Economics of little monsters and noise

So a little background story, I'm staying with my uncle and his family... Two bickering kids and lotsa noise. Sometimes its the melodious sound of joyful laughter but at others, the awful screeching of angry screaming.

I found that if i applied a little economics to this situation...
I would be able to affect abit more joyful laughter and lots less awful screeching.

Lets say an eminent fight is on the brink of bubbling out of control...
I can take 2 actions:

1) Do nothing - do nothing.. pretend I am the three monkeys...
Let the house collapse with the earth shattering ground breaking noise.

I'd go hide in the room and so not be any less happier nor sadder, where as the kids will not be any happier or sadder because... they are kids who like to quarrel... and the parents will be unhappier, thus made less well off in term of the economics of happiness, and thus my taking this option of social non-chalance leads to an overall decrease in happiness level.

Assuming my not taking action would lead to a parent taking the kids
to task anyways, so no matter which option I choose, it can be taken that they would be that they would be unhappier(due to a scolding)

2) Shout and be the loudest - Show who's boss. Shout louder and longer and WIN. Survival of the fittest. Primal Rage.

Economically, I would be a little less happier as I would have to go primal and raise my voice a little... to get some peace... the kids... would be a little unhappier(but not much sadder than if i did nothing) but the parents get alittle peace and quiet and are thus better off in the happyness economic pie chart.

Assuming at any one time, there would be only one 'unit' of unhappiness among the adults: only one parent or me would be a little less happy from having to take action whereas the other 2 take the do nothing option, and are no better off.

So by utilitarian rule, I must do the greatest good for the greatest number... So I should take action which would lead to two other ppl being no less worse off.

The looking out for number one rule, states that I should just disappear into the wallpaper and slide up to my bedroom.....

Going by the faithful rule of three, I'm going to come up with a third solution.

3)Diffuse the situation - there are many ways to fight the seeming ineminent fire... Kids are really easy to distract and appease.
try tickling... telling a joke, dispersing them...

yea.. mainly just pulling them apart... and saving the house from collapsing...

who's happyer? me, parents and prob even the kids are a little well off.. assuming that the diffusal was a success....

So.. first point:
there is economics involved in everything! everyday life!

second point:
there are three sides to the coin! it's not always black and white.

third point:
based on economics, what would you do in a burning balloon? Read more ...

The Rule of Three

The Rule of Three is a "principle in English writing that suggests that things that come in threes are inherently funnier, more satisfying, or more effective than other numbers of things." However my very own ROTH (ROT looks a little too crude for my liking) suggests a way to make money.

During a trip to the casino over the weekend, I could not help but notice how all the odds of the games are stacked against the gambler i.e. you and me. However this card game titled Casino War stood out from the crowd. It is loosely based on the children's game of War.

Here's how it goes: One card is dealt to a dealer and to a player. If the player's card is higher he or she wins the amount equal to his bet, if the dealer's card is higher, the player loses his bet.

In the event of a tie, things get a little bit complicated and is not needed in my ROTH but FYI: you either double your bet to play another round or surrender and lose half of the original amount you staked.

Suppose you staked 10 dollars on your card and lost, what would you do if you wanted to recoup your losses? Stake 20 dollars on the next bet? That is what I witnessed at the tables and it did not seem to work for most of the gamblers there. Double up a few more times and you will hit the maximum bet limit before long (if you have the capital). So much for rationality.

ROTH is simple. Place 3 bets on 3 separate cards/players and you will have 3 chances of winning every game compared to the puny single card that the dealer has. Do that consistently for every game and you'll experience how simple probability brings you cash. In my opinion, ties do not occur often enough to alter the odds too much.

Why 3 Bets? Well because its a nice number to manage.

Does it work on other card games? I would think not. For example, you can place 3 bets concurrently in a game of Blackjack but your decisions to hit or pass could significantly alter the chances of winning. Feel free to correct me if you feel otherwise.

Just for the record, this writer tested out the ROTH theory with his own cash and was pleasantly surprised with how things turned out.

Disclaimer: Despite this seemingly being a post about how to beat the casino, I am actually trying to show the irrationality of gamblers (and maybe consumers/investors) thereby advising greater discretion in making decisions that seem to be second nature.
This blog does not, in any way, encourage any form of gambling and if you have a gambling problem, please do not try to test out my ROTH theory. Read more ...

Death of a Great

Randy Pausch of The Last Lecture fame passed away on the 25th of July 2008.

I had briefly brought up his inspirational lecture almost 3 months ago and shortly after my discovery of this man, he made it to Time magazine's 100 most influential people of the year, alongside people like the Dalai Lama and Barack Obama.

Randy's lecture had motivated me in so many ways that I would not list here because I want you to be motivated in your own way after you listen to his last lecture. If you have not seen it, you can find it here.

More than just making sense of cents, Randy might just help you make sense of your life.

Related Posts:
The Last Post
3 Things to Do Everyday
Cents and the City Read more ...

Best of the Rest

The Money Blog Network group is focusing on finances for fresh graduates in the month of June and I have chosen the cream of the crop for your reference.

The tips posted by the renowned bloggers do not only apply to fresh graduates, if you're looking to kick-start your finances on a clean slate, why not take on the mentality of a fresh graduate and put the advice to use?

Here's the Best of the Rest:

A Fully-funded Roth IRA at age 18 could net you 3.5 million dollars
It does not matter if you are not a US citizen and have no idea what a Roth IRA is, the gist is this: save and invest. Start investing $5000 yearly and be a millionaire by age 50. (@ No Credit Needed)

Personal Finance Made Easy: Pay Yourself First
This is actually a tip from the book, Richest Man in Babylon which I reviewed here. Paying yourself first is about setting aside a fixed portion of your income for your emergency or retirement fund. (@ Get Rich Slowly)

Welcome to the Real World
The advice here focuses on the attitude and morals that will ensure a fulfilling life rather than how much to invest or save etc. (@ Wisebread)

If you want to read more on this topic, check out the rest of the posts here. However, as it always is in such situations, many of the tips overlaps hence I only chose 3 bite-sized, easy-to-digest posts.

Any other tips for fresh graduates? Feel free to post your comments.

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10 ways to save $10 (or more)

In light of spiraling food prices, I thought that I would share some tips on how to save money in small little steps. These tips are put together from the various finance blogs I frequent with a tip or two from yours truly.

1) Switch to a LCD monitor
If you're still using the old bulky CRT monitor, you must be at least 65 years old. Well if u need just one more reason to switch to LCD, it is proven to be much more energy saving as well. Assuming you use the computer for six hours a day, a CRT monitor costs $17 a year in electricity while a LCD monitor costs $5.40!
That's savings of at least $10 a year!

2) Pull the Plug
Many people have the habit of leaving their electronic appliances on standby mode but did you know that the standby light consumes a significant amount of power? Studies have shown that standby power is responsible for 13% of a household's power consumption! That equates to a whopping $100 a year!
As a rule, always switch off appliances that have clock/timer functions. For power-intensive devices like your PC, pull the plug out of the socket for maximal savings.

3) Cut down on the Latte
Stop the daily ritual to Starbucks and purchasing over-priced latte. Instead, bring a mug to work and make your own latte in the pantry. This can easily save you $5 a day!

4) A Dollar A Day
Rising costs made you put aside your travel plans? Well fret not, just put a dollar a day into a piggy bank.
365 days down the road and viola! $365 for that short beach getaway that you deserve!

5) Eat Healthy
Notice that meat almost always costs more than salad? Well perhaps this is the best time to eat healthier and detox your body.
Even at 50 cents savings per meal, this is savings of $45 per month!

6) Home Gym
Still holding on to that gym membership that you seldom utilize? Well trash it and start doing home workouts instead. Invest in a skipping rope that's all! For aerobic exercises, you can choose to skip at home or jog around the neighborhood. No weights? Well, doing 100 traditional push-ups and sit-ups a day will definitely help you maintain your shape.

7) Free DVDs and Books
Visit the library and start borrowing instead of buying. If your local library doesn't have DVDs, borrow a Tom Clancy or an Agatha Christie for a suspense-filled weekend.

8) Hold that Up-size
Looking to up-size your meal or to extend the warranty of your latest purchase? Well think about it for a few seconds and chances are you do not need the additions. Though such up-size may cost from a few cents to a few hundred dollars, add them up and you can definitely afford another short getaway.

9) Black or White Sale
How many items have you bought during a sale and have worn them for at least ten times? If you find yourself consistently regretting your sale forays, stick to the black or white rule. Buy only black or white items during sales because these are basic colors that you can wear over and over again to anywhere. Honestly did you really buy that purplish-green cardigan?

10) Say 'No'
Learn to say 'No' to your kids or your drinking buddies and stay in control of your expenses.

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Cents and the City

You simply cannot avoid it. Flip to the entertainment segment of any paper and chances are that you will see the four females who glamorized middle-aged female sex drive. Sex and the City made a once taboo subject become a trend, for women everywhere to be proud of their sexuality.

Money is like sex in many ways:
1) You can never have too much of it.
2) Earning it is never easy.
and most relevantly,
3) It remains a taboo subject.

Would a drama series of four flirtatious investors who can charm money out of every investment remove this taboo? The fact remains that many people, including families, seldom share money management tips or their financial plans. Children always assume that their parents financial plans in place, only to bear the brunt of it when they find out that their parents do not even have basic health insurance.

Families are not the only ones treating money as taboo. Why is calculus, a subject most of us will never need for the rest of our lives, compulsory while money management is conspicuously absent from all curriculum. A Money 101 module could help many fresh graduates plan for their retirement better but we're often forced to take some other elective module that we will probably not need at all.

So until Cents and the City is made into a movie, work on that taboo today. TALK about money management, do not be afraid to ask for help especially from your affluent friends or relatives. By asking for help, I do not mean taking loans from them! I mean to get valuable advice and tips to improve your financial situation. Take control of your finances today and you will feel the difference.

Look out for the casting auditions to Cents and the City.

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Imagine

We live in a world village. I've discussed about how important it is to save money and how to be cultivate a 'rich man's habit'. As much as I like to share with you, dear reader, about basics of finance and money, I would like to show you the flipside of capitalism and consumerism.

I'd like to discuss the issue of third world debt. The following articles give a good background to what it is:
1) www.globalissues.org
2) WIKi ( everything can be wikied!)

I'll leave you to read it up. But in summary its about how "debt relief" to 3rd world countries is becoming a dead weight to their development and catching up to other developed countries with "$13 on debt repayment for every $1 it receives in grants."( global issues.org)

In caricature, it's like a playground bully scene, where the big guy squeezes the little kids neck and takes away his lunch money! And who are these big boys? well, go read and go figure! I assure you, you'd be surprised by what you read in global issues.org.

Why am I not giving a balanced argument? because you already know the flipside of the flipside, and this IS the untold side to it.

Why am I highlighting this issue? because I believe in a balanced view. The good, the bad, the ugly.

So.. While I feel it is important to get ahead and achieve financial freedom, however at the same time, I would like to create an awareness of people who have no chance to do so and hope that wherever possible, we do our part to help, in every little way, the less fortunate.

In an ever shrinking world where everyone is just six degrees apart,
Have you done your bit for the world?

" You might say that I'm a dreamer, but I'm not the only one, I hope someday you'd join us, and the world will be as one." Imagine, John Lennon.


Related links:
power of compounding
If the world were a village of a hundred people
The last post
3 things to do everyday Read more ...

The Last Post

The recent YouTube phenomenon: The Last Lecture by Randy Pausch has spawned a book, countless childhood dreams and inspired over 6 million viewers. This left me thinking, what if I only had one last post to blog about, what will I tell you?

If I were to die tomorrow, what is the one piece of financial tidbit that must be passed on?

Well I thought of blogging about all the investment basics, or all the insurance 101 or even how to get the best discounts but the answer was much simpler than all of that. If this were my last post, it would only consist of one word: SAVE.

It is the worst kept secret on getting rich. SAVE. It does not matter how much you earn or how good you are at investing, if you do not save you will NEVER be rich.

As my partner-in-blog has emphasized in a previous post, savings is about paying yourself first before you pay Sony for that new HD-ready LCD.

Most self-help books talk about saving 20% of your income and NEVER touch it except to invest it. Then set aside another 20% to splurge and reward yourself so that you feel good and will not go on uncontrolled spending sprees. I personally feel that this is an awesome piece of advice, one Investment account and one Indulgence account will guarantee that you get richer and richer.

That being said, The Last Lecture is very inspiring and I urge all of you to watch it and dare to dream.

PS. You haven't seen the last of me yet.

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Read more ...

Power of Compounding

Today, I will teach you how to be a millionaire. And you're going to realise that being rich has alot more to do with mentality and attitude rather than just having a long line of zeros in your bank account. I will highlight to you the power of compounding...

To show you the power of compounding, I'd share with you a story about golf betting . Ah kao was playing golf with Ah beng and was playing for one dollar a hole. Ah kao won on the first hole, Ah beng then wanted to double the bet at each passing hole to make the game more exciting, because he said 'one dorrar per hole onry, where got fun! I also bored to play seriously!' So they'd double the bet of $1 with every hole. So a golf course has 18 holes, so the first hole would be a small bet of $1, and the second would be $2 and $4 and $8 and so on... small amount isn't it?

Wrong. By the tenth hole, it'd be $512, by the 14th it'd be a whopping $8192! $131072 by the 18th hole! In the end Ah beng still lost, he blamed his stick and ranted in colorful hokkien at his caddy and sweared and cursed in 'french' about the weather and the wind affecting his ball. But no worries, Ah beng was able to pay Ah kao the money because he has his own money management company(loansharks!). The lesson here, dun take doubling bets unless you have to cash to lose!

Put a a dollar into your piggy bank everyday, and in one year you'd have accumulated $365(or $366 in a leap year)! The very basic habit of saving that our parents tried to instill in us in our greener years is the very basis of using the power of compounding to be a millionaire!

So... principle one of being a millionaire, save/invest your money to harvest the power of compounding. 'Save' and 'invest' are used in the same breath here because I believe that saving money in a bank is also a form of investment because you still get interest on capital albeit a much lower return with much lower risks.

Save Save Save! The reason why Asian countries are going on buying sprees in recent times is primary due to the fact that they are net savers(high savings rate as a country) and thus have the cash to acquire falling US companies at dirt cheap prices with the onset of the US recession.

So.... How do we go about saving? Well, as I said at the start that being rich is more about attitude and mindset. The difference between two exact same persons with the same pay would be how they spend their money on payday. The 'rich' would save it and already have a plan on what they want to do with it in the short, medium and long term; the 'poor' would just splurge it on whatever takes their fancy and maybe even stretch their credit, so come the next payday, they'd already be running a deficit from their credit card. Thus the 'rich' would become richer and the 'poor', poorer.

Granted, different people have different circumstances, having said that, I feel that the habit of saving should start somewhere, no matter how small or little. Gurus like Antony Robbins and Robert kyosaki would say, PAY yourself first. Forget about bills, loans, debts, on payday, pay YOURSELF first, take out a certain %, say about 10% and put that into a savings account for investment/savings purposes.

Robbins goes on to explain about the 3 buckets theory where you divide your assets into low risk investments, high risks and your happy bucket where you can use income from investments to buy your wants(which could take a whole posts, and I am meandering off topic!)

So yes, start today! The earlier the better, to let your 1dollar compound into a million!

Diverging the post into other forms of investments.. You know how you get investment brochures saying that their previous returns of 20%, 30%, 50%(saw this in a brochure today)! Well...

Number one thing you learn in finance, past performance is not a good indicator of future returns! (technical analysts may beg to differ, however, there IS a general consensus)

Number two, higher risk=higher returns, i.e. higher returns are MOST definitely likely accompanied with higher risk. Other investment with lower returns may seem less attractive; however taking into account the power of compounding, and ability to achieve consistent returns on account of being less risky means that it would still yield attractive returns over the long run.

Read more:
Time value of money
Forex - Money money money
20000 BC
To ride a bus Read more ...

3 Things To Do Everyday

If you laugh, you think, and you cry, that’s a full day. That’s a heck of a day. You do that seven days a week, you’re going to have something special.

I chanced upon this post at one of my favorite blogs and I must say I was deeply moved. While we are in the midst of advancing our education, careers and bank accounts, we tend to take the most precious things for granted.

Take a look at this video of Jim Valvano, a man diagnosed with cancer and urging everyone else to live their lives.

Laugh and think, that's easy but crying everyday? Now that's a tall order. If that proves to be too hard to do, how about trying to indulge in a little bit of sadness or nostalgia. Something that will bring a little bit of moisture to your eyes (good for those of you who spend way too much time in air-conditioned rooms) should do the trick.

Don't feel silly when you are trying it out, I will be doing it too.
Read more ...

Financial Tracker

A year ago, I was shoring around the internet looking for a program to allow me to keep track of my finances in a simple elegant and easy way... I downloaded several freeware software, but I just didn't find one I liked... So I decided to plop down and make up my own simple one using excel and put in a few simple macros and i was in business...

I'm putting it up here to share with you all and hope you find it useful in keeping track of your finances... and feel free to give your comments on how to improve it and all... Get it >here!< It's free for all... but if you want to host it somewhere else or something.. Just drop me a line and we'll talk about it...Here's a screenshot to give you an idea how it looks like when numbers have been filled in... There are 5 sheets that contribute to the pie charts... food, transport, entertainment, misc and rent. of course you can rename anything you want if that isn't a part of your expenditure that you want to actively track...

The first sheet and total sheet are summary sheets for the 5 other data sheets and are locked as you arent suppose to input numbers in them... you need to input your numbers into the 5 other sheets in numerical form that follows excel's basic rules.

i.e, if there's more than one item and you don't want to add them up your self, you have to input: =12+24 for excel to sum it up to 36. just numbers pls, excel adds the $ sign by itself... There is a final spreadsheet for input of pay and tax, however tax must be calculated manually as it is different from country to country...

Below the numerical input segment is a NOTES segment which can be also accessible from the notes button on each page, where you can input what the expense was for with a simple description.

On the Cumulative Overview page, the first pie chart is a cumulative one which reflects all that has been spent so far and the one at the bottom reflects the spending of the month, you can view each month by clicking on the month.

With some diligence on your part, you can easily track where your money is going and plan how to manage your finances. I did, I used it to keep track of my spending which helped me save up for my trip to Korea, maintain a car and still have substantial savings!

So you can download it here at : http://www.sendspace.com/file/3y84xl

If you have questions, feel free to consult the Q&A page regarding the programme. Cheers~

Disclaimer: While the author really hopes you find the program useful, he does not give guarantee that it will be 100% error free and that the numbers should be used as an approximate and not for legal purposes and shall not be held responsible for any errors, failures or other grievances. Read more ...