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Monday, June 22, 2015

A Defense of Price Optimization

A Defense of Price Optimization
A while back, I heard about insurance companies using price optimization for the first time. This is when an insurance company strategically raises prices on only some of its existing customers, hoping that the price hike is not so large that the consumer picks up and leaves. The rub is that the price increase in, say, auto coverage, is not actually based on how risky that particular driver is. The higher price is based on the kind of consumer the company thinks he is: whether he's likely to shop coverage and switch if hit with an increase.

Monday, June 8, 2015

Linear Assumptions are Bullshit

Linear Assumptions are Bullshit
I have a good buddy from college that I still keep in touch with. We went to the same school, during the same years, and we even had the same major: English. Obviously, we also had the same crap judgment when it comes to our education. We both taught for a while English, too. (Well, I did for a short time, while he foolishly refused to sell out and chase money, instead pursuing "passion" and "meaning".) We both love football, enjoy some of the same hobbies...you get the idea.

Recently, he lost his job. In a climate of shrinking education budgets, this sort of thing can happen regardless of how good of a teacher you are. Even though we graduated over a decade ago, we still talk regularly. And these days we chat about the different directions his career might go in, now that he has this transition moment.

Being self-centered, the next thought I had was about how this sort of thing might affect me.

Tuesday, May 19, 2015

When in Rome, Tip 10%

Okay, I know we're not in Rome. But the saying doesn't sound as good with "when in Krakow." We are finishing up our time here in Poland. As expected, we love everything and now we want to live here, along every other place we've visited. Our list of places to live is going to exceed our years left to live pretty soon. Traveling reveals a lot. But when it comes to Mrs. Done by Forty and me, it mostly reveals that we want to live in all the places, and do all the things...and eat all the things.

(Oh, and before I forget, this week I was lucky enough to be on the Stacking Benjamins podcast, talking about our worst investing mistakes and more. Please click and listen to me blather. Now, back to the post.)

Sunday, May 10, 2015

And We're In Europe...

The last couple weeks have been hectic. Scrambling to finish work projects before taking nearly three weeks off, planning out the last minute details of our trip, and, of course, there's the packing. It is amazing what can be accomplished with a hard deadline. Parkinson's Law at work.

Anyway, last Thursday we woke up at four a.m., and swindled a ride to the airport for my wife and I, along with our couple friends who will be hopping around Europe with us, and before we knew it we were in the air. I still truly love flying. It takes so little to make me happy in general, that the reality of flying through the air in a metal tube is something of a small miracle to me. Like a small child, I still don't get how there are windows in planes. How do they not break from the air pressure? Why aren't we sucked out into the atmosphere? Our engineers are incredible. Plus, if you ask nicely, the flight attendant will give you a  whole can of free soda that can be enjoyed thousands of feet in the air. We live in an amazing time.

Monday, April 27, 2015

Side Stepping the Hustle

Everyone has a side hustle these days. It's doing the thing you're passionate about, after you come home from your day job. Instead of your nine to five, it's your five to nine. The little something on the side. For the most successful of hustlers, the side gig becomes their main gig. And maybe, it even results in more money...along with the additional autonomy, fulfillment, and whole days spent in yoga pants and flip flops.

So when I look at my income and realize how little of it is "on the side", I feel a little left out. Just like in high school, I never got the invite to the party, and don't know what to do with myself after five on a Friday night.

Monday, April 20, 2015

Dunning-Kruger and Other People's Money

Dunning-Kruger and Other People's Money
When it comes to other people's problems (O.P.P.), I'm always an expert. When a friend is flummoxed over a new job offer, and whether he should stay put or jump ship, I can give cogent advice on the spot. Unsure how to deal with a family issue? Ask away. I've got you covered. And when it comes to money, it's a whole 'nother ballgame. Despite having no formal training or certifications whatsoever, I'm happy to opine on all sorts of financial matters. With anyone. Strangers, even. At length.

Why should I be so confident when helping with other people's problems? For one, because we all are pretty confident in those situations. It's always easier to see the clear answer to someone else's problems. They can't see the forest for the trees, but we can. They're working under a variety of biases, and often don't realize it. But we, their trusted friends and advisors, see them clearly and can guide them to an optimal solution.

Monday, April 6, 2015

Middle Class Wealth

Middle Class Wealth
Last week we took a peek at income quintiles for American households: if you lined up each American household from richest to poorest, and broke them into fifths. The results were fairly shocking for me. The main lesson? We could really benefit from earning more. Sixty percent of U.S. households are making less than $66k per year. Luckily, a lot of Done by Forty readers are doing better. Let's take a look at the poll results: