Career and Work

Smithee’s Best Advice for Graduating Seniors

by Smithee on May 1, 2009

I’m not a financial planner, adviser, guru or anything of the sort. The reason I’m writing here today is because I screwed up big time. Fortunately for you, I think I’ve figured out where the mistake began.

Recently I’ve been taking an informal poll of some of the people I would consider to be relatively young and successful. I had a theory about how they were able to create financial security before liver spots started appearing, and while it’s completely unscientific, the results confirmed my hypothesis: almost none of them started their careers while relying on credit cards.

Before I go on: there are naturally going to be exceptions among those of you who’ve already been through this. In general, I’m talking about the average American who graduates a four-year college after High School and is living away from home within a month, and who is earning just enough to get by. Most of us, naturally, can’t wait to be out on our own, enjoying that delightful freedom. Your own experience may not match this, and that’s fine.

Usually what’s happens is this:

You pack up your meager belongings and you move into an apartment by yourself, or one you’re sharing with friends. You pay a deposit for the rent, which is much higher in some states than in others. You get someone to turn on the water, electricity, television, phone (or maybe you already have a mobile phone), Internet, etc., some of which may also have a deposit attached, because you have little or no credit record. Then you go grocery shopping. If you’re working in any kind of metropolitan area, you’ll also need your own transportation or a bus or train pass to get to the office.

Then, if you’ve timed things perfectly, you start work the day after you get settled in. Assuming you’re a young professional with a salary right out the gate, in another two or three or four weeks you’ll get your first paycheck. So, here’s my question: how did you pay for the rent and the utilities and the groceries? These are the options I’ve thought of:

You had some money saved up
You got some free money as a gift for graduating
You used a credit card

For me, options 1 and 2 were not the case. I had exactly 20 cents. I consider myself lucky that I had no student loans, but at the same time, I only had that 20 cents to work with. Nobody was giving me any gifts of cash to start my grand life adventure. So, I got a credit card with a $2,000 limit and immediately started charging. I had to, otherwise I’d have no electricity or a place to sleep. It was a tool of necessity.

And it wouldn’t have been a problem if the money I charged to the credit card were just a temporary loan from the bank that issued the card (it was a Yahoo! Visa, but I don’t remember which bank). A temporary loan is exactly what it should’ve been, but by the time I’d been paid about one month’s worth of wages, the days had already come and gone when I was expected again to pay my share of the rent, utilities and groceries. So I didn’t have the money to pay my entire credit card bill. And interest started to accrue.

And I worked some more, then paid my bills, and paid what I could to the credit card company, and more interest started to accrue, etc., etc. The first few months were the worst. And the second few months, those were the worst, too. Before I knew it, I was close to the credit limit, so I got a second credit card. After that, things went into a bit of a decline. (Apologies to Douglas Adams.)

That was twelve years ago. I was on track this year to finally pay off that old credit card debt once and for all, when my employer announced 10% salary cuts so we can survive the recession. And that’s a perfect example of why it still hasn’t been paid off: crap happens. But I do have a good job, and a sensible mortgage, and the pets are well cared-for and things are generally okay. The problem is that I know people who managed to be in this same position just a few years after college. They’re steadily saving for retirement and that word still causes me to feel extremely nervous.

So here is the best advice I can give to graduating Seniors: find out how much you will need to live on your own for the first two months, and don’t move out on your own until you have that money in the bank. (That is, unless you snag a job that pays you at least double what you need to survive every month. My first salary was $22,100 before taxes. In New York City.) And don’t focus only on the rent. Include all the utilities, groceries, a little bit of extra for entertainment, and you should be much better off than I was.

And if you’re planning to take the train to New York City, living in New Brunswick, NJ is a reasonable option, but make sure you find out first how much the monthly train pass is. Twelve years ago, it was $336. These days, it’s probably the same as the payments on two brand new Hyundais.

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Resume Dos and Don’ts (Plus Resume Makeovers)

by Flexo on April 17, 2009

This is a guest article by Ginger from Girls Just Wanna Have Funds. Ginger teaches women how to break financial ceilings one stiletto at a time! Join the social network, Girls Just Wanna Have Funds on Ning to connect with other financially savvy women.

This week I’ve been helping out my company’s HR department by reviewing resumes and conducting interviews. The experience levels range from those who are new graduates to people with years of experience. Sadly, I was disappointed with how many people didn’t have the basics down when it came to writing their cover letters and resumes.

Now isn’t the time to slack in this area if you’re looking for a job, you’re competing with literally hundreds to maybe thousands for one position. If you’re looking for work, take a second look at your resume and make sure your resume and cover letter at least falls within the following guidelines:

Do not:

… ask how much the position pays within the cover letter until you’re on the interview and/or sure that you will be offered the position. I personally don’t have a problem with someone asking but I think it rude to ask in an informally written cover letter without a resume, then telling me that you’ll send the resume after I tell you how much the job is paying. Seriously? HR managers and recruiters don’t have time for that, it’s rude and unprofessional. Needless to say I didn’t respond to said applicant.

… use an email user name that isn’t related to your government name. I can’t tell you how many times I saw email addresses like starzaligned@yourdomain.com, bustitbaby@yourdomain.com etc. I moved on to the next person because I’m a firm believer that if you don’t know these basic principles of resume writing then it will be questionable on whether or not you’ll conduct yourself professionally. Your email address should be some combination of your first and/or last name.

… use different fonts throughout your resume. Using different fonts makes your resume hard to read and it shows that you’re not as detail oriented as you need to be. Set the view on your resume to 70% and make sure everything is uniform and in line, especially bullets and indentation.

… extend your resume beyond one page. Unless you have 5-10+ years of relevant experience, you don’t need a 2-3-4-5 page resume, especially if some of your experience has nothing to do with the position. Try to keep the positions listed relevant to the job.

Do:

List your achievements throughout your resume. Time and time again applicants literally copy and paste their job description without any consideration to how their actual work contributed to the organization’s goals. You need to ask yourself: how does this description convey my worth to the organization? Does “putting files away at the end of the day” really convey my value? How about: “Systematically reorganized files to increase organizational productivity and efficiency.” Sounds highfalutin but it works!

Apply for jobs that are best suited for your skills and experience. Skip the long shot positions where your experience can’t possibly match with the requirements. Look at your resume and scan the job post, how can you honestly and ethically marry up what they are looking for and what you have to offer.

Maintain a consistent theme. If you’re a jack of all trades then it’s now time to settle down on one career area. Here’s a comment from a friend who works at Homeland Security: “When you have too many degrees and you’re not working in your field of study then most likely you are a risk to hire. Why? We are looking for people that are career driven and not job driven. Just some insight from looking over countless resumes.” How’s that for sage advice? Pick an area and stick with it or create different resumes for each area. Employers want to know that once hired, you’ll be committed to the job and organization, not planning for your the next jump 3 months in.

Have a friend, preferably someone in a managerial position, review your resume for errors. Sometimes having another set of eyes review your resume helps because they might see things you won’t after looking at it day in day out. Everything starts to look the same after a while.

Make your resume skimmable. Recruiters and HR Managers spend 3-5 seconds tops skimming resumes. If your resume is hard to read or the important information is lost in the layout then you put yourself at a disadvantage. Here’s an example of a resume makeover which resulted in the resume being easier to skim:

Before

After

Take a second look at your resume and make a few edits if needed or revamp it for a bold and fresh look. Focus on your strengths and make them apparent throughout your resume. Recruiters are bogged down with countless resumes, make sure yours makes the first cut.

If you enjoyed this article, please visit Ginger’s blog Girls Just Wanna Have Funds and subscribe to the blog’s RSS feed. If you’re in the DC area, join the Girls Just Wanna Have Funds Meetup group here and for the Atlanta, GA area join here. We would appreciate your comments and reactions, so if you would like to contribute to the discussion, add your comment below.

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Why I Am Not Blogging Full Time

by Flexo on April 6, 2009

I do not normally write about blogging here. For me, writing about blogging is like singing a song about the songs one sings rather than singing a song about something inspiring in itself. Nevertheless, this is a blog in which I write about my experiences with money, and blogging has played an increasing role in my finances over the past few years.

After blogging or adding chronological updates to websites since 1994, it wasn’t until January 2005 I received my first check as a result of this writing. Granted I didn’t start Consumerism Commentary until July 2003 and I didn’t add advertising until November 2004, that’s a long time to have a hobby without any consideration of income. In fact, I could stretch my history back to 1989 with my first experience building on-line communities.

Even after that first check in January 2005, income from blogging was slow. I gradually added new projects like the Carnival of Personal Finance, helped form the MoneyBlogNetwork, created pfblogs.org, and offered to host a number of personal finance blogs by other offers for free. January 2007 was the first month in which my income from these activities surpassed my income from my “real” job.

Invariably, one of the most common questions I receive from friends and readers is about leaving my day job. When will I take the plunge by quitting my nine-to-five obligations and dedicating that time to an endeavor that seems to be providing a better payoff? The idea first crossed my mind as a remote possibility in January 2007 and as a serious option in January 2008 when my income from this “hobby” was consistently twice my salary.

The benefits are numerous.

I would not be tied to any particular location. Without having to report to an office every day, I would have the freedom to work from home, my girlfriend’s house, a public library, or a hotel in Arizona. Additionally, I could live anywhere in the world with a reliable connection to the internet, saving money on living expenses. If I so desired, I could even take the extreme route and live out of my car.
I would be my own boss. Rather than being subject to the whim of a large multinational corporations and the seemingly endless levels of authority between the CEO and myself (currently at six or so), I make the decisions about which projects to pursue and how much time and effort to devote. I’ll still need to answer to the government when it is time to pay taxes, however.
I could devote more time to my projects. By leaving my primary job I would have more time on my hands to work with. With more time, I would be able to focus on improving the quality of everything I do now as well as working on new projects.

If those were the only points to consider, I would have quit my job to focus on my writing months ago. Here is the other side to the story.

There’s not much of a business plan. A good portion of income from this side business is from advertising. It’s rather short on products that consumers can use other than information. I don’t see this as a sound strategy for the long term. People who study this particular industry believe even in the short term, such as this year, on-line advertising could experience a decline.
Income is too reliant upon Google. Even though only a small portion of income comes directly from Google, most other income sources rely on Google indirectly. The search engine delivers visitors who search for certain topics to Consumerism Commentary or other websites I manage. As I experienced first-hand about a year ago, one small change in Google’s algorithms or opinions could ruin the business model. If only regular readers visit Consumerism Commentary, advertising mostly fails.
It’s not wise to voluntarily give up five figures of annual income. It’s hard to turn away from a consistent, relatively stable check every two weeks, including low-cost health and disability benefits, a 401(k) matching contribution and discounted stock purchase plan. I also work with interesting people, and it’s nice to spend my time in an environment that is friendly and not too saturated with a sense of urgency. But if even 25% of my total income is stable as long as I perform as expected, I have a foundation to rely on when the other 75% could be inconsistent.

There are straightforward arguments against most of these drawbacks. With more time to devote to my projects after quitting my day job, I could come up with a more diversified business plan. That might include the typical “financial guru” fare like presenting speeches and writing a book. Neither of these excite me for a variety of reasons, the least of which is that I am quite critical of people who are “gurus.” I am more interested in building communities and would like to find more way to accomplish that.

I could also argue that the time I would receive back from my employer could be used to earn more income than I would be giving up by leaving that job, but that’s not a foregone conclusion.

If I am going to take a risk by leaving the corporate world and possibly revealing my identity, it’s better to do so now before I have more obligations and people other than myself who rely on my income. And it is true that I could reenter the traditional workforce if necessary if my plans for self-sufficiency fail. With all this to consider, I will stick with indecision until I decide to make a decision or until my company decides to make that decision for me.

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The Recession Finally Hits My House

by Smithee on April 3, 2009

I work for a small Interactive Agency of twenty-four people. This is a company that managed to survive the dot-com bust and, like any company, has good times and bad times. Our president always makes every effort to keep great people, even if it means cutting her own salary. I consider myself lucky to have found a place there, not only because I love my work, but for the atmosphere and common sense of purpose.

Now, I consider myself even luckier. Yesterday, instead of twenty-four people, there were twenty-six. We simply don’t have enough work in process to keep going the way we were, so the management team had to find $60,000 a month to cut out of our operating costs. We had to let go of two project coordinators, ’cause we simply didn’t have enough to keep them busy.

Less drastic, but more personal, is the 10% salary cut that will affect everyone else for the foreseeable future. This will bring my before-tax salary of $80k to around $72k. I’m not going to complain about this. $72,000 a year is a lot of money, especially considering I don’t work under hazardous conditions, or with unruly children, and I don’t have to take steroids to stay competitive.

However, this will require my wife and I to tweak our budget somewhat. $72,000 is a huge salary for someone with no debts; unfortunately I am not that someone. It was that extra $8,000 that was enabling me to make so much progress toward finally erasing my credit card debt that began in 1997. As of today, the balance is down to $3,522. My first instinct for modifying the budget is to say, “Okay, let’s just ignore that credit card until things get better.” I know that’s not wise. The last finance charge on the card was about $37, and if I start making just the minimum payments each month, that number will just get bigger and bigger. It’s a complete waste of money.

But there are other considerations, too. My wife and I have things we want to do this year. In fact, we’ve already paid more than $1,000 to go to a conference in California, but we haven’t arranged any plane tickets or figured out where we’re going to stay for the vacation days when we’re not at the conference itself. And then there’s the pet sitter, the meals in nice restaurants, etc.

Or maybe this is the kick in the pants that I need in order to spend more time working on my freelance work. Given the different ways that a salary and freelance work are taxed, in order to make up the difference, I’d need to earn about $1,000 a month (putting half away for taxes the next April). I don’t imagine that’s going to happen anytime soon, but it does give me something to work toward. Flexo is always happy to have me write more for this site, and there’s a side business in Web Analytics that I’ve been flirting with. My two pro bono clients (I wanted to practice) have been thrilled with my work so far, so maybe it’s time I start courting paying clients.

As I said, I can’t really complain about my cut in salary. If it weren’t for the two car loans from 2006 and my history of dumb materialism, my wife and I would have quite a bit saved up. I have faith we’ll get to a point of having a three-month buffer, but it won’t be this year.

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Salary Flat? Washington Post Wants to Hear From You

by Flexo on March 30, 2009

A reporter from the Washington Post is looking to hear from Consumerism Commentary readers who are coping with wage deceleration or stagnation. If you have had to make changes to your lifestyle due to wages or salaries that haven’t been rising as quickly as expenses, you are a perfect candidate for this article in progress. The reporter would like to talk to you about the effect of your stagnant income on your ability to save or pay for a child’s education, or any other kind of adjustment you are experiencing.

If this description fits your experience, please leave a comment here or send me an email (flexo at Consumerism Commentary dot com), describing your situation. I will put you in touch with the reporter.

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How to Deal With a Low Salary Offer

by Flexo on March 25, 2009

In my life so far, I’ve had three major chances to negotiate a starting salary. The first was with a cash-strapped non-profit organization that had enough problems keeping its payroll account funded every other week. The second was with a company in the financial industry, a segment of that industry that is known for being cheap in the salary department, particularly for an operational position rather than a business unit. The third was with the same company in a different location.

In all cases, I didn’t have a lot of room to maneuver. And rather than spending my time outside the office looking for new opportunities, I’m spending my time working for myself. It would be nice never to need to negotiate a salary for myself again; and in fact, it’s possible I’ll be on the other side of the negotiating table.

But I liked one of the ideas offered by Liz Ryan at Business Week for dealing with a hiring manager whose offer is lower than one feels they deserve.

Go back to the hiring manager and say: “Thanks so much for the offer. The job seems terrific, and I’m thrilled to be moving along in the process. We’ve had some kind of miscommunication along the way, clearly. I’m focusing on opportunities in the $XX range, and the offer I’ve received is obviously way below that number. If you’re set on this type of salary range, I’m not your hire, but it may make sense to talk about having me consult with you as you get your new plans under way and your new hire up to speed.”

At first, I didn’t see this as an option applying to any of my situations, but maybe it would have. And maybe this is not a bad idea for winding down my day job to begin focusing on my own projects full-time.

Liz Ryan offered a number of other suggestions, like accepting the job part-time (wouldn’t they use that as an excuse to lower the salary offer?), but I don’t seem them applying to most situations.

Lowball Salary Offers: A Working Guide, Liz Ryan, BusinessWeek via Yahoo Finance, March 23, 2009

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AIG Still Planning Massive Bonuses Today

by Flexo on March 15, 2009

Today is the deadline for American International Group (AIG) to pay $165 million in the form of bonuses to executives involved in businesses that led to collapse of the company — and the broader economy — last year. The company argues that these bonus payments were agreed to before the company required support from the government and taxpayers to stay in existence, and the government agrees. While some of the bonuses paid by AIG to its employees were reduced, these will go forward.

According to an anonymous government official quoted in the New York Times, the White House is outraged at the continuation of bonuses at taxpayer expense, yet they cannot do anything about it.

Is this too much attention on the one company? Should AIG be permitted to honor contracts drawn up under significantly different financial conditions? These bonuses supposedly help the company retain the best employees; if the employees in these divisions that led to the company’s collapse were the best employees, wouldn’t they have been able to avoid that collapse?

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Company-Wide Stock Bonus Vesting Next Week

by Flexo on March 6, 2009