Gambling for Fun and Profit

I’m not a big gambler but it is fun to get together with some friends and play poker when we get a chance.  I have written before about the three investment rules that apply to Texas Hold’em and was reminded of them during our game last night

- Know When to Fold’em
- Know Your Odds
- Be Patient

Know When to Fold’em
I probably folded just as many hands as I played last night. Sometimes the hand starts off looking great with an ace, king but then the flop comes and you realize you have no hand at all.  Psychologically, it’s tempting to stick around and chase another king or ace.  Who knows, you just might get lucky.  But following my strategy of playing a tight game, it makes more sense to fold’em at this point.  It is hard to do, kind of like selling a good stock gone bad, but it makes the most sense.

Know Your Odds
I’m not experienced enough to know the odds of each hand but I can reasonably judge the risk reward relationship on many hands. If I’m dealt an 8, 3 non-suited the odds are good that I won’t have a winning hand.  If the betting is low I could try and stick around, hoping to make two pair on the flop but the odds tell me to save my money and wait for a better opportunity. 

You can try and calculate the odds for a company’s performance by looking at their financial statements and outlook for the future.  If the last several years have been poor and the outlook is grim, odds are the company’s stock won’t do so well over the next period.  It may be better to keep looking for a better buy elsewhere.

Be Patient
It seems one of the biggest mistakes in Texas hold’em is to get impatient.  If you are not getting good hands you might start betting on cards you normally wouldn’t just so you can play. Being patient can help prevent losing your money on hands that just aren’t quite good enough. 

Patience is also a virtue in investing world.  As I’ve said before, poker games are won one hand at a time, just like investment portfolios grow over time with smart, steady investments. Don’t bet all your money on the first three hands. In other words, don’t approach investing with the attitude that you’ll get rich quick. Steady investing over time leads to wealth.

Manage Your Risk
Hanging out with the guys was fun but it was even more fun because I won the card game! Walking away with a small profit is always nice but it’s good to start the game with the expectation you might lose it all. This is different than investing because you never want to lose it all in the stock market; that is why diversification and allocation are so important. You really could lose all the money you invest in the market but if you diversify your holdings, the odds are you’ll come out okay.  If you set your expectations about how much you’re willing to risk and how much you stand to gain when you get started investing, watching your portfolio rise and fall will be much easier on your psyche over the years.

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Blockbuster vs Netflix: Why You Should Sign Up For Both

How can you save money on movie rentals by signing up for both Blockbuster online and Netflix? It’s pretty simple really, the battle between Blockbuster and Netflix in the home movie rental industry gives you a lot of leverage as a consumer. You can use this leverage to get free and cheap movies.

Enjoy Free Movies
Both Blockbuster and Netflix have had offers of the first month free for new customers. We took advantage of these offers to get free movies for the majority of two summers.  After our one-month trial with Blockbuster online was over I called and complained about some aspect of the service that wasn’t up to par and got another free month.  The wonderful thing about the competitive market is that companies will do what they can to make you happy and try to keep you as a customer.

My wife went back to work at the end of summer and we canceled our Blockbuster subscription. The next summer I did the same with Netflix, then canceled when the free movies were done.  Almost two summers worth of movies for free! One thing to be aware of.  Make sure you send your movies back prior to the end of your free trial or they will charge you for another month of service the first day after the promotion ends.  I was able to talk them into a refund but it was a hassle, so get them in on time.

Competition is Good for You
Once the free trials are over the fun begins!  What’s better than being a preferred customer?  How about being a former customer?  Both Blockbuster online and Netflix know you’re interested in renting movies and for all they know you have switched to the competing service.  Why should they try and find new customers when they know you are a good lead AND they know how to get a hold of you.  Instead they’ll try and lure you back to their camp.

You will start getting e-mails from Netflix, “come back to us and we’ll give you this great special”.  We received coupons in the mail from Blockbuster this summer that allowed us to rent any movie we wanted for only a $1.99.  Once we were in the store they tried to sign us up for Blockbuster by mail but we weren’t interested.

The current price war between Blockbuster and Netflix keeps driving down the price of online video rental while the price of gas keeps climbing. So skip the trip to the video store. Take advantage of your spot in this battle, sign up for both Blockbuster and Netflix and enjoy the spoils!

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American Express Helps the Rich Spend their Money

High incomes and steep annual fees will get you access to some of the most exclusive credit cards available such as the American Express Centurion Black Card and the purple Coutts World Card. 

In addition to providing a feeling of prestige, these cards actually help their wealthy owners spend more money through concierge services.  An article in the Times Online illustrates how credit card companies get their rich customers to put more money on their cards by finding them things to buy.  Some crazy examples from the article are:

• A discontinued design of wedding dress – it was sourced and shipped from Italy to the UK in time for the big day.
• Champions League tickets – delivered to the customer outside a stadium in Spain.
• A specific model of Renault coupé not produced since 2003 – one concierge service located three of these rare cars in Europe.
• Top tickets for a hit London theatre show needed urgently by a customer who had forgotten his wedding anniversary – booked.
• Exclusive hospitality packages for Wimbledon, the Cannes Film Festival and the Monaco Grand Prix – all have been arranged.

Now if “go to work and do my job” for a week was on the concierge list, I might consider applying for the card.  Since I know I don’t make enough to be approved anyway, I will just stick with making $125 off of a credit card promotion!

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Is the Minimum Wage Too Low?

Let’s ask Joe the business owner and Sam the employee whether the federal minimum wage is too low.

Joe: Every time they raise the minimum wage I have to choose between raising my prices or letting employees go in order to keep the business running.  I would like to pay my employees more but I just can’t afford it.  Minimum wage should stay where it is.

Sam: Raising the minimum wage from $5.15 an Hour to $5.85 is ridiculous!  That’s only an extra $28 for a 40 hour work week.  What can you buy for $28, not much.  Yes the minimum wage is too low but only raising it $.70 is not going to do much to help.  We’re going to need a bigger raise than that to make a difference.

Of course Joe and Sam are fictional characters of my own creation but the issue is quite real.  I can see both sides, both people are just trying to make a living the best way they know how.  Never having had employees myself I tend to side with Sam.  I can’t imagine trying to live on $5.85 a year an hour, it seems ridiculous to me that the federal minimum wage is so low.  However, if I was a struggling business owner and my labor costs went up overnight I might feel differently.

What do you think?  If the federal minimum wage is too low now, what would be an appropriate rate instead?

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Personal Finance Review – Dragon Naturally Speaking Edition

I know by now you’re probably tired of hearing me talk about carpal tunnel but I have to share a nifty trick for anyone with sore wrists.  I tried out Dragon Naturally Speaking for sending e-mails and writing this post and it’s a wrist saver!  It takes a little getting used to but it’s pretty smart software and comes in handy if you don’t want to type.  Since I’ve been writing less, I’ve had more time to read this week.  Here’s a round up of personal finance articles this week.

– Generation X Finance talks about how much money you need when you retire

– The Digerati Life asks how you’re building your net worth

– Money, Matter, & More gives some tips on buying a used car

– Binary Dollar offers some mortgage lessons

– Sun says goodbye to Emigrant Direct

– Lazy Man tells us why we should complain about gas prices

– Free Money finance offers a tip on how to stop the flood of credit card offers

– Five Cent Nickel has a poll on favorite mutual fund companies

– Consumerism commentary lists 10 ways to prepare financially for a baby

– Mighty Bargain Hunter asks how far you would go for good eBay feedback

– Advanced Personal Finance lists 10 ways to save money in your budget

Thanks to the Mint blog for hosting the birthday edition of the carnival of personal finance last week and letting everyone know the steps they can follow to make $125 with the credit card promotion.

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Carpal Tunnel Makes Me Feel Like Darth Vader!

One of the recommended treatments for carpal tunnel is to wear wrist splints while you sleep, while you type, and other times you’re using your wrists.  I’m wearing a Futuro splint on each hand at night, at work, and various times during the day and feel like half man/half machine.  Now I know what Darth Vader must have felt like with all that gear on!

The good news is I had some nerve tests on Friday and there is no permanent nerve damage. I still have numbness and pain which hopefully be controlled by rest and treatment. If I don’t improve the next step is to try cortisone shots and I’d like to avoid that.  The final step would be surgery to remove a band of tissue from around the median nerve to relieve the pressure and I really hope to avoid that.

It’s strange having to avoid being on the computer when you’re on it all the time, I’m going through a bit of computer withdrawal.  At least I can catch up on some of the personal finance books I’ve been accumulating but haven’t had a chance to read.

Thanks to everyone who’s sent their well wishes!  I have an old copy of Dragon Naturally Speaking and am going to fire it up thanks to the suggestions of some friends and readers.  I’m also going to check out a book on chronic pain the Happy Rock recommended, thanks for the tip!

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The High Cost of Carpal Tunnel Syndrome

My doctor confirmed my fears yesterday, I’ve typed my way into Carpal Tunnel Syndrome.  I go in for another test Friday to determine the extent of the problem.

So far it’s cost me a $25 co-pay and $45 for a pair of wrist splints.  Unfortunately, the highest cost has been my lack of productivity in my job and in my side business. I’m afraid to calculate what that might cost me.  The good news is I have short term disability insurance so if I have to miss work for several weeks I’ll still have some money coming in.  Hopefully with the right treatment I’ll be back in business in no time and won’t have to resort to that.

The bad news is that in order to give my wrists and median nerves a rest I’ll have to cut way back on the time I spend on the computer.  This will likely mean fewer blog posts and fewer items sold on eBay for a while.  If anyone is interested in writing a few guest articles while I rest my wrists just shoot me an email via my contact form. 

One word of advice to those that use the computer extensively in their life, get an ergonomics expert to checkout your workspace and posture.  Believe me, it’s worth it!

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How Money Can Change A Life

What would you say to a drug dealer who asked to bum a cigarette?  My answer was pretty simple, “I don’t smoke”.  He laughed and said I was smart, I told him he should quit.  Of course at that point I didn’t know he was a drug dealer and gang member, that came out later as we sat and talked on the courthouse steps.  I was there for jury duty; he was there to work out a deal for getting caught selling drugs.

Since it was his first offense he had gotten off with three years probation and was waiting for a ride to his new home in the suburbs.  Just 5 months ago he could have walked the 12 blocks from the courthouse to his home in “the hood” (his words, not mine) but now he had a better place to go. I couldn’t help but think as he told me his story how fortunate he was and how money really can change a person’s life.

A Second Chance
The change started 6 months ago when he met a young lady that wasn’t from his part of town.  She was actually from a whole different world than him, wealthy parents living in a huge home in a nice neighborhood.  As their relationship grew serious he met the parents and they offered him a second chance, a new lifestyle.  If he’d lose the guns, drugs, and gangs, he could move into their home, away from a life destined for jail or death.

A New Life
He jumped at the chance.  He’s cut his ties with his old neighborhood, has a steady job with benefits, and is now free of the drug charge that loomed over his head.  He likes her parents, loves her, and wants to change his life. It seemed to me he was sincere.  I could tell he was a smart guy he picked up on stuff quickly and asked smart questions.  With the right support and motivation I bet he’ll go far.

A Rough Start
Obviously, he made a choice growing up to lead the troubled life that he did.  There were people born in his same neighborhood that hadn’t followed the dangerous and illegal lifestyle he had.  However, the cards were stacked against him from the beginning. His dad was in jail so his role models growing up were gang members and drug dealers, that’s what he learned, that’s how he knew to get by. 

We talked about how one night he robbed a cocaine dealer then “partied like a rockstar”.  He started learning about guns when he was five years old.  His cousin was in the same gang as him and was on the FBI most wanted list for multiple murders.  He painted a pretty bleak picture of life in the fast lane, the only life he knew.  Luckily for him, he has discovered how money can change a life and now lives in the safety of suburbia.  Through the graciousness of his wealthy ‘in-laws’ he has a safe place to live, food on the table, and a regular job to help him earn an income.

Making Adjustments
“Dealing drugs makes you lazy”, he told me.  He wasn’t used to having to show up every morning and put in a full days work.  I told him I didn’t like going to work all day either.  I let him know there were legal ways to make money other than going to a job.  I talked about all the different ways you can make money online and explained the things I’ve learned over the last year.  I told him it took time & patience to make it work but anyone could do it. 

Parting Words
When his ride finally pulled up two hours later I didn’t know quite what to say.  I had so much more to tell him.  So many more questions to ask, so much more advice to give.  I said something uninspiring about how he should be sure to stay out of the old neighborhood and check out making money online legally.

I never got his name, never gave him mine.  I’ll probably never see him again; I hope he sticks with his new life plan.  I wish I would have emphasized what an opportunity his girlfriend’s parents had given him and that he should take advantage of it.  I should have told him about Chris Gardner’s story chronicled in The Pursuit of Happyness, how perseverance can lead to great outcomes.  I hope our two hour conversation had some impact on him. I wish I could have done a better job answering his questions.  What would you have told him?  What gems of advice would you have shared to help motivate the guy to stay on the straight and narrow?

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Jury Duty is Costing Me Money!

I’ve been summoned for jury duty, my first time going through the process.  I called into the informational phone number listed on the summons to find out what time to arrive, where to park, etc. and discovered I was actually going to be losing money while on jury duty!

The courthouse is downtown and the recorded message let me know I would need an all day parking spot.  Then it informed me the city would not provide parking, I’d have to find it on my own and I should expect to pay $10 at nearby lots.  From what I’ve heard, you are paid $4–5 every day you serve jury duty but that only covers half the cost of parking!   If I’m there the rest of the week, I could end up spending $25 on parking.  I know its part of my civic duty to participate in the process but it would be nice if they could at least provide somewhere to park. 

Another bummer is that the parking lots only take payment in cash.  I always put everything on my credit card to earn the rewards so I never carry money on me.  I’ll have to make an extra trip to stop by my bank’s ATM to pull out some money, and of course gas prices aren’t getting any cheaper.  You can bring your own lunch so at least I won’t have to pay for a meal at noon.  I try and stay away from situations that lose money but this is one I can’t avoid.  Not only is it something I should do as a citizen but they fine you if you’re a no-show so I’ll be there bright and early, losing money to help keep our streets safe

Update: Jury duty was quite an experience. The two eye opening hours I spent visiting with a reformed drug dealer and gang member made jury duty well worth my time.

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High Energy Bill Edition – Personal Finance Review

Our first big energy bill for the summer came this week.  The summer is always a killler not just because it’s so hot but also because my wife has stopped working and needs to keep the house cool all day long.  We did have the AC tuned up a few months ago so hopefully its running as efficiently as possible. 

Although the bills are high, it sure is nice to come in out of the blazing July humidity into a nice cool house.  Just like many other personal finance issues, we have to weigh the cost of something vs. how it effects our quality of life.  I’m sure we could save $50–$75 a month by turning the thermostat to 80 or even all the way off but it would make for a very sweaty and grouchy family.  Here are some other personal finance topics to consider from this week.

– Money, Matter, & More got the car he wanted for the price he wanted.

– I’ve often wondered the effect credit card arbitrage has on your credit history, especially now that I’m going after $125 in bonus money.  Five Cent Nickel puts my fears to rest as he discusses credit card bonuses and credit score.

– The Digerati Life discusses how occupation, education, income and net worth determine social class.

– Flexo learns a lesson from the hilarious TV show The Office, “If there’s anything to learn from The Office, it’s not to be a selfish jerk about money“.

– Congrats to Lazy Man on his wedding!  Now the party is over and he looks back at the cost of his wedding.

– Free Money Finance asks if you can save $2000 a year buying store brands.  I save a good deal of money buying store brand cereal but I don’t know about $2K a year.

– Binary Dollar tells us about Geezo, a social finance website.  It’s nice to see Henry back in action!

– Mighty Bargain Hunter has discovered that just because you’re smart doesn’t mean you’re rich.

– Jim has a good list of financial accounts you should and shouldn’t have.

– Sun does double duty telling us about his Zecco surprises and writing a guest post about mutual fund distributions at Gen X Finance while Jeremy is away.

– Raising 4 Boys put together a list of sales tax holidays for back to school shopping.  These holidays are one of the ways you can avoid paying sales tax.

– Articles from Money Smart Life were featured on two different sites last week:  The Carnival of Personal Finance at BrokeAss Student and in the creative Festival of Frugality at Mr. Credit Card.

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