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Tuesday, November 20, 2007

Pay Yourself First


When it comes to wealth accumulation, nothing will serve you better than the concept of "pay yourself first". I had been using this technique for years before actually reading about it in publications by investment gurus like Robert Kiyosaki and Donald Trump.

The concept is that when deciding how to slice up your income (or profits) you should always set aside your savings first, before paying anyone else, any other creditor, and possibly even The Taxman. This concept is difficult for Westerners to grasp, as we are taught at an early age that "a good person" always works hard and pays their debts. The problem with this is that it teaches everyone to be good employees, and to work hard for everyone else except themselves.

Most people I know work for their mortgage company, GMAC, Visa, etc. and not themselves. There is always an obligation to repay someone if you look hard enough, and there will never be money left for you if you adopt this philosophy. This is why most folks work paycheck-to-paycheck, and can never seem to save any significant amount of money.

I'm not suggesting to ignore your debts! To do so would ruin your credit or land you in the pokey. I'm saying to fund your savings vehicles, mutual funds, 401K plans, etc. first or automatically each month. Then, pay the bills that will assess you a service charge or late fee, or that could impact your credit score. Lastly, pay everyone else.

I also refuse to set up auto drafts out of my accounts. I decide when and how much to pay a creditor as the money flows into my life; they do not get that luxury.

If you live in the US, have a Happy Thanksgiving. If you do not, then best wishes as we enter into the Holiday Season and New Year.

JMK, The IT Entrepreneur



Monday, November 5, 2007

Corporate Layoff: a Convergence of IT & Real Estate

Last week, I received news that a former client (Bluelinx Corporation) had laid off many from their staff. I’ve heard that their target goal was pretty significant, but I don’t know exactly how many people have been let go.

This former division of Georgia Pacific is the US’ largest distributor of building supply products; the layoffs are no doubt tied directly to the problems in the US housing market and the slow down in new home starts.

I have several friends in the IT department there, and some of them are now contacting me as they start to network. Of course I wish them the best, and am diligently trying to help them with their search for new jobs.

My two points with this article are that:
1. No job is secure. Many of these folks had been with GP/Bluelinx for years, and were quite comfortable in their positions.
2. It is not a home builder’s or seller’s market, but one can infer that it is a buyer’s market.

Also, after years of observing companies like this who cut back to improve the bottom line, I know that all things are cyclical. One day, someone will realize that there is a ton of work to do and no one to do it, and resources will be hired. Contractors initially, then “permanent” employees. Of course we know that no one is truly permanent…

JMK, The IT Entrepreneur

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