Archive for February, 2008

A reader, Mercedes, beat me to the punch on free gym but I also wanted to talk about getting free business class airfare all over the world.   How is it done?  If you’re a key employee for a multi-national/global company then you’re likely to travel all over the world in business class for various business affairs.

As you travel the world, you’ll rack up frequent flyer miles which can be redeemed for upgrades or free travel during your own vacation time off.   Most companies allow this perk because globe trotting isn’t the glamorous  activity most people think it is as you’ll likely spend 10 hours flying to Europe only to spend a few hours in a layover to catch another 12 hour flight to another continental destination or return trip.  Effectively, you’ll lose days of your life away from family and friends for the company.

There are other perks too; you might be able to get your company to subsidize an American Express Platinum card which gives you access to world traveler lounges which give you access to free internet, free booze, free food, free showers and more!

You might also be able to negotiate memberships to business clubs, professional associations, and trade groups.   Some companies offer other perks such as free breakfasts, free dry cleaning, free roaming internet access cards and, of course, free gym.

Since it’s Friday, I’ll stop this little series on career counseling but I hope you got some ideas on how to think outside the frugal box.  I titled these “non-frugal” because frugality has nothing to do with getting Free Steak & Lobster lunches, Free Activities, Free Cell Phones, and Free Education but everything to do with career advancement and excellence.

Why pay for your own MBA when you can get one subsidized or paid in full by someone else? How do you get a free BA or MBA?   It’s not government grants, charitable scholarships or your parents paying for it.

Businesses really do take care of their own and it is a strategic business move that will ultimately lead to higher profits for a business.  An educated employee adds value to a business and a highly educated employee adds greater value so most businesses have a policy of providing assistance or in some instances paying for an employees entire college tuition in an undergraduate or graduate program.

Additionally, if you are a key employee, you’ll likely be able to negotiate bonuses or other awards as part of your retention plan after completing your degree program so your employer won’t lose you to the competition.

If you already have a graduate degree then there’s nothing wrong with expanding your horizons and getting a secondary degree or various certifications in your career field.

All you have to do is ASK!  And for goodness sake, keep your toolbox updated!

Why pay for cell phone services when you can get them for free? Why pay for regular parking when premium parking can be had for nothing? Intrigued?

While some people spend countless hours devising ways to save a penny here or a penny there, time better spent on career advancement may actually lead to significant yet subtle returns on investment in a grander scale than shaving pennies.

With most cell phone plans now ballooning up to the $70+ mark when including voice, text, and data services it makes sense to try to get these services for free. Seventy dollars a month after all translates to$3.5/work day which is just enough to buy a nice StarBucks latte.

So what’s the secret to free cell phones? The secret is to become a key employee in your organization; an employee so important that it would be detrimental to the company if they wouldn’t be able to get a hold of you whenever they needed you.

History shows that if you’re important enough to command this type of accessibility then it should follow that premium parking spot should be provided to afford you with faster access into the organizations location(s).

This is the third post in this series and I hope you’ll see the pattern forming from post one and post two in the series.

Tomorrow, I’ll follow up with another post.

As I wrote about yesterday in the Key To Free Steak & Lobster, today’s non-frugal tip lesson involves getting free concerts, sporting events, golfing, fishing, and other activities at no charge.

It was well known that movie stars and other celebrities received serious swag during the Oscars and at other award events but it wasn’t until the IRS started threatening celebrities with tax penalties that the practice became better understood by the general public.

There is something similar that happens in the business world but it revolves more so around less expensive items such as invitations to concerts, sporting events, golfing activities and other such business gatherings.

The key of course is to get invited to these events and that is usually accomplished by being a crucial person in your organization from which your advice or counsel will generally be wanted or needed. In some instances, it may even be the same armada of sales people who take you to lunch that may offer you these free activities.

So brown bagging it is the way to go to save money right? What if you love eating steak, lobster, shrimp, and other goodies during lunch? Here’s the perfect non-frugal tip and the key to free steak & lobster lunches.

Over the course of the work week, I tend to eat out almost every day although I had cut back for a while because of my widening ab axial girth. So how is this done?

When you reach a senior manager or executive level management position, there is an endless armada of sales people trying to solicit you with various products or services. Whether it’s a consulting firm offering services, an employment agency, or software vendor there is always some type of sales person interested in selling you something.

With the recent discussion about frugal tips and why I don’t think they matter it did occur to me that I am becoming more and more detached from the average working person than ever before and I am genuinely beginning to forget how hard those early days were before my career really took off.

I’m not really sure how to counter that either nor whether I should try at this point. I have become so accustomed to being taken to places like Fogo De Ciao or Ruth Chris Steakhouses and other high end restaurants that they’ve become passé.

Oh no, I sense a deep reflection moment coming on…….I’ll follow up later.

I’m getting sick & tired of the political grandstanding around the FISA law.  If it’s so darn important to listen in on American’s phone calls the please just nationalize AT&T, Sprint, Verizon and any other telecomm company.

Airport security was deemed so important to national security that Bush federalized all the security positions so why not the telecomm companies?

While we’re at it, nationalize the mortgage industry and banking system because if it collapses that will be an issue for national security.

It sounds like our current politicians are taking a page out of the Hugo Chavez manifesto.

One of the rallying cries of the housing boom that fed the frenzy was, “Buy now or you will be priced out forever” implying that those people that sat in the sidelines waiting for cheaper days would NEVER be able to buy a home because prices would only go up.

Today, home prices are dropping across the country but a funny thing has happened on the way to lower real estate prices – people ARE going to end up being priced out forever and here’s why:

The bond & credit markets are in total turmoil.  No one wants to lend money out because housing prices keep dropping and unknown volatility is making lenders skittish.

It’s not just skittish lenders though, with judges and congress threatening to put moratoriums on interest rates, offering amortization certificates, re-writing loans, or ceasing foreclosure procedures, you’d have to be an idiot investor to put money into financial institutions that lend out money as a core business.

Where will this lead?  Despite the Feds panic attack and extreme rate cuts, eventually the only way to attract capital back into the lending market will be to offer attractive returns through really high lending rates.   Who would buy a $200,000 home at 18% interest rate?

The net result will be people will be priced out of homes because they’ll be unable to afford higher interest rates and capital won’t be available unless it’s attractive enough (high returns) to offset the risk from investors.  It will be a much worse conundrum than the current falling home prices scenario.

So ironically, those who said, “You will be priced out forever” will be correct in the long run.  The smart move would have been to buy a sensible home at sensible interest rates and those days will be gone for a long long time.

I’ve now run into the same problem twice at two different companies with my 401k. Most companies offer matching contribution but they do so on a per transaction basis so you need to be sure that you spread your max contribution over the 12 month period for the fiscal year.

For example, if you receive a 50% match on your contributions up to 6% you’ll likely receive that match only as money gets taken out of your paycheck and into the 401k.

If you earn a salary of $100,000 and decide to contribute 20% then you’ll likely max out sometime in October 100k *20% = $20,000. 20k/12 = $1666/month. However the max contribution for the year is $15,500 so you’ll lose out as your employer will stop making withdrawals AND contributions when you max out as $1,666 * 10 = $16,600 sometime in September or October.

The appropriate formula is to divide $15,500 by your salary to get the annual percentage contribution.

In some rare instances, I’ve encountered a couple of people that opted to have 50% of their salary deducted so they could quickly be done with their 401k contributions but unfortunately if this person maxed out in March or April they would not receive any matching contributions for the rest of the year.

Steroids and HGH aren’t just for baseball players, these handy little boosters will work wonders for your investment portfolio.   I’ve hinted in the past about a new mathematical model for the ETF-Cashinator that factors in leveraged index funds with covered call writing to boost returns to superior levels and as always, I put my money where my mouth (blog) is and take action.

Yesterday, I banked about $2700 on top of the $900 I made last week but I’m moving toward using my new leveraged model to rake in more profits as I described here.   This essentially goes back to this original mind blowing article written by Jason Kelly here.  I’m convinced that this model can work with pure options plays as well but that’s for another blog and another time.

So how does this whole thing work?

We all know index funds tend to be the better bets on the stock market.  Less than 20% of funds ever beat indexes so it makes index funds a very seductive investment play but how can you make it better?

In a single word: leverage.   If index  funds are good then why can’t leveraged index funds be better?  If you’re dollar cost averaging anyway, why not buy leveraged index funds.  Sure you’ll lose twice as much during down turns but as long as you keep buying you’ll make twice as much on the way back up right?  I like to think of these leveraged index funds as index funds on steroids.

Index funds on steroids can be rewarding but why not add in something a little extra for a little insurance and extra kick!   Mixing leveraged index funds with covered call strategy is exactly that extra kick I’m famous for at this point!  I like to think of the covered calls as HGH so that leveraged index funds with covered calls acts and feels like steroids with HGH enhancement!

So what are the main tactical components.   Well leveraged index ETFs are the ones I like the most right now:

DXD – Double Short Dow

DDM – Double Long Dow

SSO – Double Long S&P 500

SDS – Double Short S&P 500.

I like all of these because they are leveraged up/down and they all trade options with healthy volume.    So my most recent trade was to go double short on the dow (DXD) and sell calls (DXDCI) to be inverse long.  Using this strategy, I banked ~ $2,000 in my power account yesterday.   I then went on to go double long on the Dow (DDM) and sell calls short DDMCT to bank another $700 in my mini account.

So whether the Dow goes up or down from here it should be a profitable move -in theory.  The DDM will be valuable if the market recovers short term or long term and DXD will be profitable if the market tanks or recovers (options).

We’ll see how March expiry plays out.

With the over abundance of frugal tips on the pf blogger circuit, you’d think they’d be millionaires left and right all over the place but what I’ve found so far is that most of the people advocating frugal tips aren’t rich (as far as I can tell) but hope to be rich some day.

I find the situation to be quite paradoxically ironic.  I also spent a great deal of time thinking why this is so and I can’t really come up with some specific theories.   I tend to wonder if frugal people cripple themselves or others around them with their philosophy.

Take for example an 18 year old that wants to go to Princeton or Harvard but is vexed by having frugal parent(s).  Little Jimmy goes to mom and dad and says, “I’d like to go to Harvard so I can become a lawyer” and the response from mom & dad comes back, “Harvard is too expensive, why not go to state college instead….”

I’ve touched on this subject before in Frugalism vs. Capitalism but I’m trying to understand the true dynamic of the wealth gap between frugal and rich.

When I read frugal tips offered out in the pf blogger world, I can tell a great deal of time, energy and effort was taken to come up with some of the elaborate tips for saving a buck or two and I can only surmise that perhaps too much time, energy and effort is spent on researching ways to be frugal vs. growing income.

I’m on record suggesting that frugal tips don’t do much more than possibly adjust your expenses to compensate for inflation and often I don’t see how certain tips really offer any advantage over buying something outright from someone with vast economies of scale.

As an example, many suggest growing your own garden to save money on groceries but it’s unrealistic to save any money growing your own veggies.   Buying seeds, fertilizer, water, labor and mitigating crop failure from pests or disease as an individual is much more inefficient than an industrial farmer with heavy gear, bulk seed discounts, government subsidies and cheap migrant labor.

I just don’t see how frugal tips work on the long run to make you rich.   It takes real earning power, and leverage, to get rich in my opinion and that’s what I try to focus on every day.