How many times have you heard of someone signing up for a three year contract with a gym only to find out that they don’t like the gym? Or don’t have enough time to go? How many times have you heard of someone signing up for a two year contract with a cell phone only to find out that they can’t get service inside their house? As consumers, we’re savvy enough to extensively research our major purchases but are less savvy when it comes to services. We’re quick to sign a gym membership without using the services but would have difficulty buying gym equipment without trying it.

You should, whenever possible, try something out before you sign any long term contract. It won’t be possible in all cases but try whenever you can. With gyms, you can request a one or two week trial. In addition to trying the facilities, the trial weeks allow you to integrate the gym into your existing schedule. Can you really go as often as you think you can? If you can’t hit your targets during your trial weeks, is it really worth signing up for a longer term contract? You may find that paying on a per trip basis ends up being cheaper than the contract because of how often you’ll really go!

(Photo by I Like)

On Tuesday, Madame X blogged about the increases in prize money at Wimbledon this year and I thought it’d be fun to check out all the purses at all the major American sports from football to baseball to golf to tennis. I managed to catch the final set between Federer and Nadal and it was amazing. Madame X, if you though there were some crazy shots in the beginning, the fifth set was unreal. What’s even more surprising is that the champ takes home nearly a million and a half dollars, I didn’t know the prize money was that big.

Unless otherwise indicated, the prize money listed is for 2008 and the conversions were done through Google just a few minutes ago. I was surprised that many sports don’t have a guaranteed championship winning prize payout. Many of them simply share a bit of the gate receipts (or something similar) with the players, though I imagine in those sports there are rich contract incentives.

Football - The Super Bowl

The players on the winning team will each receive $64,000 for winning the game. That pay day doesn’t include the championship ring each of the players will receive or any contract bonuses they may have. New York Giants players were each given 1.5 karat diamond rings that cost $5,500 and are valued at $25,000.

Hockey - Stanley Cup

In hockey, according to WikiAnswers, there is no cash payday for the players on the winning team unless it’s specifically written into their contract.

Baseball - World Series

Again, like in hockey, unless its written in the contract, players don’t get anything extra outside of a share of the gate receipts. You can read more about the shares at Baseball Almanac.

Basketball - NBA Championship

According to the Wages of Win Journal, the payout for a championship win is a little trickier to calculate. Player salaries are all paid out in the regular season and bonuses are paid to each team during the post-season. The winning team of the NBA Finals takes home $1.77M split amongst all the players and coaching staff. WOW did the math and found that, assuming the winner sweeps every series and plays only 16 games, they get only $9,342 (versus around $50k in the regular season on average) if it was split across the players alone.

Golf Majors

Men’s:

• Masters: 1,350,000
• U.S. Open: $1,350,000
• The Open Championship: $1,542,450 (2007)
• PGA Championship: $1,260,000 (2007)

Women’s:

• Kraft Nabisco Championship: $300,000
• LPGA Championship: $300,000
• Women’s British Open: $320,512 (2007)
• U.S. Women’s Open: $560,000 (2007)

Tennis Majors

Australian Open:

• Men’s Singles - A$1,370,000 (~$1,302,596)
• Women’s Singles - A$1,370,000 (~$1,302,596)

French Open:

• Men’s Singles - €1,000,000 (~$1,566,900)
• Women’s Singles - €1,000,000 (~$1,566,900)

Wimbledon:

• Men’s Singles - £750,000 (~$1,477,650)
• Women’s Singles - £750,000 (~$1,477,650)

US Open:

• Men’s Singles (2007) - $1,400,000
• Women’s Singles (2007) - $1,400,000

Of course, we all know that salary and prizes don’t tell the whole story, the richest sports athletes rely heavily on endorsements. I’m still waiting for mine.

(Photo by aldinegirl12)

Comparative advantage is a principle in economics that explains how fair and free trade helps everyone involved and it’s an idea that I believe will affect everyone’s job, more than it already has, in the United States. Wikipedia has a detailed page explaining comparative advantage but essentially the idea is that two people, groups, countries, etc. that are better at different things benefit from focusing on their strength and “trading” with each other.

Here’s a simple example. Let’s take two people, Jim and John. In one hour’s time:

• Jim can catch 5 fish or gather 2 lb. berries,
• John can catch 1 fish or gather 10 lb. berries.

Jim is a better fisherman, John is a better berry gatherer. It benefits both to focus on their strengths and trade for what they lack if exchange rates are favorable. What is a favorable exchange rate? As long as the rate is better than 1 fish for 10 lb. of berries, John will trade. As long as the rate is better than 2 lb. of berries for 5 fish, Jim will make the trade.

Let’s say the exchange rate is one fish for two pounds of berries. Jim can fish for an hour and then trade one of those fish for 2 lb. of berries. After an hour, he has 4 fish and 2 lb. of berries, which is 4 fish more than if he was bumbling around the forest looking for berries. Likewise for John, he can gather 10 lb. of berries, trade in 2 lb. for a fish and end up 8 lb. of berries ahead. Get the idea? We’re better off doing what we do best and trading for the rest.

So, how does this affect you or me? Outsourcing. There are billions of people outside of the United States and the reality is that the cost of labor is extremely cheap in many countries. A lot of corporate call centers are located in India because the cost of living there is ridiculously cheap relative to the United States. Why do so many products originate in China? Again, cost of doing business is much lower there. (Before you complain about dealing with Indian CSRs and poisonous Chinese products, remember that Americans love cheap stuff and ultimately it’s American corporations choosing to work with particular subcontractors, responsibility is on American companies)

How do you protect yourself? Find a job that cannot be outsourced. Easy to say, not as easy to do! What are some jobs that cannot be outsourced? These are jobs where the work products cannot be easily transported or not legally transported.

• Work products not easily transported: A car mechanic’s job will likely not get outsourced because he or she need to be near the cars he or she is working on. A doctor has to be near his patients. However, there are aspects of those jobs that can be outsourced. Perhaps one day a car mechanic’s diagnosis can be akin to the outsourcing of x-ray examinations. The x-rays themselves are easily transported, but the patient may not be.
• Work products that can’t be legally transported: A great example of this work in the defense field. Product designs and configurations are easily transported but cannot be under law. If you work in the defense industry, it’s unlikely your job will be outsourced.

That’s comparative advantage in a nutshell, why outsourcing works, and how one can best protect themselves in these changing times.

The following is a guest post by Gary Bonner.

A commenter from my last post “Making a Living, Or Making a Life” had a slight disagreement with my quote that “no one ever lies on their deathbed wishing they had spent more time in the office.” In the balancing life of modern America the commenter expressed that “there are plenty of people working past the age of 62 and even those who are retired that say to themselves ‘if I had only gotten that promotion.”

62

His mention of age 62 or even those retired who may have regret for not getting a promotion appears to be a concern about the higher earning power that comes with higher positions in corporations. Retirement planning and savings are a central focus in everyone’s career in today’s workplace. The objective is to maximize return on investment while increasing savings contributions when salaries and bonuses are rising.

There are other reasons beyond financial concerns for people regretting the missed opportunity for promotion. People in corporations value promotions because it indicates achievement, responsibility, trust and confidence expressed by the corporate manager/owner that the person can tackle the challenges of their new roles. The new promotion more readily “defines” the person in the group and often grants them higher privilege that others in the organization must accept. And at the bottom line, it is a boost to the ego that “these guys are finally seeing the light”.

While we don’t have to dig too deep into our thoughts to find the desire for a promotion, what are the elements of how a promotion occurs and what drives the individual to achieve it? The elements that provide the highest probability of success are familiar and can be extended further: the right place, the right time, the right group, the right set of talents and the right motivation. Let’s look at an illustration that identify these elements.

General Patton & General Eisenhower

General George S Patton was without question the most talented and feared warrior in the Allied effort in World War II. Patton had a natural knack for leading men into battle. Nazi Germany assumed he would lead the total war effort to defeat Hitler in Europe. Patton, with all his skill and achievement, was at the right place at the right time. However, Patton’s West Point schoolmate, Dwight “Ike” Eisenhower was appointed Supreme Commander of Allied Forces in Europe. Patton was assigned a lesser post and commanded the 3rd Army Tank Group.

Eisenhower had immense organizational and planning skills to assemble the vast armada necessary to invade the French coast. Most importantly, Eisenhower had the diplomatic skills and ability to deal with difficult people and conflicting egos to overcome obstacles, reach consensus and lead a multi-national force in unison. Everyone “liked Ike”. Eisenhower was at the right place with the right group and had the right set of talents.

Patton saw himself as a reincarnation of Caesars and ancient heroes of battles. He was argumentative, uncooperative, driven and determined to have everything done his way. He believed he had the greatest vision to defeat the Germans and should be the Supreme Commander. His motivation was not only victory, but personal triumph that would lead to glorify Patton.

Patton not only didn’t lead the invasion, he was left cooling his heels and didn’t participate in leading anyone anywhere on D-Day. Eisenhower used Patton as a decoy to delay the Germans from reinforcing Normandy. The fake worked and allowed the invasion forces to gain a strong foothold to begin operations. Eisenhower’s motivation was to achieve the mission objective regardless of who gained glory or received credit. Eisenhower, not Patton, had the right motivation. Personal ambition has its place, but it is not the primary reason to grant a promotion.

Be Honest With Yourself

You can avoid regret if you honestly objectify yourself and assign your correct identity into your workplace circumstances. You need to evaluate the work situation correctly and not project your own hopes or aspirations into the group dynamic. Then the questions can be asked: “are you/were you at the right place, at the right time, with the right group and did you possess the right set of talents?

Then you must sort out motivation to properly evaluate your gain or loss of promotion. You have to examine your own motivations. You also must judge the motivations of higher management and other group members as you perceive them. This is difficult as the motives of others may prove to be elusive. All play a key factor whether you obtain the promotion or not.

We all have a better chance of getting to retirement without looking back with regret if we periodically step back and evaluate our current situation. We may see ourselves blocked into our jobs because the situation lacks one or more of the elements needed for promotion. If so, we need to decide whether we should seek opportunities elsewhere or satisfy ourselves that our present circumstances are acceptable. Either decision is rational, it is up to the individual to decide if it is desirable.

We’ll explore this a little further by looking at the career of automobile giant Lee Iacocca next time.

Gary Bonner has spent the last 35 years in commercial & consumer finance, equipment leasing and factoring for 4 of the largest financial organizations world-wide. He served as a senior executive with a Fortune 500 manufacturer and also started and operated a successful small business. He graduated with a Bachelors Degree in Finance from the University of Oklahoma and now resides in San Diego, CA.

Whenever you change jobs, there’s always some vacation days left over that you can either take or cash out (some employers won’t give you an option, this is for those who do have a choice). For me, the choice has often been pretty clear: take the days off. You’ll be paid for both but by taking vacation you get a few more benefits.

The only argument I can think of in favor of cashing out vacation is one where you want to start work at your new job ASAP and you’ve signed some sort of non-compete agreement with your former company. In that scenario, you would be in violation of that agreement if you worked for your new employer while still on the payroll of the former one. Outside of that scenario, unless you all can think of one, that’s the only argument for cashing out vacation. (There is one more, if you have a lot of vacation and you want to be paid in the current pay cycle rather in the next one… but that’s even rarer than the first scenario)

Here are reasons to take the vacation:

Medical Insurance

If you take the vacation days, you still get medical coverage for the time you’re on vacation. If you get paid out for those days, your medical insurance ends on your final day. This may not be a big deal if you start your new job immediately. If you want a few days off in between employers, it pays to “take vacation” and have medical coverage.

One thing I never understood was why my medical insurance expired on the last day of employment yet I continued to pay, out of payroll deductions, for medical for the entire month.

Accrued Benefits

Depending on how your benefits math is calculated, you may want to schedule your final day during the beginning of a month. At my last employer, our vacation days were accrued on a monthly basis. When I left on February 28th, I didn’t get the vacation days I had accrued for the month of February (ouch). This may be the case for the accrual of other benefits as well, such as pensions, so you might want to take a few vacation days to pull you into the next month.

Holidays

If you’re a few days away from a holiday, it’s better to take the vacation and get paid for those holidays (duh). I knew someone who switched jobs around Thanksgiving. Using his vacation from his first employer, he was able to stretch is last day past Thanksgiving. He also started at his new job on the Monday before Thanksgiving. End result was that he was paid by two employers for that nice two day holiday… very clever!

One thing to be aware of is whether you signed any sort of non-compete agreement (as mentioned earlier) while you were employed with your former company. In the case of my Thanksgiving friend, there was no non-compete agreement in place (not that the first employer knew) and so he could technically be employed at the two companies simultaneously so all was okay.

There you have it, some reasons why you should take your vacation rather than taking a straight payout. Of course, this requires some delicate discussion with your HR department or your direct manager. I’ve found that people are reasonable, will appreciate some forewarning, and won’t mind you taking vacation. If your HR or your manager doesn’t seem reasonable (and everyone who has an unreasonable HR and/or manager knows they’re unreasonable), give the least amount of notice possible. It’s all business.

(Photo by Storm Crypt)

Losing your job sucks and if you recently lost yours, I’m sorry to hear that but you are not alone (in May 2008, 861,000 joined the already 8.5 million unemployed, which is always undercalculated*). However, we live in the land of opportunity and there’s always something around the corner, so until that corner turns you should consider filing for unemployment benefits.

When people talk about unemployment benefits, you’re really talking about the Federal-State Unemployment Insurance Program and it’s a program you’ve been indirectly paying into with each and every paycheck. Your employer has to pay an unemployment insurance tax that you make claims against if you are eligible (and unemployed). You indirectly pay for the insurance because in the absence of that tax, you could theoretically be paid more (feel free to debate the merits of that argument on your own, either way it’s money that’s rightfully yours if eligible).

The eligibility requirements and benefit payouts vary from state to state. The US Department of Labor has a very handle list of all the state departments, along with address, phone number and website, to help you in your search and claims filing. You can also use this map to locate the proper office to contact.

File today. As soon as you lose your job, file immediately. There is often a two week lag between when you file and when you receive benefits, though benefits are effective as soon as you file (if you are eligible).

It has no bearing on you as an employee. In fact, being eligible for unemployment benefits couple a positive. One of the reasons for denying a claim is misconduct. Though it’s unlikely that an prospective employer would ever find out that you did receive unemployment benefits, if they did they could be reasonably sure that you didn’t get released because of misconduct.

It won’t affect your credit score. Collecting unemployment will have no bearing on your credit history or your score. If you do apply for a loan, it would be reported as unstable income which could cause you not to get a loan. However, if you think about it, unstable income is better than no income so you probably have a better shot at a loan with the benefits.

You need it. Even if you’re in solid financial shape, the reality is you don’t know how long you may be out of work. You may be great now, able to live off your emergency fund for a few months, but eventually your bank account will begin to dwindle. As the balance falls, you will be feeling more pressure at a time when pressure will already be at its highest. It’s important to swallow your pride, get yourself some additional breathing room, and file for benefits that are rightfully yours. Remember, it’s not welfare; it’s unemployment insurance your employer has been paying for.

If you’re reluctant to take a hand out, take it now and consider donating that amount to your favorite charity when you get back on your feet. Good luck.

(Photo by le_haricot)

Let’s play a game, draw the X and Y axis of a graph. On the horizontal X axis, label it “age.” On the vertical Y axis, label it “total income.” Now, draw a line of what your income path and growth rate would be if you had only a high school diploma. Now draw a line of what your income path and growth rate would be if you had a bachelor’s degree. Draw one for the industry and job title you are now, then draw one for the industry and job title you want to be in next, then one fanciful/dream job. Start drawing it for all the permutations you think you are, could’ve been, or could be.

Do you get something this? (with more lines, but this illustrates the point)

Let’s say you’re in the green line (B) today. It will take you 6 years to make the same annual as someone who is on the purple line (C) and has worked two years. According to the lines above, it takes someone on the blue line (A) to earn as much in a year as someone who works two years in the purple line (C) or seven years in the green line (B).

What’s my point? My point is that for most young (and aggressive) employees, regular, organic growth in your salary is not going to get you to where you want to be. 3-4% raises may keep you on pace or a little ahead of inflation. Waiting for your superiors to recognize your fine work will be effective for a small percentage. The key to increasing your income is to speed up or shift you income. Either demonstrate consistent and solid performance, itemizing out accomplishments and bringing them to the attention of your superiors, or demonstrate the accumulation of valuable skills, degrees, or certifications that can justify significant merit increases. Doing a good job is mandatory, but unfortunately it’s become as much of a discriminator as a college degree (almost required for many jobs and only gets you in the door).

(Incidentally, there is nothing wrong with wanting to be the blue line (A), because the blue line has a better chance of giving you more time with your family, more time with your kids, and more time with your friends than the other three - maybe :))

So, what should you be doing? The solution is to either shift your income path upwards or speed up your growth. What I discuss below isn’t meant to be treated as advice or anything like that, it’s merely my own thoughts on the matter and subject to the specifics of your situation. Please read it with that in mind, it’s designed just to get your brain juices flowing and not designed as an instruction manual.

Shifting Up Your Income Path

The key to shifting up your income path has a lot to do with education. If you don’t have a high school diploma, getting a GED will shift you up. If you have a high school diploma, a college degree will shift you up. If you have a bachelor’s degree, consider a master’s degree (hopefully with tuition reimbursement from your employer!). If you can augment your resume on the education bullets, you can negotiate higher salaries with your current or future employers.

Another key to shifting up your income stream has to do with job responsibilities. Promotions often, but not always, lead to shifts in income to keep your salary competitive with the market rates. If you’re an engineer, a promotion to a team lead should get you a raise above and beyond what you would’ve gotten if you stayed a non-technical lead. If you are promoted to a first line manager or above, you should shift to higher lines. If you aren’t, consider moving to a company that will reward you for taking leadership and management positions.

If you can’t shift (those aren’t the only two ways, but I think you see what I mean), or at least not now, try speeding it up.

Speed Up Your Income Path

A shift up is much harder than simply speeding up your path along the income lines. Whereas a shift up requires degrees or actual responsibilities, you can speed up your income line by simply increasing your value to the organization relative to your peers. If you learn new applicable skills that improve your productivity and show gains for your organization, they should reward you for it. If you don’t use Excel at all in your daily routine, going to an Excel class won’t help. If you do use Excel and can show productivity gains by going to a class, your improved performance, and your documentation of it, should lead to speeding up your income line so you get a little more than the standard raise everyone else is.

The second part, regarding performing better relative to your peers, is just as important as performing better. If you are surrounded by superstars and your department only has a set amount of money to dole out in raises, you might have to work your butt off just to keep up (it could explain why you may have a few bad raises!). If you are surrounded by a department of fools, it’ll be far easier for you to shine so you better take advantage of it. If you need ideas, it doesn’t hurt to ask around.

Build A Case

One crucial point that is applicable to both ideas is communication with your management and company leadership. I know a lot of people who, upon attaining master’s degrees, weren’t properly compensated for their efforts after the degree was awarded. Part of that was institutional (the company simply didn’t see why they should, so people went to other more enlightened firms) but part of it was communication. You have to build a case for yourself before anyone else will. Your manager has a job to do too and it’s not priority number one to ensure you get what you deserve… that’s your priority number one. So remember to build a case for yourself, don’t just assume people will recognize what you’ve done and compensate you for it.

Nearly two years ago my then beautiful girlfriend, now my gorgeous wife, quit her job and moved to Maryland. Over the next month, she faced an adversity some are now facing, the seemingly endless futility of searching for a new job. She was jobless for quite a while, sending out dozens of resumes and cover letters a day, and falling deeper into the pit of futility with each passing day. While she didn’t feel actual financial pain, she was feeling the pressure of not earning money but still spending it, on rent, groceries, etc. It was that pressure and her ingenuity that resulted in these three morale boosting tips we discussed over dinner the other night.

The key behind each of these tips is that they’re designed with a single aim in mind: boosting your morale. Sometimes it’ll feel like finding a job is a numbers game, where you send out hundreds of resumes in return for a handful of callbacks and an even fewer number of actual interviews. That’s because it is a numbers game and it is just as important to keep your chin up as it is to keep sending out your resume.

Aside: On Being Fired

Let me briefly tackle an aside for a moment. If you were let go from a company, don’t feel bad. Despite what the numbers may indicate or what the pundits may say, we’re in an economic slowdown that has companies letting people go. If you were fired in a time of prosperity, perhaps you might feel bad about yourself. However, given the economic climate today, it’s just as likely mismanagement on the part of your company (in planning, projecting, etc) has as much to do with your departure as you do. Either way, being fired is not the worst thing in the world and to think that is counter-productive. Perhaps this is the opportunity you’ve always wanted, a chance to look inside yourself and figure out what it is you actually want to do. Don’t squander it by going down a dead-end path for the sake of money.

Onto the three morale-boosting tips…

Track Your Progress

The first step in her job search was to build a spreadsheet of all the companies she was interested in. The next step was the track what she did with each of those companies, whether it’s calling them up, visiting their offices, or sending a cover letter and resume. This lets you accurately track your progress and builds structure into your work.You have zero control over whether the company responds but you have control over your level of effort. You alone control how many resumes, cover letters, and emails you send out. If you don’t track your own progress, all you’ll focus on is the fact that no one has responded and it will disenchant you.

Hand in hand with tracking your progress is setting achievable goals for yourself such as number of resumes sent, or number of companies contacted, or number of companies identified to contact in the future. You have to feel success in the things you can control, effort, because you can’t control anything else.

Do Something Else

You can only job search for so long before you start feeling burned out, so do something else. If you have a choice, pick up something that gives you a sense of accomplishment or improves your skills. If you’re a software developer, perhaps you can use this time to brush up on your programming skills by building side projects. If the prospect of something that close to your real work is discouraging, pick up an entirely different hobby like gardening or running.

What you want to do is get that feeling of accomplishment and success because it’ll give you a strong moral boost. You want to be able to look back on your day and say: “I sent out five resumes and I planted a bed of roses, that’s a pretty good day.” or “I set up my company tracking spreadsheet, hit the gym for an hour, and cooked up a nice little dinner.” Honestly, those two examples are probably more productive than most people are in 8 hours at work.

Read What Color Is Your Parachute

I haven’t personally read this book but my wife said it was great when she was looking for a job. What Color Is Your Parachute by Richard Bolles has been lauded in many places and I would take a trip to the library to check it out. My wife said that the most poignant part of the book, for her, was the section that explained how this should be an exciting time in your life. It’s one of the few times that you can honestly give yourself an assessment and decide what you really want to do with your life.

If you left or were laid off from a job in the financial services industry, now is a great chance for your see if you want to try something else entirely. Maybe you went into a career for the money but not because you loved it, now is your chance to try something you truly enjoy. I’m sure there is more to the book than that concept but that’s certainly a good point.