This Blog Has a New Home: www.schaefersblog.com

Readers,
The time has finally come for me to move my blog. Please come on over with me. Don't forget to change your links and RSS feeds. Here's the new address:

www.schaefersblog.com

Create and Maintain a Budget Using Wesabe

For the past several months my wife and I have been using the free, easy-to-use, web-based software called Wesabe. Many of you have been asking me about it lately so I decided to give a brief overview of what it is and why I like it.

First, I'm a firm believer in the importance of spending your money intentionally, rather than being surprised by your purchases at the end of each month. In order to do this a detailed budget must not only be created, it must be constantly maintained. There are many different programs out there to help you in this endeavor like Quicken and MS Money, but Wesabe is free and it adds the community element which I'll explain later. Before I forget, here's the link to a quick 3-minute video tour of Wesabe if you're more of a visual learner: VIDEO TOUR

Some of the highlights of Wesabe:

All Your Accounts in One Place - Wesabe is nice because it allows you to view all of your bank and credit card accounts in one place making it easy to budget, categorize and view all of your spending rather than having to skip from site to site.

Creating Spending Categories - When you first upload an account (checking, savings,
credit card, etc.) with Wesabe it displays the transaction exactly like it reads on your financial statement, often meaning pointless numbers and codes with no relevance to you. Wesabe then allows you to edit the transactions individually changing the bank code into something you can use like, "McDonald's" or "Apple Store". What makes Wesabe great is that from that point on it will recognize if a similar transaction comes though and will assign it the name you chose automatically; meaning, if you receive a paycheck on the 1st and 15th of each month from the same place Wesabe will recognize this and call the transaction "Paycheck" (or whatever you assign).

Also, as part of the editing process Wesabe enables you to "tag" each transaction, putting it in a specific category like "Restaurant" or "Entertainment." This ability to create spending categories is obviously key in creating and maintaining a detailed budget. The tag process also "learns" as you use Wesabe more, automatically assigning repeat transactions the right tag. For example, if you go to Chili's every week you will only have to assign the first transaction a name and tag, after that it will do this for you as it recognizes the same purchase item or place.

Creating Spending Limits - Another handy tool Wesabe offers its users is the ability to create spending limits. Users can assign each "tag" or spending category a certain spending limit for the month and Wesabe automatically keeps track of where you are as you make your purchases. If you set a "Restaurant" limit of $150 for the month, Wesabe will let you know that you only have $50 left for the month if you go out one night and spend $100 on a meal. This is probably my favorite feature as it eliminates the guessing of where you are at any given point in time in regards to your budget...helping you spend intentionally

The Community Element: Tips and Goals - Wesabe is unique from traditional budgeting software in that it relies on its community of users to provide guidance and tips on how to successfully manage your money. The "Tips" section of Wesabe looks at common themes in your spending and automatically provides user-generated tips specific to you. So, if you're a single-person with no kids you won't be receiving advice on saving money on diapers or budgeting for your kids' college tuition.

The community also comes into play in the "Goals" section of Wesabe, a place where you can create and monitor your personal financial goals. The wife and I currently have goals including buying our first house and maximizing our yearly Roth IRA contributions. Wesabe allows you to connect with other users with the same goals giving you an opportunity to discuss, share and learn.

Overall, we've been very pleased with Wesabe. Every once and a while it mis-tags a purchase, but that is rare and easy to fix. The only other problem we ran into was having one transaction come up twice in "Bills" and "Payments"...we fixed this using the filter feature, filtering out the "Payments" from our spending and earning summaries. Finally, many have questioned the security aspect of uploading financial accounts onto the web...understandable, but Wesabe takes security just as seriously as any of your financial institutions that you bank with daily. Check out there security policies here: https://www.wesabe.com/page/security.html

Who is Ron Paul?

If you are like me you are watching the presidential election like you watch a round of golf on tv, checking out the leader board from time to time, but mainly just using it as some good background noise for a Sunday afternoon nap. I thought I knew what was going on for the most part until I started seeing the name Ron Paul everywhere on the Internet. I am still trying to figure this guy out, but if you would like to know more as well here is his "Issues" page from his official website explaining what he believes. Enjoy! Vote!

http://www.ronpaul2008.com/issues/

The Dollar is Falling....Big Deal

Tyler Cowen, author of Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist, wrote a great piece in the New York Times a few days ago entitled, "The Dollar is Falling, and That's Good," about the current hullabaloo regarding the falling value of the greenback. Its been in the news a ton lately and financial sages like Buffett have been warning about the precarious position a devalued dollar puts us in with countries like China holding so much of our debt in their hands. I admit, I've had mixed feelings about the real impact of a falling dollar wondering often, "Is this really something I need to be worrying about?" Cowen puts things in perspective:

ANXIETY about the dollar continues to spread. The falling greenback is often seen as a sign of an impending recession or the fall of the United States from global leadership. A low dollar simply looks bad. We are, after all, used to judging ourselves against others — comparing our salaries with the earnings of our peers, and our homes with those of our neighbors. We’re used to thinking it is a big advantage to stand at the top of a numerical list.

But when it comes to currencies, a higher value neither brings national success nor predicts future prosperity. The measure of a nation’s wealth is the goods and services it produces, not the relative standing of its currency. Take a look at 1985-88, when the dollar lost more ground than in the last few years. Those were good times, and the next decade was largely prosperous as well.

Today’s lower value for the dollar reflects the success of other regions. Europe has shown it can make the European Union and its unified currency work, and thus the euro has become stronger. The Canadian union appears increasingly stable, and that means a higher value for the Canadian dollar. Over all, these geopolitical developments are good for America even if the dollar becomes weaker in relative terms.

As to the concern that China could lay the wood to America by dumping the dollar:

Another worry is that a falling dollar puts the United States at the mercy of China. Dr. Brad Setser, a currency analyst at RGE Monitor, estimates that the Chinese hold about $1.2 trillion in dollar-denominated assets. China is likely to slowly diversify into other currencies, but Chinese leaders have no interest in encouraging a run on the dollar or a fire sale of dollar-denominated assets. China is in a more vulnerable position than the United States, if only because China is a poorer country and has underdeveloped capital markets.

Cowen concludes that all of the people claiming the sky is falling need to relax:

Still, it would be naïve to argue that a weak or falling dollar can never hurt the United States. Extreme volatility can increase general anxiety and discourage economic commitments. If the dollar went into a true free fall, it would damage the reputation of the United States as a desirable place for foreigners to invest. That would hurt; but on the other hand a low dollar would mean bargains for foreigners, thereby attracting investment and limiting the potential negative fallout from a dollar collapse.

SO far the Federal Reserve and the Bush administration have shown little concern over the falling dollar. This isn’t because of neglect or lack of interest; trillions of dollars worth of currency are traded every day, so policy makers have only a limited ability to push around long-term exchange rates, even if they wanted to do so.

When it comes to market prices, people can always find reason to be unhappy. In the eurozone, for example, it is a common complaint that the euro is too strong and therefore it is too difficult for Europeans to export goods and services.

In the case of the dollar, we need to stop thinking of its value as a marker of economic success. The American economy has its problems, but so far the low value of the dollar has proved more a benefit than a cost.

Weak Ties Experiment: Ben and Ramit

And now in the spirit of learning and discovery I offer this experiment to help prove the power of weak ties. I am going to send my "Creating and Cultivating 'Weak Ties,'" post to two of my favorite bloggers, Ben Casnocha, author of My Start-Up Life: What a (Very) Young CEO Learned on His Journey Through Silicon Valley and Ramit Sethi of I Will Teach You to Be Rich

I have a weak tie with Ben through Paul Berberian, a former USAFA grad who came back frequently to speak to our Management classes. It was through Paul that I learned about Ben's blog which I follow avidly. Ramit I know only through his blog. I suppose both of these are "weak" weak ties since they are one-sided, but we'll go with it for the sake of the experiment. Anyway, at this time I get on average 10-15 readers a day on my blog. My hypothesis is if I can get Ben and Ramit to link to my article either by a direct mention in their blog, delicious link, or some other means, my traffic will double for at least 3 days after their link is published simply due to the access I will receive to their blog audience. In doing so my life will be improved by more blog traffic, exposure, etc. and I will have cultivated a weak tie that could be of value in the future. Will let you know how this one turns out!

Creating and Cultivating "Weak Ties"

Since I finished pilot training I have had some time for myself to study, think, write and review. One thing I have felt strongly about is going back over some of the books and ideas I found most interesting over the past few years. For example, I read The Tipping Point: How Little Things Can Make a Big Difference by Malcom Gladwell a while back, but if someone asked me to summarize the ideas today, I would be limited to the subtitle, "How Little Things Can Make a Big Difference, " and a few smatterings from the book on Mavens and broken-window theory...not exactly high quality or usable information...so I'm reviewing in order to be able to actually use and apply Gladwell's ideas rather than just recalling how interesting they were at the time.

One of my favorite sections of the book involves the Law of the Few where Gladwell lays out the 3 types of people necessary to start a social epidemic: Connectors, Mavens and Salesmen. Connectors fascinate me because I relate to them the most. Connectors, in Gladwell's words are, "people with a special gift for bringing the world together." Connectors know lots of people, naturally, and, "for one reason or another, they manage to occupy many different worlds and subcultures and niches." For me the most important aspect of connectors is their gift of creating and cultivating what sociologists call a "'weak tie,' a friendly yet casual social connection."

It is my opinion that weak ties are an invaluable source of social capital one must cultivate if he or she has any chance at success. More from Gladwell:

In his classic 1974 study Getting a Job, Granovetter looked at several hundred professional and technical workers from the Boston suburb of Newton, interviewing them in some detail on their employment history. He found that 56 percent of those he talked to found their job through a personal connection. Another 18.8 percent used formal means...This much is not surprising; the best way to get in the door is through a personal contact. But, curiously, Granovetter found that those personal connections, the majority were "weak ties." Of those who used a contact to find a job, only 16.7 percent saw that contact "often"...People weren't getting their jobs through their friends. They were getting them through their acquaintances.

In short we don't rely on friends when it comes to new jobs, new information or new opportunities because in large part, they occupy a world very similar to ours. Weak ties are incredibly important for the simple fact that they are generally connections to a world outside of our own, a diverse form of social capital allowing us access into places we normally could not go. In a world of globalization geography is becoming less important and relationships are becoming more important. As the pool of high-skilled workers increases (aka China and India) who you know will become a key way to differentiate yourself from the other thousand people with similar resumes, making the number of your weak ties a valuable asset in determining your success in business and in life. Knowing the importance of weak ties, here are some ways to get better at creating and cultivating them:

1) Meet more people - go to church, attend art shows, join a book club. Expose yourself to various degrees of social randomness, groups and people that you would normally not associate with, people outside your normal social circle. Remember, you are not looking for a new best friend, only casual friendly connections. If your normal Friday night routine involves staying at home and watching a movie in your sweat pants, mix it up a bit and go out every other week. Extra tip: people tend to connect more easily if they are holding a beverage in their hand...it seems to create a small barrier making people more comfortable when conversing.

2) Organize your contacts - meeting mass amounts of people will do you no good if you do not come up with some sort of system to remember them. LinkedIn is a very useful online tool I just joined. They help you track down old classmates and colleagues, create connections, organize and maintain detailed contact information. Obviously there are a million social networking options today from MySpace to Facebook to Twitter...use them all. Also, most smart phones today have great contact systems as well, utilize them and keep them updated.

3) Weak tie, not dead tie - Find a way of keeping the ties alive over the years. For example, Mr. Horchow, a connector Gladwell studied in Tipping Point would keep track of his contacts birthdays and send them a birthday card. This seems easy enough you might say...Horchow had a contact list on his computer of over 1,600 names! Maybe this isn't your style, but find something even if it is only a yearly e-mail updating them on your life, or a Christmas card, whatever you have to do to keep the tie healthy enough that when you call on that person for a favor sometime down the road they don't respond with, "who did you say you were again?"

4) The magic of remembering a name - We all know how good it makes you feel when someone you only met once remembers your name....become that person. I heard a story once of a Wing Commander at an Air Force base in North Dakota that memorized the names of every single airmen under his command...and their spouses! We're talking thousands of names people! He obviously had come up with a system, placing a name with a fact about the person, reviewing photos, something. Whatever he did, his ability to know his subordinates' names made an incredible impact. The moral was very high and every airmen wanted to work hard for the Commander because they felt like he cared. If you can learn to remember people's names it will make you a person people want to remember.

Go forth people and establish your weak ties! Comment with your ideas, systems and thoughts.

My Best Books of 2007

Its about that time again when much of the media will be focused on creating their year-in-review pieces. Like my blogging friend, Ben Casnocha, I love "Best of" lists. So, without further attempts to write for the sake of hearing my fingers hit the keys, here is a list of my favorite books I read in 2007:

Troublesome Young Men: The Rebels Who Brought Churchill to Power and Helped Save England by Lynne Olson

My latest read, a story about the band of young MP's in Britain that broke party ties on the eve of WWII in order to topple the Chamberlain-led appeasement government and make way for Winston Churchill. Starts out a bit slow, but gains rapidly after the first 6 chapters. Incredible insight into the internal struggles many of the young politicians faced in going against their party and standing for what they believed was England's only chance at survival, all-out war against Nazism. The book raises interesting questions concerning loyalty, party politics, the role of the press and leadership. Lynne Olson has made great tale in describing the behind the scenes workings of a few that helped change the world for so many.



Bobos In Paradise: The New Upper Class and How They Got There by David Brooks

Go to any college campus, resort town, or urban-chic hotspot in America today and David Brooks' "Bobos In Paradise," could act as an incredibly detailed and relevant tour guide. Everyone knows a Bobo whether they realize it or not...in fact they may be one themselves, though they would never admit it. After reading this book I realized that I am in fact a Bobo. Brooks cracked the code for me on things I had always noticed, but never been able to put into words regarding the new class of society forming in America; the exotic coffee drinking, urban outfitter/anthropologie wearing, mutual fund owning, I go climb Himalayan ranges barefoot and drink yak's milk tea with the sherpas over Spring Break for fun because all the "tourists" stay in Kathmandu, class of society. The people that will not like this book are the ones that take themselves way too seriously...most likely because they are probably Bobos too, but too proud to admit it. Entertaining to say the least!


Londonistan by Melanie Phillips

Shocking commentary on the rise of radical Islam in London. Finally, someone who is not afraid to call a spade a spade. Melanie Phillips should be commended for her courage and tenacity in tackling head on an ideology that is seldom confronted out of fear of being labeled "intolerant." Ideologies of hate simply cannot coexist with freedom. "Londonistan" shows the front lines of a culture war that has been brewing for centuries and is nearing its critical mass. This book should sound as a warning for every American, highlighting the consequences of appeasement and the philosophy of moral and cultural relativism. Prepare to walk away angry and shocked.


The Brothers Karamazov (Everyman's Library) by Fyodor Dostoevsky

Not much to say on this book, its a classic for a reason. Dostoevsky has an amazing ability to take characters and make them your friend, brother, father, etc. The story of a Russian family and their struggles for power, money and blood. Some of the greatest writing I have ever experienced. Examines nearly every big philosophical question: meaining, purpose, good, evil, God, man. If you read one classic, read this.


The Black Swan: The Impact of the Highly Improbable by Nassim Taleb

Most predictions are flat out wrong, just listen to any "expert" on CNBC give a prediction of where the market is headed on a given day. Yet, we love predictions because they help us feel like we understand what's going on around us much better than we actually do...the idea of randomness is uncomfortable. The reason our prophecies fall so short is our lack of understanding of the Black Swan and its impact on both history and the future. The Black Swan as Taleb describes it is:
1) an outlier 2) carries extreme impact 3) produces explanations only after the fact.

The bulk of Taleb's book explains in great detail, clarity, and wit the error most humans make in failing to account for the Black Swan in their thinking. He explores various theories ranging from our eagerness to interpret the "causes" in history (confirmation bias, narrative fallacy, etc.) to our inabilities to predict the future (the expert problem, herding and the character of prediction errors).

Finally, Taleb doesn't stop with mere theory; he gives the reader help in how to think in a Black Swan world. His advice, make black swans gray by being aggressive in gaining exposure to positive Black Swans and extremely conservative when under the threat of a negative Black Swan. You're probably reading this right now going, I think I know what he is talking about, but you don't, just read the book and be prepared to have your comfort zone shattered and your mind exercised.

New Comments Platform: Intense Debate

Readers of Schaefer's Blog,

I have decided to add Intense Debate to the blog as a new way of doing comments. If you haven't signed up for an account I highly recommend it. Intense Debate allows users to track their comments, have one place to save them all no matter what blog they commented on, gain reputations based on the quality of comments, and thread comments together. If you would rather not use this feature simply click cancel and post your comments as you normally would.

I've seen this used on some other blogs I read like BrianReeseBlogs and it makes comments much more dynamic, allowing good content to stand out. Please let me know if you have problems with the new platform or questions. Thanks

My Assignment: C-17 McChord AFB

After 13 months of Air Force pilot training, over 200 hours of flight time in the T-6 and T-1, countless 12-hour days, check rides and hundreds of thousands of dollars of jet fuel, I finally found out tonight, at our class' Assignment Night, the plane I will fly for the Air Force: C-17's at McChord AFB in Tacoma, WA. I am incredibly excited and grateful as this was one of my top picks on my dream sheet. Overall our class got great drop with nearly everyone getting their top choice of plane.




The C-17 is an awesome plane, the newest of the Air Force's airlift fleet. It has the most advanced avionics, electronics, capabilities of any of the heavy aircraft. The main feature of the C-17 is its ability to land on small, dirt strips in remote operating areas while carrying up to 170,000 lbs of cargo...oh yeah, and it can stop in approximately 3,000 ft. For more stats and info on the plane check out this page on Wikipedia.

Definitely more to come on my new plane, but just enjoying the moment for now. Thank you to all the taxpayers of America that let me fly around everyday as my job!