Financial Training Wheels

Teaching our children about money is a very important responsibility. Nicole Mustard, senior vice president of strategy at Credit Karma, weighs in on teens and credit cards saying:

"Think of prepaid credit cards as training wheels in the world of credit. They are best for teaching teens to control spending and the conveniences of how and where to use a credit card, without the risk of falling into debt".

This makes a lot of sense if you embrace the idea that indebtedness is a fact of life. If you think that way then you feel a need to train your children about how to "borrow responsibly". It is all very logical except that the need to borrow money is not a fact of life. I suggest these two training wheels, left and right, for your kids:

• Train them to conquer their lust: Many have taught their kids, by their living, that it is okay to pay for their lusts for houses, cars, clothes and other things with credit cards. In doing so they teach their kids to yield to the power of their lusts. And they leave them powerless to defeat the lust that will make them slaves of debt.
• Train them to be generous: In a sense the flip-side of lust is generosity. Lust is focused on getting things for ourselves while generosity accentuates the need to sacrificially share with others. When we are sacrificially generous we embrace the welfare of others and declare our freedom from our own lusts.

Granted there is much more that can be said about teaching our kids about saving money and avoiding credit. I would be interested in hearing your thoughts on the subject.

Twisted Thinking

Beyond Blue, Therese Borchards' great mental health blog, had a post this week that was titled 10 Forms of Twisted Thinking. In it she lists examples from Abraham Low's teaching about how to analyze negative thoughts. Here are a few from the list with my comments:

• All-or-nothing thinking: Life is filled with complex grays and it is often destructive to break everything down to simplistic black and white evaluations. I think that it can feed a perverse judgmentalism.
• Overgeneralization: Hyperbole is a great thing when everyone understands that you are speaking in that kind of language. Sadly many times even we do not understand this and find ourselves covertly embracing some dark stereotypes.
• Jumping to conclusions: I am not sure why we do it but we rarely jump to positive conclusions. I think that we mostly do this when things agree with our preconceived ideas and understandings.
• Emotional reasoning: I am an emotional guy and as such have gotten myself in trouble when I let myself be consumed with the emotional side of life. I have to remind myself that my feelings do not always mesh with reality.
• Blame: The Blame Game is one that is better to not be played. Many things that happen to us are not our fault or the fault of others. Blaming may make you feel good for a season but the bitterness that you develop is a high price for those feelings.

If you are interested in learning more, I suggest you take a look at the whole list here.

Can you relate to ever having these kinds of twisted thinking?

Text Test

I am not a big time phone texter - I rarely use text shorthand. Here's a bit of text shorthand. Can you decipher any of them?

BRB, BCNU, DBEYR, FWIW, ISO, JK, MHOTY, RBTL, RTM, TYVM, WYWH

I will post the answer in the comments. Let me know how many you knew.

The Moral Luck Concept

It doesn't take a genius to understand that much of our destiny is somewhat predetermined by the place that we are born. My blog friend Don Hendricks (pictured here) shared these observations on his Not Whistling Dixie blog on Wednesday.

From the moment I cross the border in Mexico I cannot stop thinking about the life I live in America in the middle class. I try to figure out how all the people I see down there are surviving in those put together shacks, those without electricity, the unemployed, elderly.

I think about those raised in Arab countries being tyrannized by decades of corrupt leadership, those whose religion is as oppressive as their opportunities are limited.

So much of the physical and spiritual blessings I enjoy are because I was born in the right place and surrounded by the right messages. This is why we need to see spreading the compassion of God toward the poor and the downtrodden as a privilege and responsibility of those more fortunate, more lucky, than others.

Sometimes I think that we in the West have a tendency to forget that we are living in the prosperity earned by our forefathers. In a sense not one of us is a self-made person - not one of us lives a life independent of the moral luck of life.

Ad Astra Oil

This image again reminds me of our dependence on oil from unstable mideast countries. My son owns Ad Astra Oil, a company that pumps and drills for oil in Kansas - they drilled and hit oil in January. You can get his perspective on the rising price of oil on a video, produced by a local TV station, at his company's website. The future is not stable for gas prices but I am hopeful that small oil companies like his can help keep prices lower in the long run. I guess only time will tell.

We in Kansas City are paying a bit over $3 a gallon. I heard that gas prices may hit $5 a gallon this summer. What are you paying for gas where you live?

Life: Understood Backwards but Lived Forwards

I think that most of us can relate to the squares on the grid shown on the left. Soren Kierkegaard once said:

"Life can only be understood backwards; but it must be lived forwards."

I love how we can learn from past mistakes, disasters, resistance and successes.. both our own and those of others.. to walk forward in life.

Do hospitals want us to use their ER as a clinic?

Saw this billboard yesterday. It reminded me about how many people use emergency rooms for doctor offices. I think that billboards like this one serve to only reinforce that idea. You have to wonder about all of the hospitals that moan about that phenomenon then slap up billboards telling folks that their clinics have no lines and no waiting. I think that this aspect of health care problems probably are more complicated than we think. Do you think hospitals want us to use their ERs as clinics?

The Illusion of Networks.. Social and Otherwise

This funny Shoebox cartoon reminds me that our online personas do not always mesh with reality. It is good to acknowledge that carefully crafted profiles on blogs and facebook profiles often do not match reality. These online venues can be masks presenting pretty pictures and lofty descriptions of people we do not know.

On the flip-side I doubt that many of us really know the people that we regularly interact with. Who has not been surprised by friends? A few years ago one of my religious friends was caught doing drugs, losing lots of money gambling and running around on his wife.

Maybe there is a bit of illusion in all friend networks?

Stock Advice So Bad It Will Make You Cringe

Since retiring from Ma Bell in 1998 I have spent a bit of time managing my retirement accounts and watching the stock market run like a bull and walk/crawl like a bear. So my interest was peaked when I saw a Motley Fool article titled Stock Advice So Bad It Will Make You Cringe. The post is a reaction to a "Rich Dad Stock Success" seminar that staff members attended back in January. Here is a few things they agreed with the speaker on:

• Investing is risky and could result in losing money.
• Everyone's goal should not be to get rich quick, but to "get educated."
• Illiteracy was the foundation of financial struggle.
• The rich are that way because they "know how to compound."

The seminar then shifted to something they call cringe-worthy. Some of their feedback:

What was appalling was how actions and words so massively diverged. The earlier evangelizing about education was twisted into an unrecognizable form. This wasn't about education -- unless you count "learning how to read a green arrow and a line crossing another line on a chart" for knowing when to buy a stock.
...
I know a disaster when I see one. If you know someone considering one of these workshops, warn them that they won't learn much. Here's a direct quote I scribbled down: "I couldn't care less about why a stock goes up -- as long as it is." So much for education.
...
In the end, the most discouraging part of the seminar wasn't what was said or what went unsaid: It was the captive audience hungry for education. Some uniformed military who'd just gotten off work, some parents with their young kids -- they all wanted to learn about investing, but didn't. Those seeking true investing education at the Rich Dad Stock Success seminar instead got the quick-start rundown of how to use a software system.

That last statement so mirrors my experience with financial advisors who depend on software driven models and really cannot explain in simple terms why they prefer one stock or fund over another. If you encounter on of these folks I suggest your run. Following are a few of the Motley Fool's 11 must-do's for anyone wanting to learn about investing:

• Don't buy stuff you can't afford.
• Only invest money you don't need for at least the next five years.
• Challenge others and seek to have your own opinions challenged.
• Realize that there aren't any shortcuts in investing.

There are several suggested reading articles in the list that you also might find helpful. I suggest that you check them out if you are new to investing.

Do you invest? What one investing principle has helped you the most?

The Social Network | ★★★★★★★★

I have to issue a caveat - I am a nerdly geek and I am a Facebook fan. If you are neither then I suggest you might not like this movie. If the movie did nothing else it gave me a glimpse into the success of FB and it's creator Mark Zuckerberg - wonderfully played by Jesse Eisenberg. I thought that the screenplay moved fast and appropriately focused on FB players like the original CFO, Napster mogul Sean Parker and the Harvard jocks who claim FB to be their invention.

Some may disagree but I came away from the movie impressed by the intellect and prowess of Zuckerberg as he steered FB and made fools of his detractors. On a scale of ten, I give it ★★★★★★★★ and maybe more if you are a geek or like geeky flicks.

The Gospel of Wealth

No, this is not a post advocating for or condemning the prosperity gospel that some preachers preach. The Gospel of Wealth is a book (first titled "Wealth") that was written by philanthropist Andrew Carnegie. Here is what the wiki says about it:

In Wealth, Carnegie examines the modes of distributing accumulated wealth and capital to the communities it originates from. He preached that ostentatious living and amassing private treasures was wrong. He praised the high British taxes on the estates of dead millionaires, remarking that "By taxing estates heavily at death the State marks its condemnation of the selfish millionaire's unworthy life. It is desirable that nations should go much further in this direction." His "gospel of wealth" earned much praise, but did not win many converts. Carnegie made it clear that the rich were best suited for the recirculation of their money back into society where it could be used to support the greater good, given that they are presumed to have a penchant for management of capital. However, he shunned aristocratic chains of inheritance and argued that dependents should be supported in moderation, with the bulk of excess wealth to be spent on enriching the community. In cases where excess wealth was held until death, he advocated its apprehension by the state on a progressive scale: "Indeed, it is difficult to set bounds to the share of a rich man's estate which should go at his death to the public through the agency of the State, and by all means such taxes should be grated, beginning at nothing upon moderate sums to dependents, and increasing rapidly as the amounts swell, until of the millionaire's hoard, at least the other half comes to the privy coffer of the State. He claimed that, in bettering society and people here on earth, one would be rewarded at the gates of Paradise.

A few key points and my commentary about Carnegie's ideology:

1. Carnegie's idea did not win many converts: It is a sad reality that the wealthiest amongst us are not philanthropists. Percentage wise more is given to charity by the poor than the rich. Even religious people are not generous tippers.
2. Apprehension of estates by the state on a progressive scale: I suspect that most of us will balk at this idea because we want to pass on our estates to our families and not strangers. The next question raises the issue of how much should be passed on. 
3. Dependents should be supported in moderation: Whether before or after death this seems to be a good idea. Inherited wealth rarely does anyone good when it is lavishly bestowed to ungrateful heirs. It is good for people to earn their keep.
4. Ostentatious living and amassing private treasures is wrong: Reminds me of the rich man that came to Jesus and was instructed to sell all he had. Also remind me of the man who kept building larger barns for his grain and was called a fool when he died.
5. Bettering society and people here on earth will be rewarded after death: Also reminds me of a passage in the bible where Jesus tells us to lay up treasure in heaven. Salvation comes by grace. Gracious giving should be evident in the life of a believer.

I am interested in what you think about Carnegie's thoughts about wealth and philanthropy. Please let me know what parts of his ideology you agree or disagree with.

Uncomfortable Shoes

This funny Shoebox cartoon reminds me of all the uncomfortable shoes that I have owned: in the 60s it was combat boots; the 70s platform shoes; the 80s winged tips. By the time the 90s got here I mostly wore comfortable casual shoes. Any more I mainly wear athletic shoes with comfortable inserts. Not much to get dressed up for as church is very casual.

Are you wearing uncomfortable shoes today?

Web-Streaming Funerals

Ann and I have much enjoyed attending church services via live web-streaming technology. In November we also attended a streamed NMO patient day that originated from California. So I am a huge advocate of this technology. Even so I was taken aback by a Mercury News post titled Web-streaming of funerals grows in popularity. Here is a clip from it:

Several software companies have created easy-to-use programs to help funeral homes cater to bereaved families. FuneralOne, a one-stop shop for online memorials that is based in St. Clair, Mich., has seen the number of funeral homes offering webcasts increase to 1,053 in 2010, from 126 in 2008 (it also sells digital tribute DVDs). During that same period, Event by Wire, a competitor in Half Moon Bay, watched the number of funeral homes with live-streaming services jump to 300 from 80. And last month, the Service Corporation International in Houston, which owns 2,000 funeral homes and cemeteries, said it was conducting a pilot webcasting program at 16 of its funeral homes

I have to admit that this could be a tremendous blessing for out-of-town family but I wonder how much comfort such a service would offer to bereaved family members attending the funeral. There would be no opportunity to embrace and cry with hurting family members and friends. And certainly no time to visit with them or share stories. It seems this kind of technology would turn funerals into spectator events.

So, I do not think that I would want my funeral to be streamed. How about you?

Drugs: Caveats, Generics, Canada and Profits

Does anyone else groan when a drug commercial comes on the TV and begins to list all of the possible side-effects? You have to wonder how profitable such advertising can be. News of new drug patent laws in the US may also be cutting into those profits. Consider this clip from a Wall Street Journal post titled Drug Firms Attack U.S. Patent Plans:

A U.S. government proposal to bring cheaper generic drugs to the market more quickly and help curb health-care costs has triggered criticism from the European pharmaceutical sector. Many drug makers fear that cutting the patent protection for biologic drugs to seven years from 12 years will upend their business models and curtail their ability to develop new drugs and generate profits.

Add on top of this the mounting number of folks buying their drugs through Canada, where generics can be purchased before the US patent expires, and you have to wonder how the global market will impact the profitability of drug companies and their willingness to invest in expensive research. Even so, most of my drugs are generic. How about yours?