Thursday, February 28, 2008

The mind-body connection

Last night I was up late flipping through channels (I have this insomnia thing) and I came across Namaste Yoga on FitTv. Has anyone ever watched? It’s really good! I’ve done yoga in the past and really enjoy it. I love the idea of a mind body connection, and the flexibility. For the body to be in perfect harmony with the mind with the organic movements, it’s really fascinating to me. So I stopped and watched the episode. It was called Lotus Link- how cool is that? One of the main movements was stretching your arms above your head and interlacing them, then moving them down in front of you and curling them up in front of the chest with palms opening like a lotus flower. It is supposed to help with shoulder and arm flexibility. It was really beautiful though. While Namaste Yoga is pretty fast paced (to get a full workout in no doubt), the moves are, for the most part, very simple and easy to follow along.

The other great thing about Namaste (which is a Sanskrit word for the prayer posture of the hands) is the beautiful locations where the women do yoga. They zen in abandoned warehouses, on a pier with boats floating by, a lush green park, and mountaintop retreats. This really gets the viewer in a peaceful, serene mood. It’s fascinating even if you’re not participating and only appreciating the fluid movements of the bodies amongst the beautiful backdrops. I recommend it to all, insomniacs and yoga enthusiasts alike.

Thursday, February 21, 2008

Pareto's Law

I've been reading a business book called The 4-hour Work Week, which has really opened my eyes on a couple of things. The book is about improving effectivity and efficiency to the point where you only need 4 hours a week to perform all your work tasks, allowing you to free your life to live it up and do whatever you want.

The first point I'd like to discuss regarding this is Pareto's Law or the 80/20 rule. You may have heard of this, but essentially much of business falls into this 80/20 rule. 80% of your revenues comes from 20% of your customers. Or 80% of your revenues comes from 20% of your products. And 80% of your headaches comes from 20% of your customers, etc. etc.

So, one way to start improving effectiveness is to focus on the pieces that matter, and discarding the rest. If 80% of your problems come from 20% of your customers - then shed those customers. Just drop them. You've just improved your life and your business. With all that time freed up, you can now focus on more important matters - like looking at the 20% of your products that produce 80% of your revenues and further promoting those. Or supporting the 20% of customers that produce 80% of your sales.

The point is not to just make a lot of money - the point is to free up your time so you can spend your money. Your job is not your life. Your career is lame no matter what it is. Life offers so much more than work - get smarter, streamline your business and your time, and then you can see what life has to offer. To have complete freedom is hard to imagine, but it is attainable.

Friday, February 15, 2008

Tennis and Technology

Tennis is not a game known for its technological achievements; after all, when fans argue over clay versus grass, it's a sign that tradition rules. However, Babolat Racquets has been making small but significant changes since it was founded in 1875. Most of those changes have happened to the shoes and the racquets (there's not much you can do with the ball, and the outfits will always be subject to current trends), and some of those changes have been interesting.

The tennis racquets have improved, mostly from wooden framing to metal, and from strings made from intestines to graphite. The goal was to increase the endurance of piece of equipment that suffers a lot of indignities (as demonstrated by John McEnroe's ability to make a racquet bounce when tossed on the court), as well as increase the power of a hit ball. By increasing the use of space-age materials, the performance and longevity of the racquet has been increased significantly from its humble beginnings.

Mens tennis shoes have had an interesting history, especially as they have been used in more locations than just the court. They have been fashion statements of their own, usually signifying poor teenagers whose families could only afford one pair of shoes. However, they have had their own interesting upgrades; the newest is to use Michelin rubber (yes, the tire company!) on the soles of the shoes, for better gripping and traction (something valuable when in a sport where you need to get somewhere quickly and stop without falling down).

It will be interesting to see what happens in the world of tennis. It's a game that continually surprises, in that it seems to be continually bouncing back into the spotlight, and not always just when there's no other ball game on the television. It may not inspire the same level of fanaticism, but it is nonetheless a sport that will always be with us.

Thursday, February 14, 2008

Leverage in Real Estate

Taking a step back - so why is real estate a good investment? Because you can make a lot of money with not so much money.

Let's take the case of the guy who's renting for $1,000/month. If he purchased a $200,000 house, with 10% down, his payments would be about $1,400/month (assuming 6% interest rate). After taxes, the actual out of pocket difference is minimal between the mortgage payment and rent. It's worth pushing yourself a little bit here. The payments may start off a bit difficult for you, but they get easier as you adjust and make more money. Work for that raise or promotion!

So, this guy needs $20,000 to start. But there are loans where you can buy a house for as little as 5% down. The monthly payments would be higher, but now you only need $10,000 to start.

Now, in a hot real estate market, that $200,000 property could go up $50,000 a year. Maybe even more. Year after year. And even though you've only put 5% or 10% down on the property, you get 100% of the appreciation. That $10k could turn into $100k after a few years. That's a lot of leverage. And the risk is low. Real estate inevitably goes up over time. In the worst case scenario of real estate taking a nosedive, well you still need a place to live anyway, so ride it out. Even in the area I live, which was thought to be topped out, I read in the paper that real estate appreciated 11%.

So, compare this to the stock market. Let's say you invest $20,000 into the market, and your securities go up 10% for the year. That's a great return and you've just made $2,000. Now compare that to the scenario above. You use the same $20,000 as a down payment, and your house appreciates 10%. You've made $20,000, or 100% of your investment! Not to mention, if the house is your primary residence, you won't have to pay taxes on your gain for up to $250,000 worth of profits, unlike stocks where you will have to pay taxes on any gains you make.

But certainly, real estate is an investment, there is risk. Do your homework and scope out different areas, their rate of appreciation, jobs moving in, the city improving or expanding. Look for a place that you can fix up a bit and immediately increase the value of. As you've heard, location is important. And a rundown place in a great location is ideal - new paint, carpet, tile, etc. is cheap, but somehow increases the value of your place by tens of thousands immediately.

Half of the "so-called" experts say the market is heading down. The other half say the market is strong and will stay that way for a long time. The real estate market is comprised of local markets. Any statement made about real estate in general doesn't make sense to me. There are always spots that are appreciating like crazy, while other spots are stagnating. Granted, rising interest rates can slow down housing in general, but guess what. If rising interest rates make loans too expensive, then people end up renting. Now the rental market strengthens, and if you own rental properties, well your appreciation may be slowing but you can raise rents.

My next post will be about the mistakes I made on that first purchase. Even though I made money on it and it would help me with my next move, I should have done things differently. Lessons learned coming next.

Monday, February 04, 2008

An education in gambling at Gambling PHD

One of the more interesting gambling sites I've run across is Gambling PHD. It's a site that offers some interesting articles on gambling, as well as some interesting links.

Gambling PHD approaches the gambling site from a different perspective. Instead of acting as merely the splash page to a game, the site acts as a mini-portal, allowing gamblers to not only go to suggested links, but to also read articles about gaming, from its history to psychology to basic rules, and provides some online casino reviews. There is even a section regarding the signs of addiction and what to do if you become addicted! Although it could use a slightly better design, the site is perfect for what it does, which is to get you playing as quickly as possible without looking too foolish for your first time, or to give experts a slight edge, and any experienced gambler knows that even the slightest edge can be valuable.

Gambling PHD is definitely one that you should check out. It offers some decent information, as well as some great games.  It offers solid online casino reviews to help you choose a site. You should check it out at least as it could be an interesting addition to your gaming links.

Sunday, February 03, 2008

Making Money in Real Estate #2

Ok, you're making some money, you've saved some money, and you've got some credit. Here comes the next step - MY FIRST HOME PURCHASE.

If you're renting, you should look into buying yourself your own pad. Of course, there are a ton of variables here, but what if the rent you're paying could just be a mortgage payment and you own the place? If you're making decent cash, then the interest that you pay on each monthly mortgage payment (which is most of the payment) becomes tax deductible. So, the net effect is you're paying less taxes and you can adjust your withholdings with your employer to receive a bigger paycheck (in anticipation of paying less taxes). So, rent of $1,000/ month could be comparable to a mortgage of $1,300-$1,400/month (this depends on your tax bracket, etc - an accountant can run numbers for you).

I was commuting to work (1.5 hour drive each way) for about a year while I saved some cash. I then bought my first house at age 26, this was 8 years ago. I bought a house close to work, which was a requirement for me, being in IT, and having to run to the office for every goddamn computer glitch. I bought the shittiest house on the best street/neighborhood I could find. The house cost $225,000 - it was 950 square feet in Redondo Beach. I had to come up with 10%, which was like $23,000. I chose to buy a house, rather than condo/townhouse because there's no homeowners association fee (HOA) monthly payment with a house, and I own the land + house, not just the house. I thought this would end up meaning greater appreciation in the property (house vs condo/townhouse), which is still usually the case but not always (so don't limit yourself).

I would recommend an 80-10-10 loan. What this means is that you come up with the 10% down payment, borrow another 10% for the down payment, and then borrow the 80%. You'll end up with a 1st and 2nd mortgage. But by borrowing that extra 10%, you'll avoid paying Mortgage Insurance (which you MUST pay if you put down less than 20% of the purchase price). Mortgage Insurance is not tax deductible, but the interest on the payments on your second mortgage (which is 10% of the purchase price) IS tax deductible. This is usually a better way to go.

Now, for those of you who are commitment phobic, buying a home is not signing a contract with the devil. Don't feel you're trapped or restricted. A year lease at some apartment can be just as big a commitment. I owned this first house for LESS THAN ONE YEAR. This property appreciated from from $225,000 to $280,000 in less than one year. Sure, I had to pay taxes on the short-term gain, but I was able to offset the gains by improvements, etc to reduce that tax payment.

In the end, I made money on this place, lived in my own house and enjoyed it, and the appreciation in that property would set me up to invest in my next house...

BTW - if you invest in a 401k at your work, you can utilize that money to put down on your FIRST home purchase - without the monster penalty of an early withdrawal!!! This is a worthwhile endeavor if you've already invested in that 401k (talk to an accountant!).

Saturday, February 02, 2008

Finding the right place for you...

Moving can always be interesting. The first thing to ask is: Where? Just ask yourself what you are looking for, and then gravitate towards buying real estate there. For example, if you are like being in the center of things, you may want to check out Atlanta real estate. Although there is a heat and humidity issue, you would nonetheless be in one of the best cities, especially when it comes to education, fine cuisine, and night life. One of the nice features about Atlanta real estate is that it's also near some of the finest outdoors areas in the nation, allowing for some great hunting and camping.

If Atlanta real estate doesn't sound interesting, Arizona real estate may be more your thing. Arizona real estate tends to be a bit more isolated, and the area is more relaxed. As it is also near Mexico and a number of reservations, Arizona real estate is also a multicultural experience.

If you want something else entirely, then consider Austin real estate. It's more of a college town, and the center of the independent movie industry. Austin real estate has all of the advantages of Arizona real estate, but is more of an urban setting. There is also the advantage that Austin real estate is in the center of Texas, so that you also have the advantage of urban night life.

Just remember to go where you love; you shouldn't have to live where you hate it!

Buying a dishwasher shouldn't be a chore!

Dishwashers have become a necessary part of modern life. They simplify our lives, and make dinner clean-up quicker. The biggest problem is that there are so many different models with so many different features that buying a dishwasher can be a chore in itself.

When you are looking at any particular dishwasher, you need to know what issues you need the dishwasher to deal with, and if that dishwasher will deal with those issues. Because of this remember to make a list of features that you need. Keep in mind that being quiet or how the dishwasher organizes the dishes.

Also establish a budget, with two amounts: What you are willing to spend, and what your limit is. A dishwasher should clean your dishes, not clean you out. As long as you stay within that budget, you should be fine.

Lastly, keep in mind the design factor: Will this dishwasher go with my kitchen d├ęcor? If necessary, take a few pictures and take them with you when you are shopping, or even if you look for dishwashers online; this should help prevent disasters of the “But it looked so good in the showroom!” kind.

Keep those items in mind, and dishwasher shopping may actually be fun!