, cable TV is NOT a need.) If I felt they could cut a bit and make their commitment, I'd hold them to it. If I felt they couldn't, I'd probably give my neighbor some time but ask that he handle it within a period of time. For my brother, I'd probably pick up the tab.

Money's response: They say that if someone is in real trouble, then you should pay for it and asked to be reimbursed. That's a lot easier said than done IMO.

Problem #3: You're a manager at a company that's struggling, and you have to decide which employees to lay off. Some are single. Some have families to support. Some are healthy, while others have medical problems. Meanwhile, your longtime assistant tells you that she could lose her home if she doesn't get a bonus. You could go to bat for her, but it would mean that much less will be available for others.

My response: I've been here before -- having to fire people at a bad time for the company. Here's what I (and the rest of the company did): 1. Looked at the needs of the firm. 2) Looked at who was performing well and who could fulfill the needs of the company to give it a chance to thrive. 3) Those remaining were let go. Personal circumstances were not considered. It sounds very cold, but if you don't do it this way IMO, you risk the whole company going down and EVERYONE losing their jobs. Better to save the many, if possible.

Money's response: They pretty much agree with me.

Problem #4: Your job is far from secure, and you are doing your best to scrimp and save. But good friends are making that difficult. The folks with whom you and your family vacation every summer, for example, are balking at the much less expensive cabin you have proposed this year. And your college roommate, who was the best man at your wedding, now wants you to be the best man at his -- which takes place in Rome.

My response: No problem here. Level with them and move on. Tell them you're in a tough place financially and just can't swing it. If they're upset at you after knowing this, they aren't very good friends IMO.

Money's response: They generally agree, but suggest you that you should try and do all you can to make the "commitments" you have.

Problem #5: Thanks to decades of prudence, you're financially sound. But others in your life can't say the same. Your spendthrift son has lost his well-paying job and says he'll lose his Porsche if you don't take over the payments. And your best friend needs a loan to help with his daughter's tuition -- a loan you're uncertain he can repay.

My response: To son: sell the Porsche (and the tons of other trinkets he probably has), downsize your life, and consider it a lesson well-learned early on in life. To friend: Sorry, I don't loan money to friends. I might GIVE him some money (a couple thousand or so -- loaning money can kill a friendship), but that's it.

Money's response: On the same page with me.

How about you? Would you have approached these issues differently?

Four Ways LinkedIn Can Help Your Career

The following is excerpted with permission from How to Succeed in Business Using LinkedIn: Making Connections and Capturing Opportunities on the World's #1 Business Networking Site by Eric Butow and Kathleen Taylor (AMACOM 2008). We've talked previously about the value of LinkedIn and this piece adds some meat to that discussion.

Promote Yourself

LinkedIn is designed for business professionals and business owners instead of for the general public. You establish yourself on LinkedIn by creating a profile that summarizes your professional and/or business accomplishments. Without a profile you can’t link to anyone else in LinkedIn, and no other LinkedIn users can learn more about you. So creating a profile is one of the first tasks you need to complete. For example, when I joined LinkedIn, I set up a profile for my business and linked the profile to several colleagues.

The text that you include in your profile is searchable. So, if you’re looking for work in a particular area, such as telecommunications, be sure to add this information in your profile. As an example, Penelope Trunk, a syndicated career columnist for The Boston Globe, who uses LinkedIn extensively to network with others, pointed out in her April 24, 2007, blog entry about 10 ways that journalists can use LinkedIn. A thoughtfully completed and properly linked profile is an excellent way of promoting yourself and/or your business.

Grow Your Network Fast

LinkedIn offers subscribers a remarkably fast way to grow their networks. When I joined LinkedIn, about 14 of my colleagues asked to link with me, and I asked to link with some of them. By degrees I expanded my link network to hundreds of LinkedIn members because my originally linked members have links to hundreds of other connections. And those hundreds of connections have thousands more. In a very short time you’ll have more connections than you ever thought possible. Fortunately, LinkedIn makes it easy to search for other LinkedIn members who share your interests, including, for example, the company you work for (or the company you worked for sometime in the hazy past), as well as for people you went to school with (in the even more hazier past).

Guy Kawasaki, former Apple evangelist, managing director of the venture capital firm Garage Technology Ventures, author, and LinkedIn user, offers a valuable tip. He notes in his January 4, 2007 blog that if you make your profile available to everyone and use your actual name for your public profile URL (also known as a Web site address), you make your profile information easier for search engines to index. This is especially true when people use Google to search for you because your site has a higher Google PageRank, that is, your profile comes up more quickly in search results when people search for your name, giving you more opportunities for people to network with you.

Get a Job, Man!

When a friend of mine told me recently that he was looking for a job, one of the first things I told him was to sign onto LinkedIn and let me know when he did, so that I could not only link to his site but also write a recommendation for him. When you write recommendations for other users, they appear in the users’ profiles so that others can read about how great your contacts are. Not only are other LinkedIn users searching for fellow users with similar interests, but recruiters and business owners also use LinkedIn to find great employees by posting job listings. And your LinkedIn home page shows you who’s hiring in your network.

In addition, as Guy Kawasaki notes in the same blog entry, LinkedIn also enables you to perform reverse checks on your prospective manager as well as the company you’re thinking of working for. You can use LinkedIn to contact people who have worked at the company, get feedback from them, and find out about the current rate of turnover.

Give and Get Inside Information

LinkedIn is also a great place for members to collaborate. You can question only the people in your network, or you can expand your search for information in LinkedIn Answers, which is a section for asking and answering questions at-large. You can ask a question in as many as 16 different forums, from issues about business administration to using LinkedIn. You also can participate in discussions and answer questions from other users.

What’s more, as Penelope Trunk notes (in the same blog entry), you can get ideas for topics and trends in your industry. For example, she notes that, if you look for information about the iPhone, you get some of the buzz about the product from other LinkedIn users. If you’re looking to work or start a business in a particular industry, Guy Kawasaki points out that you can use LinkedIn to find out who worked for your competitors and see who’s starting up businesses in the same industry.

The more questions you answer, the more you become recognized as an expert in the LinkedIn community, and that leads to more opportunities for you.

Help a Reader: What to Charge as a Babysitter

Here's a question left recently by a reader on an older post of mine:

My neighbor wants me to start babysitting her nine month old. She works unusual hours: Monday - Friday he'd be at my house 6am - 1 pm and then 2pm - 8pm. and then 10 hours on Saturday. Is 90$ a week fair? I'm 16 by the way, but I don't just sit the kid in front of the TV; we read books, go to the park, take walks, or paint. I give him all three meals, snacks, give him a bath, and put him to bed.

Do the math. It's 13 hours a day for five days a week -- plus 10 hours on Saturday -- 75 hours in total each week. $90 seems to be waaaaaay low. Do you agree? What do you think is the right amount for her to charge?