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Bitcoin, Ethereum, And Other Cryptocurrencies Aren’t Just For Nerds, You Too Can Invest Like I Did.

Lately, everyone who knows me knows I can’t shut up about crypto currencies. Tired of sharing my excitement with uninterested parties, I thought I’d share my knowledge of cryptocurrencies and blockchain technology with other millennials like you who could really benefit. I am really passionate about this topic for so many reasons. Now this topic is very broad so I will be keeping it surface level here and provide an overview of my experience with the emerging technology thus far.

My interest in cryptocurrencies really picked up about five months ago, when my boss pulled me aside and told me to read up on the newest crypto technology called Ethereum. To start with some background definitions, a cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. A crypto currency is unique in that it operates independently of a central bank. You can think of this as a monetary unit that only exists and is valuable in the digital space. One of the unique aspects of this currency is that it is not regulated by a centralized base, as the US dollar is by the Federal bank. Instead, Ethereum is decentralized by the mere fact that it exists within Blockchain technology. A blockchain is made up of a network of computer users that jointly manage the digital transactions of currency created by a universal ledger of accounts that cannot be erased. The universal ledger is a record of all transactions that have occurred since inception of the Blockchain.

What I just said probably made your head spin, if you’ve never heard of these topics, but i needed to get the formal definition out. The blockchain is the technology that these currencies are built upon and whenever the currency is traded, there is a permanent digital record that is kept to keep track of what took place.  This record happens instantly and cannot be changed or modified. This ledger of records is decentralized and universally recorded, which is the brilliance behind the technology.

Now at this point I had heard of bitcoin from way back in 2013 when there was a lot of buzz about the new technology, but I never really invested much thought into it before. I’m sure some of you have similar memories, maybe you heard of the Silk Road, the bitcoin crash or other scandals. But up until recently Crypto has been getting a lot of buzz because businesses are starting to catch on and realizing that the world can really utilize this technology for business applications. After doing preliminary research on Ethereum I was interested and started checking the currency rates every day against the US dollar. I noticed the market was very volatile. I was interested when the price of Ether jumped up from $83USD/ETH to $183 USD/ETH in the span of a few days. This is where it hit me, REAL MONEY COULD BE MADE! The market was extremely volatile and going back and forth like crazy. Yes, money was my primary motivation for taking an interest but it wasn’t until I started learning about the technology behind the cryptocurrency before I knew that this was going to be something big because even if Bitcoin and Ethereum fail, the principles and the guiding technology is what would prevail. This is when I fell down the rabbit hole.

I did what everyone else who was in the know was doing. I downloaded an App called CoinBase and threw in $1,000 just to see what would happen. I purchased half a bitcoin and a number of Ether Coins and some Lite Coins. These are the three main coins available for purchase on the popular CoinBase App. I was able to quickly double my investment in the coming weeks. At this point I was hooked. At first it did seem like I was winning the lottery but what I realized and was told before was that the currencies were highly volatile. Also i had been invested in the stock market for quite some time and had to wrap my mind around the fact that these currencies were not shares of a company but exchangeable currency pairs. Because of the volatile nature of these currencies you have to have an appetite for risk. Everyday I would gain/lose hundreds of dollars in unrealized gains and losses. But after a while you start to notice trends and patterns that you can use to your advantage. You can see when to hold your investment or buy the dip. My biggest recommendation for anyone would be to try out the market. When i initially put my first investment into the market if forced me to pay attention. I was seeing headlines i wouldn’t normally read and focus in. What was causing the value to rise and fall? What technological advances have occurred since? The material and future ideas were so intellectually stimulating that I had to dive right in.

Personally I believe in the technology more than anything and that is why I decided to get some of my savings and invest in these three currencies. Blockchain technology and the idea behind a universal permanent ledger for transaction verification will be crucial for the development of future technological infrastructure in our everyday lives. This is one of the biggest reasons I am focusing my time and energy into studying this technology and investing in these currencies.

 

I’m Obsessed With Money And I Still refuse To Play The Lottery.

Every few weeks someone from my office makes the rounds to each cubicle to collect $5 for the PowerBall jackpot. Small talk breaks out at this time and everyone starts fantasizing about leaving their job, sailing around the world, buying sports cars, partying with their friends, etc. Everyone gets jittering with optimistic thinking; “it could happen” or “what if we win?” I mean winning the PowerBall could mean hundreds of millions. (By the way, i’m not talking about the $1 scratch offs your aunt gives you for christmas, you shouldn’t play those either, but they are fun once in awhile.)

I don’t play. When they stop at my desk, I politely decline. I don’t want to hand over my $5 of hard earned money. I won’t win. No one wins. Even if your numbers are chosen and you win the grand prize.

Here are some facts that you should remember when you are fantasizing about what type of mega-yacht you are going to buy:

  • The odds of winning the grand prize are 1 in 195,249,054. This alone should stop you from buying a ticket. My 5th grade math teacher was right when she used to say “The lottery is just a tax on stupid people”.
  • Lottery winnings are taxed like income. When you collect your earnings, you will really only be taking home approximately 1/3 of your stated winnings if you are lucky.
  • 70% of lottery winners spend all their winnings and proceed to lose the rest of their money within seven years. Many end up going bankrupt.
  • The hype is hard to ignore: I’ve heard it so many times “come on dude why not?” or “you’ll be so pissed if we all win..”,  it’s because money adds up. $5 seems small but If you set that 5 dollars you spend on the lottery every month into a money market fund for the next 35 years, you will have an extra $20,000 when you retire.
    • The probability of winning is so low that the certainty of having $20,000 at retirement is a much better payoff with almost no risk.

To me, these are great enough arguing points for not wasting my money on such nonsense.

Say you were lucky enough to actually win the lottery. The problem is that most people would have no idea how to conduct themselves. They are not experienced enough to use their winnings properly or correctly. There are so many implications that could cost you many good parts of the life that you live now.

  • Spending and excitement would become a drug, when dopamine is depleted and the rush is over depression sets in. Your happiness will have peaked and you might not recover. You will keep spending to achieve that same initial rush.
  • You will probably lose friends. People will see you and treat you differently. You will be the rich friend who was just lucky. People will come out of the woodwork to ask you for money. Their personal ATM, “what does he care”. 90% of winners lose good friends.
  • There is nothing better than the feeling of earned money. Money that you win is not money that you personally earned and that is the most defining factor. $30,000 is a lot different to a 30 year old than it is to a 12 year old. When you win the lottery you are the 12 year old. You will most likely make decisions with an immature mind set.
  • There was a study done that shows that poor households, with annual take-home incomes under $13,000, on average, spend $645 a year on lottery tickets, which comes to about 9% of their yearly income.
    • Don’t let this be you. Lottery collections will happen in an office near you, so stop wasting $5!!!

Sources

 

 

Why Constantly Tracking Your Income and Spending Will Give You More Focus on Financial Success.

If your life is anything like mine, there comes a time every month when you don’t know if you can actually afford anything. When you hand the bartender your credit card, you silently pray that it doesn’t get declined. This is usually around the time when you are waiting on a paycheck, have just paid off your credit card statements in full, but still owe your landlord rent for the month. During this time you have no idea of your financial standing and are too lazy and scared to look. So you continue to stress and you continue to pray.

As I looked into ways to eliminate this monthly stress, I read a lot of articles that focused on the importance of consistency, goals and budgeting, etc. I also began reading a book called ‘The Power of Habit’ by Charles Duhigg. In this book, Duhigg explains why we have habits in our lives and how the habits we keep become the distinguishing factors between failure and success. With motivation to change my habits and a goal to become more aware of my finances, I began a daily budget tracker. On March 1st, I made a commitment to track all of my finances to the penny, every single day.  

While this task might sound daunting to some of you, I can assure you it becomes second nature in no time. There are plenty of finance tracking apps out there, but I wanted to keep it simple and use Excel as I suggest you do as well. As you will see below, I created a table with the days of the month across the x axis and a list of income and debt sources along the y axis. Laying everything out has helped me become grounded in the reality of my financial standing, which has in turn motivated me to take more action towards achieving my financial goals.

How to go about tracking: Open your spreadsheet and then open all of your banking, credit card, stock trading apps on my phone. If you do not currently have electronic access to all of your funds (assets and liabilities), I would download these and keep them on your home screen With these open, simply input the data into the appropriate rows on the spreadsheet.

You can also build out a graph as I have done below, that will pull in your inputted data and adjust accordingly. Keeping tabs on your daily spending is a cool way of learning about who you are as a person and what you value the most, by what you spend most of your money on. So many of our purchases these days are mindless because we keep our finances out of sight and out of mind. This is why when we open our bank account after a month or so, we wonder where all of our money went. This routine allows me to see where my money goes every day and how my investments are growing. Saving money is a checks and balances system if you will. Through tracking, as you learn about your losses/gains on a daily basis you will be able to clean up your spending and increase your savings. The first step to financial success is confronting reality and taking responsibility for your spending.

Below are some screenshots of exemplary tracking.

May 1 May 2 May 3 May 4
Cash (estimate) $350.00 $328.00 $317.00 $298.00
Checking 1 $800.00 $788.00 $812.00 $806.00
Venmo $45.00 $45.00 $58.00 $62.00
Savings $1,500.00 $1,500.00 $1,500.56 $1,500.56
Brokerage $1,289.00 $1,290.00 $1,311.00 $1,298.00
401k $12,785.00 $12,790.00 $12,811.00 $12,806.00
Total Assets $16,769.00 $16,741.00 $16,809.56 $16,770.56
Credit card debt -$4,876.00 -$4,800.00 -$4,811.00 -$4,750.00
Student loans -$26,000.00 -$26,000.00 -$26,000.00 -$26,000.00
Total liabilities -$30,876.00 -$30,800.00 -$30,811.00 -$30,750.00
PNW -$14,107.00 -$14,059.00 -$14,001.44 -$13,979.44

Stop Making Plans and Start Establishing your Priorities.

When I started my job last summer, I became increasingly focused on planning out my future. When you are investing upwards of 10-12 hours a day at the office, you want to know that your time and energy are taking you where you want to go. Not only is “planner” built into my position title, but I have always been a planner in general. I like to know where I’m going, what I’m doing and who will be there.

Making plans has proved beneficial for me in the past, especially while at college, when classes ran on the same schedule every week and I was regularly in touch with the same groups of people. I knew what to expect from my days, so having a plan helped me fill my extra time in the best way possible. However, as I settle into my life outside of academia, I have started to see that the same rules don’t apply. Having plans has become more of a hinderance to my productivity than a help.

When plans are too detailed and timely, it can be very stressful trying to keep up with them. Your mood changes, people change their minds and the weather is never as nice as we expect it will be. If you have a set plan for your day, last minute changes to your agenda can leave you feeling very down, stressed and under-accomplished. Which in turn can reduce your productivity, and lead to increased planning in the future. I know first hand, it’s a bad cycle.

What I have started to do instead, is become increasingly grounded in my priorities. As someone who hadn’t put serious thought into my priorities before, it was difficult to determine what they actually were. I asked myself these four questions to get started.

  • What do you spend the most time doing already and why?
  • What do you do the most in your off time and why?
  • What is the majority of your Instagram/Facebook/Youtube feed filled with and why?
  • If you were on your deathbed, what would you want the most and why?

While my mind was all over the place at first, after a few weeks of journaling and observing my behaviors and thoughts, I came up with my answers. These were undoubtedly my priorities, whether I had realized it before or not. The most important part of my answers was the ‘why?’ Becoming very clear about your priorities and having concrete reasons as to why they are what they are, is crucial for living an honest and productive life. Yes, it may be scary to admit that you truly can’t plan out your day, year or life, but if you commit to operating based on your priorities, you can never really lose.

As you learn to say no to opportunities that don’t align with your priorities, you will naturally gravitate towards those that do. You will be able to make decisions more confidently and will be less thrown off when things come up unexpectedly. We can’t predict what will happen in life, but we can decide how to react when things do happen. If we are always mindful of our priorities, then we can best decide how to react to situations in order to live out our goals.

Minimalism: A lifestyle for us all

Do you remember the apartment I mentioned in my last article? The one I moved in to, to pay $200 dollars less a month for rent? Well since signing in September, my monthly payment isn’t the only thing that has decreased significantly.

Back in August, at the peak of our desperation to find an apartment, my roommate urgently called me from an open house showing. I could hear the smile in her voice on the other end of the phone. “I think this is our place. It’s small, don’t get me wrong. The rooms are tiny. But the location is perfect and rent is unbeatable!” Before I had a chance to respond, my phone started buzzing in my ear as pictures of the place popped up on my screen. I put her on speaker and zoomed in on the images. The place looked livable from what I was seeing, but pictures had previously deceived us. I decided to leave work early and head over to catch the tail end of the showing.

She wasn’t lying, the apartment was very small. Standing with the realtor in the kitchen, the most spacious room in the entire place, I brought up the questions he didn’t want to answer. “So what exactly are the dimensions of these rooms? I need to make sure my bed will fit.” He lead the way to the smallest bedroom without a closet, folded open the crooked, shutter style doors and let me walk in. “The room you are in now is 7×7 feet.” I pulled out my phone and Googled the dimensions of a queen size bed. “Okay, it looks like it will just barely fit. Queen beds measure about 5×6.” We both giggle sighed and shrugged our shoulders.

When I made the decision to live in this apartment, I knew I was going to have to get rid of over half of my belongings. I knew I did not have room for all of the clothes, furniture, decorations and other STUFF I had been living with for years. What I didn’t understand at the time was that the terms of this commitment would change my life for the better. Now even though I only have a bed in my room, a wardrobe consisting of only the clothes I feel good in and a fridge with only the food I will eat within three days, I am more satisfied than before.

Over the holiday break, I watched the documentary Minimalism on Netflix. It was amazing hearing neuroscientists and other striving minimalists describe what I have been experiencing for months. One minimalist explained, “every possession serves a purpose that brings me joy…when I look around I have to justify to myself, does this add value to my life, and if it doesn’t I have to be willing to let go.” Letting go of things that do not have utility can be difficult, especially if we have an emotional attachment for whatever reason. Speaking from experience however, the letting go is the hardest part. Living life with less has not only helped me save money, but has allowed me to shift my focus toward my relationships and my personal goals.

So this year I challenge you to first watch the documentary, and then begin taking small steps to become more of a minimalist. No, you do not need to move into a smaller space to start living this lifestyle. I do however, encourage you to choose quality over quantity. Let go of anything in your life that isn’t serving you right now and begin valuing and caring for those things that do. Needing less will not only make you richer in the bank, but richer at heart.

FOUR Financial Lessons from the Homeless

New York is one of the biggest financial capitals of the world. Finance is everywhere in this city, whether in the billion dollar hedge funds that are making million dollar deals or the restaurant owners calculating bar tabs, brunch receipts or tenants saving for the unruly rent they owe their landlords at the start of each month. 

One lesson I have learned from observing the homeless on my street, is that being a pure minimalist has its benefits. These people carry with them only what they need and nothing more. It would be inefficient to carry around dead, excess weight. We as millennials need to understand why excess is bad and recognize how our spending habits are based on desire instead of necessity. If we all became more aware of the things that we buy and their ability to clutter our lives, we might start to realize that material goods do not help us meet our goals or delay the process.

The second lesson we can learn from the homeless is how we can market ourselves well to attract the attention of others. I regularly encounter homeless individuals on the subways and in the streets. They are holding signs that tell their story or are yelling at passengers about their specific misfortunes. Many of them have had a lot of practice doing this, so they know what works and what doesn’t. They are forced to put their best foot forward and try and try again to sell the bystanders on a few dollars of investment into them. They are essentially pitching themselves to an audience of investors, like you see startups do on Shark Tank. When you want money for an investment or business, or are trying to land the perfect job, you need to market yourself to your best ability. This means looking the part and connecting with the given audience on a personal and real level. The homeless live it everyday. Their survival depends on it.  Since yours doesn’t, if you were to apply the same sincerity and passion into improving your current state, you would likely get very far.

The third lesson is utilizing the resources around you to the best of your best ability. I was in the train station one time and a homeless man was cleaning all of his clothes in the bathroom sink. Since the station is a public facility, this was free to him. He was being resourceful. I also see many homeless people using public places for shelter or the public library for entertainment to pass the time and read or subway seats as beds. We as millennials also have boundless resources around us that will cost us little to no money to utilize things such as books, mentors, the internet, newspapers, other people in our field willing to help us if only we just ask. Many of us do not use these resources to our advantage as we should.

The fourth lesson is that homeless people ask for what they want. If asking doesn’t work with one person, they try and try again. They are relentless because they need to survive. They will badger so many people and most of the time it works. I know because I see so many people fall prey to their tactics and reach into their pockets to grab money. Its human nature to feel empathetic towards other people and want to help them out. Ask for what you want and if you get denied ask someone else.

The final lesson to consider is that homeless people use a cash based accounting model. These days everyone is in debt. Debt is a tool, but most of the time people, especially people our age, abuse this tool. Homeless people collect cash, use that cash and simply go and try to get more when they run out. They don’t just put their purchases on a credit card. People need to realize that we should only spend what we have available. Try carrying around a specific amount of cash each day, spending only what you need and nothing more. Don’t always be putting the little things in life on a credit card because it creates bad habits that are hard to stop.