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January 2013


I don’t have the statistics pertaining to this, but I have a strong impression that many people dream about starting their own business, and many who do have this particular daydream are inspired to consider what this life would be like because they don’t like their boss. Or maybe they don’t like working for someone else in general.

All the late-night infomercials and spammy or scammy websites promising riches with tantalizing come-ons like “Work from home!” and “Be your own boss!” certainly point to the idea that there’s an innate desire to storm out of the boss’s office, slamming the door on the way out, with a huge grin on one’s face as one sticks it to The Man. Commercials like this appear on late night for an obvious reason: insomniacs and others staying up late at night are tired and more susceptible to misguided, illogical, or poorly reasoned suggestions.

I can’t criticize either the entrepreneurial spirit nor the process of meeting with one’s boss and handing her a craftily worded letter of resignation. I left my corporate job to work for myself.

Although I’ve known for a long time that I don’t mindlessly bend to authoritative figures, particularly those whose awarding of authority is based on something I consider unworthy, this wasn’t my particular driver for forming a business. I came upon my business by accident, spending almost all of my waking free time in a manner most would consider a waste of that time. It wasn’t a business at first; I wasn’t trying to make money. It just worked out that way, and I was able to fit that into my worldview wherein I don’t particularly care for working for others.

This in itself is the wrong reason to become an entrepreneur. But what does it mean when someone says he doesn’t like working for other people? It has to be a combination of the following:

  • The lack of autonomy.
  • Having responsibility without authority.
  • Being part of a system that is not a meritocracy.
  • Superiors who don’t have either the knowledge their position should entail or the people skills required in management.
  • The lack of advancement opportunities.
  • The lack of compensation growth opportunities other than incremental.
  • A certain level of anti-social tendencies.
  • The disdain for adhering to someone else’s schedule.

Perhaps this clip from the Coen brothers’ film The Hudsucker Proxy, wherein a green hire at the bottom of the ladder of a nebulous corporation receives his orientation in the mail room, epitomizes why working for a corporation can be anathema to so many people who have a mind tuned towards independent thinking and humane treatment of other people. Be sure to watch the entire excerpt.

There’s bad news for those whose sole reason for starting a business comes from the attitudes towards working described above. None of these attitudes would be beneficial to anyone, whether working for another individual or working for oneself, and if you disdain these types of situations in a corporate situation, working for yourself isn’t going to be that much better from a psychological standpoint — but maybe you’ll have more of the benefits for yourself, outweighing the potential annoyances.

An entrepreneur has more bosses than any other type of worker.

You can call yourself President, Chief Executive Officer, Owner, or Grand Poobah. Titles like these give the impression you answer to nobody else. The buck stops here, with you. They may well be accurate titles, too — well, except for the meaningless “Grand Poobah.” Those titles work best when you have other people working for you; without someone to order around, there’s really no point in having any title anyway. They imply you’re the boss, not to be trifled with, and they tell the world that you make the rules.

You don’t. If you want to own your own business, whether you hire people to help you or not, you have many bosses you’ll need to answer to. Your entire job will be based around making someone happy, or else your business won’t last long, and your days as an entrepreneur will be numbered.

Your new bosses could include your customers, your clients, your Board of Directors, market conditions, your shareholders, your private investors, and government regulators. They might not be telling you what time you need to open your email in the morning, but you’ll need to listen to their feedback and understand their needs in order to have a successful business. In many cases, the combinations of new bosses will be more demanding that have higher expectations than your former corporate boss in the corner office or the larger cubicle ever was.

If your new venture creates products and services — and what business doesn’t, in some form — you need to listen to your customers. In fact, doing so might alter the mission.

Personal finance start-up Budgetable started as a way to help customers create and stick to spending plans, but after determining that their customers were more interested in finding coupons and saving money through spending rather than actually saving — or determining that this is the more profitable route — they changes their focus towards finding the latest deals. I don’t know if this is a great example of listening to one’s customers, as it seems more like the customers they initially had weren’t profitable and turned towards those who are, but if you believe the press releases, they needed to listen to their customers.

Customers provide feedback in many ways — sometimes it’s as simple as refusing to buy the product, but a good entrepreneur can perform the research and adjust to the needs of their customers. This is best done by firmly believing that the customer, while perhaps not always right, is always the boss. Sometimes you have to convince the boss he’s wrong, and that can be a daunting task, but if you don’t listen to your customers as if they were making the rules, you won’t have your business for long.

If you create your business as a consulting firm or as an organization that provides some kind of service to other businesses, you have clients. The clients are your customers, and the same rules apply. It’s just a question of terminology.

Depending on how your business is organized, as an entrepreneur, consider yourself employed by your Board of Directors, investors, or shareholders. If you do not meet the expectations in your role as C.E.O., they will kick you out and replace you with someone who does listen to their demands. They may not care whether you work regular hours, but if you don’t like working regular hours and your stakeholders are doing their jobs, their expectations of you will be high enough that you’ll need to manage your time well.

Every successful entrepreneur I’ve known has put more time in than one might consider required. Those who put in extra effort and time in a corporate job answering to someone else are more likely to have the work ethic required to excel as a business owner. “Nine to five” as a concept for getting work done doesn’t exist when you own your own business. It may just be a question of motivation. You may hate being asked to work overtime when you don’t see the benefits (other than overtime pay), but working for yourself, you may be more willing to put in extra time. But in my experience, the best attitudes for successful business ownership carry over into other aspects of life, like working for other people.

It takes a special passion to be successful starting a business. You have to be ready to make a commitment and ready to prioritize the needs of that business. The needs of the business relate directly to the needs of the new bosses, the customers, clients, and investors, as mentioned herein. The same traits that prevent a person from overachieving while working for some other company might cause problems when that same person decides to become an entrepreneur. Many of the same skills that allow a worker to impress others in a corporate setting will translate well to owning a business.

It’s a myth that people who can’t function well in corporate settings due to the lack of desire to work for others have what it takes to be successful entrepreneurs. There are exceptions, of course; I know a good number of bloggers, for example, who were able to quit their day jobs, but in the grand scheme, that is very rare. Starting your own business won’t necessarily help you excel if you are unsuccessful in a corporate setting.

Photo: Flickr

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I’m currently in California, visiting my mother, who as I mentioned in a previous article is in the hospital. While articles this week will likely be slow on Consumerism Commentary, one thing I won’t have to deal with while visiting family is the relaxed regulation on merchants who accept credit cards. Starting this week, retailers in many states are now explicitly allowed to charge customers who wish to pay with credit cards an extra fee. My home state of New Jersey will be affected, while California has state laws preventing such consumer discrimination.

Here is how this came to pass.

The Credit CARD Act of 2009 directed the government to regulate swipe fees for debit cards, sending companies involved in payment processing, from Visa and MasterCard to the smaller companies that handle the transaction technology, scrambling to ensure the lost revenue could be made elsewhere.

The CARD Act set the stage for pro-consumer changes to the credit card industry as the empowered government agency, the Consumer Financial Protection Bureau, began changing the landscape for the financial industry and its consumers.

In July 2012, Visa, MasterCard, and several banks settled an anti-trust lawsuit that alleged the companies fixed prices — the prices these companies charge merchants to accept credit and debit cards. Merchants generally pay for each swipe of a customer’s card — “swipe fees” or interchange fees — so off the top of a large number of transactions, the payment processors, the banks, and the card issuers stand to earn 3 to 4 percent of the transaction price in total. The settlement opened the door for retailers to begin passing the cost of the credit card transactions onto their customers.

But wait. Retailers were always passing these costs onto their customers. It just so happened that the cost was spread out more or less evenly among all customers, regardless of payment method. So customers paying with cash were helping subsidize the cost of accepting credit card transactions. The figuring can’t ignore, however, there is a cost to a retail location’s acceptance of cash. Someone needs to handle the cash, and a responsible employee needs to count it at the end of the day. Someone needs to bring the cash to the bank to deposit it, and the bank surely charges fees for business deposits. Have an armored guard service? You can bet there is a cost associated — a cost no business would have to deal with if all transactions were effected with plastic or electronics.

The cost for a business to handle cash is significant, and I wouldn’t doubt that cost is much higher than 4 percent of a transaction, particularly for a business that deals with small transactions.

All of these expenses are already built into the price point a company determines when looking at the figures. This surcharge is a way retailers can charge a higher price for some customers and blame the price increase on someone other than their own management.

From the smart consumer’s perspective, a 4 percent fee for using a credit card does more than negate the potential cash back rewards you could earn from taking advantage of some of the best credit card offers. Even the cards offering 5 percent cash back do so only on restrictive product categories and up to a low spending limit.

Those who use credit cards because of a cash flow problem — and this group of people is more likely to be people who have fewer purchasing options available to them — will be most negatively affected by this surcharge. It’s bad enough that groceries in low-income communities cost more than the same groceries in affluent communities, regardless of the reasoning behind the price discrimination. This credit card surcharge is going to make financial situations more difficult for the most vulnerable.

Like California, New York has restricted its businesses from this type of price discrimination — though similar policies haven’t stopped some businesses from using the “cash discount” trick to charge credit card customers more. Here are the ten states that have outlawed this practice already:

  • California
  • Colorado
  • Connecticut
  • Florida
  • Kansas
  • Maine
  • Massachusetts
  • New York
  • Oklahoma
  • Texas

Any store with a retail location that charges a credit card surcharge must post a notice at the store’s entrance. The notice does not need to indicate the amount of the fee, but it needs to be clearly shown on the purchase receipt. Online retailers, however, don’t need to inform their customers until they reach the check-out page.

Customers who use debit cards will not be affected by the surcharge, but debit cards don’t offer the same kinds of protections as credit cards. It comes down to what we’ve always known: despite credit card rewards and benefits like purchase price protection, extended warranties, and certain kinds of insurance, cash is still king.

Despite what some reports are saying, customers using American Express credit cards and Discover credit cards can be charged this extra fee for their purchases. Most American Express cards are actually “charge cards” — cards without interest rates that require a balance to be paid off in full every month, and they may not have the surcharge, but a retailer is within his or her new rights to charge all credit card users extra, regardless of the branding, the processing network, or the bank.

Are you willing to pay 4 percent more for your groceries, entertainment, electronics, household items, prescription drugs, clothing, subscriptions, and so many other products and services just because you use a Visa or MasterCard? Do you want your state to prevent retailers from price discrimination? Do you believe the fantasy that cash customers will benefit from lower prices if credit card customers pay more?

Photo: Flickr

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Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series.

SteveDH is retired, and he and his wife have two grown kids. By the time he retired in 2008, he had reached his retirement asset goal of $500,000. His goal now is to ensure his savings last as long as he does. Read his bio to learn more about SteveDH. SteveDH is on Team Roger, with Certified Financial Planner Roger Wohlner.

Keep reading to see his net worth report, which includes progress over the past year, with detail from the past several months, as of December 2012. Following the analysis from SteveDH, Roger Wohlner will offer his own thoughts and guidance from his planning perspective. Jacob Wade, a budgeting expert who publishes from iHeartBudgets, will also provide commentary.

Roger Wohlner, CFP appears courtesy of The Chicago Financial Planner.

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Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series.

LastDollar is thirty-three years old, an entrepreneur and single mom with two children with learning differences in private school. To learn more about LastDollar, read the bio published last month in advance of Naked With Cash. LastDollar is on Team Neal, with Certified Financial Planner Neal Frankle.

Continue reading this article to see LastDollar’s financial progress over the last year, with estimated figures from December 2011 and actual number for the past few months, culminating at the very end of 2012. Her net worth chart is followed by LastDollar’s own comments and analysis. Neal Frankle will follow with his suggestions, and budgeting expert Jacob Wade from iHeartBudgets will also provide insight.

Neal Frankle, CFP appears courtesy of Wealth Pilgrim and Wealth Resources Group.

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Take the Time to Meet With an Estate Planner

by Luke Landes
Last Will and Testament

After putting this aspect of my finances off for the duration of my entire adult life, I finally found a recommendation for an attorney who focuses on estate planning, and we had our initial meeting earlier today. A few months ago, I had some concerns that my tax accountant, who had done a good job ... Continue reading this article…

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Kathleen December 2012 Net Worth

by Luke Landes

Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series. Kathleen is thirty-one years old, single, and living in Portland, Oregon. ... Continue reading this article…

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8 Rules for Borrowing Money From Friends and Family

by Luke Landes
Money

I’ve written about lending money to friends and family. I addressed this topic a few years ago because as my personal financial situation improved, I was in a position to help. Not so long before that time in my life, however, I was in the opposite situation. I didn’t have my financial situation stabilized, and ... Continue reading this article…

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JW December 2012 Net Worth

by Luke Landes
JW Net Worth December 2012

Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series. JW is thirty-one years old and a father of one with ... Continue reading this article…

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Some Taxpayers Can’t File Income Taxes Until March

by Luke Landes
Taxes

Thanks to tax code changes like the American Taxpayer Relief Act of 2012, the law that put an end to the fiscal cliff bickering and uncertainty around this year’s tax rates, the IRS is behind with their normal process of updating forms and testing computer programming. While the government is usually ready for taxpayers to ... Continue reading this article…

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Calvin December 2012 Net Worth

by Luke Landes
Calvin Net Worth December 2012

Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series. Calvin is in his early 40s, earning a salary of $120,000 ... Continue reading this article…

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Subcontract the Work You Don’t Want to Do

by Luke Landes
Chinese outsourcing

Until he was caught by a security firm hired to investigate a suspected hacking, an employee of an unnamed company took advantage of an extreme inefficiency in the job market. He was reportedly earning a six-figure salary as a computer programmer — I suppose programmers are called developers in the parlance of our times — ... Continue reading this article…

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A New #Cut4Bieber: Justin Bieber’s Prepaid Debit Card

by Luke Landes
Justin Bieber

There’s apparently a celebrity of some sort called Justin Bieber. I don’t know much about him, but I might have heard a song of his one time. He might have been a baby only a few years ago, but today he’s following in the footsteps of some of my favorite gurus, in a love-to-hate sense, ... Continue reading this article…

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Anonymous S December 2012 Net Worth

by Luke Landes
Anonymous S Net Worth December 2012

Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series. Anonymous S is a 24-year-old engineer earning $67,000 a year plus ... Continue reading this article…

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Podcast 169: Helaine Olen, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry

by Luke Landes
Helaine Olen

The Consumerism Commentary Podcast is no longer on a regular schedule, but I plan to produce new episodes throughout the year as the opportunities arise. Today’s guest on the podcast is Helaine Olen, author of Pound Foolish: Exposing the Dark Side of the Personal Finance Industry. Helaine is a New York-based journalist, contributing to Forbes, ... Continue reading this article…

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Anne and Matt December 2012 Net Worth

by Luke Landes
Naked With Cash

Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series. The first readers to share their December 2012 net worth are ... Continue reading this article…

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$1 Trillion Platinum Coin: The Next Episode of Reality TV

by Luke Landes
$1 Platinum Coin

Political theatrics doesn’t stop. I’ve been ignoring the latest issue for as long as possible, but this is so ridiculous I couldn’t go on ignoring it. Now that pundits have stopped talking about the fiscal cliff, the discussion has turned to the debt ceiling, the artificial limit Congress has put on spending that they have ... Continue reading this article…

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Quit Your Job This Year

by Luke Landes
Quit your job

If you’ve been thinking about leaving your job, do it this year. If you haven’t been thinking about quitting, but think you might be valued as an employee somewhere else or have something more to offer the world, start thinking about saying goodbye to your boss. Every time as an adult I left one job ... Continue reading this article…

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You Can’t Control Everything About Your Money

by Luke Landes
Hurricane

Choices play the biggest factor in success in life, financial success or otherwise. It took me a long time to come to that conclusion, but once I started accepting the facts that I could choose how I spend my time, I could choose how hard I work, and I could choose how to react to ... Continue reading this article…

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Fiscal Cliff Bill Passes: American Taxpayer Relief Act of 2012 (H.R. 8)

by Luke Landes
Senate

Late last night, the United States House of Representatives passed is designed to avoid the fiscal cliff, the bill already approved by the Senate that avoids the fiscal cliff, the automatic tax rate reversion and spending cuts agreed to last year by Congress. With recurring drama every few months, the government seems to be taking ... Continue reading this article…

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