Ego Libre

I am leaving Japan for about two weeks tomorrow, but I will do my best to keep posting. I know I have not been able to write articles as often as I hoped for, however I think that once I settle into a pattern it’s going to be fine. Lately there was just too much traveling and work-related stuff going on.

So leave me some comments (they might not appear right away due to spam filer) and I will get back to you a.s.a.p.

By the way, I have a budget for this travel, so we will see what is going to happen. Traveling is my biggest weakness as I always see it as an opportunity to blow out your savings.

Afterall, this blog has ego in its name, so what does ego has to do with finances and budgeting? It turns out that quite a lot. And all of the factors are negative.

First, ego tells us that we don’t need a budget. This one is the most beautiful example of how ego drives us not to do some things and later on punishes us for not achieving the goals that could have been achieved if the ego did not stop you in the first place. Namely getting rich.

A drive to get rich is usually simply an ego-trip. I am not talking about poor people who are striving to get relatively rich, which eyes of many other people just means getting average salary. This is a very respectable drive. I am talking about all those dreams including Ferraris, yachts, villas, private jets and skyscrapers. We want to be rich because we se success in it. But as it turns out, you cannot get rich unless you spend less then you earn. That is the simplest math in the world. And because I am trying to run my life as a company, I just have to remember to learn a lesson from the .com boom. If you ain’t earning anything, you are not getting any richer. Getting a capital from a venture capitalist and blowing it on beautiful office, secretary and business strategy instead of developing a real product is exactly the same as going to your bank, getting a credit card and maxing it out.

You have to have income and your expensive have to be lower then the revenue. Unless you are a start-up company, or in my case, a student. That is the only time when you can actually run a deficit in real-terms and rely on the future income to pay for it. But it does not mean you should acquire the bad habits. How many companies managed to get a successful product and failed due to their bad financial planning, especially cash flow?

So we need budget and we need to curb our ego. If the ego tells you that you don’t need a budget, then you are like a CEO who thinks that CFO and accountants are just a useless liability dragging you down. So let me ask you this, would you fire all your accountants and think that it will just somehow work out? I didn’t think so…

Second issue where ego comes into play is tightly connected with the one already describe. Let’s say that you establish your budget, that is you hire a CFO for your head. Let’s say you also maintain it daily and record all your spending, which would be an equivalent of your accountant keeping the books in order, then we still have CEO’s behavior influencing the bottom line. Even if these guys try to keep a cap on your spending, you can still bypass them and buy a SuperBowl commercial or move your office into 57th floor in downtown Tokyo. They will try, but in the end they can’t stop you. The question to ask is, will the 1.5 million $ Tv spot pay off? Or can’t we have an office in a small building on the outskirts and save 90% of rent especially because we are a small internet start-up?

Same parallels can be found in life (or Life Inc.). Do you need that new computer? Do you have to stay in a five star hotel during your vacation? Do you absolutely need to have a 3-bedroom house next to the sea? Some people answer yes, and I say, if it is within your budget, go ahead!

But unfortunately for many people it’s not. Blame it on consumerism, blame it on TV, blame it on our skewed values, I don’t care. I don’t care why we act in such a stupid way. Peer pressure is getting the best of us. People run credit card debts to go on vacation. People have double mortgages on their houses so they can’t buy designer cloth (I know one), people buy expensive cars that will cut out half of their salary just on the interest. I don’t care why people have these ideas in their heads, but I know what drives them to act on them. Ego.

So what can you do about it? Yes, you got it! Tame your ego. Learn how to control it. Observe it, learn on what it feeds, what it likes. Find ways how to shut it up and maybe if you are lucky, maybe one day you will wake up and realize that you are free.

I am quite not there yet. I have overcome these two steps already. I started my budget and I am using it as a tool to feed data to my rational mind which is the arch-enemy of emotional ego. But I have not overcome on major problem. I am afraid that I also owe to ego something for my success. I am afraid that destroying the ego completely will extinguish the drive and hunger for success that I have. I am afraid that without ego I will fail. That is like a company run by a arrogant, irresponsible CEO, but the board is afraid to fire him or her because the company is doing good, stock is rising and they don’t know if it is because of him or despite of him. What should the board do? I don’t know yet, but I strive to find out.

So there you ago. Maybe observing your own life and mind can teach you something. Maybe running your life as a company will not only improve your life, but it will actually teach you how to to really manage a business in future. We are all entrepreneurs. How is your Life Inc. stock doing?

Before I will go back to Life inc. I wanted to react to a recent study. It shows once again that Denmark ranks as #1 country in the world when it comes to life satisfaction and happiness. This one is mostly for those of you that have been or lived in Denmark. And it is twice as funny if you are (open-minded) Dane

So Guy Kawasaki posted a link on his site about the study of happiness around the world. The data is collected annually, so naturally I have seen the results before. But I still can’t believe how silly and biased it is. How do you measure happiness across cultures, countries and language. What does happy mean to a Dane as compared to a Japanese? How do you express it in the language? And are immigrant Iranians living in Denmark as happy as aboriginals living somewhere on Fynn? I just don’t buy it, but one of the readers on Guy’s site posted a link to this fantastic study explaining why Danes ranked as #1 for last 30 years It is a fantastic read.

I must admit I love Denmark, but I am also quite skeptical about it. I love how simple and slow the life is, but I also find it annoying how naive and close-minded can Danes be. Especially because they are trying to project themselves as liberal and open society. Yeah, maybe in the 70’s and 80’s. I especially like the business environment in Denmark, which despite being socially oriented and burdened by high taxes thrives. It is a fascinating society, but still, I am afraid that Danish happiness stems partly from Danish naivety.

Another reader is Danish and his reaction fits perfectly in my perception of Denmark:

“Remember that Denmark is a small country (both in population and size) with aprox. 5.5 million people and we pretty much have the same opinions all the way round. We have the worlds best health and social system, so we really don’t have a lot of (major) stuff to think about in our everyday life. We worry about all the small things and we worry way to much about ‘em. On top of that we have the money to buy a house that are too expensive, if just one thing goes wrong. We have the excess money to use on online poker with the risk of going broke and the money to buy crap we really don’t need even though we pay 50+ per cent in taxes and 280 per cent on our cars. So overall we’re happy, we worry only in short periods of time. The sad thing is that when we are worried it’s about stuff like >>why doesn’t he want to be with me>What if i don’t get that raise my neighbour got>I feel so alone and everybody seems so happy?…

…The problem is that we don’t need to “fight” for anthing, it’s there right in front of your nose and there are a lot of people who just can’t cope with that. It could be compared to when an actor or actress starts to drink or do drugs.”

Indeed, that is what I feel about it too. I keep wondering who drives the Danish economy if most Danes in my opinion lack any drive and hunger to succeed. But maybe my perception is wrong. Maybe I will change my mind after living there a few more years. And maybe one day you will hear me say: “I am so happy that I live in the most happy place in the world.” But then again, maybe not.

How do you spend your money? What is your budget? What are your savings targets? What proportion of your money do you spend on booze? How rich do you want to be?

Money is a tricky thing. Basically there is no other area where ego would play such a big part of our decision making. Well, sex might be another, but then again so many people feel that money and sex are desperately intertwined. This is the first post from the personal finance series that I am about to start. But why would I want to do that?

Because I have realized that when it comes to money, I act as an idiot. I make so many mistakes, I do not learn from those and repeat them, I have no idea where my money is going, I live from salary-to-salary, month-to-month, and if my parents would not save my ass at times, I would be drowning in debt. Yes, I am an idiot. Yet my goal is to be rich, become wealthier and successful (and here we have example how my brain-washed ego tells me that these two things are connected). How can I become rich with such bad habits? And if by any chance I do, how do I stay rich without following the footsteps of McHammer and likes?

For years, I thought that these are just current problems that will go away with my rising income. For years I have been living the way teenagers and poor students do - on parents allowance and my necessities could be counted as a few beers a week, movie tickets on dates and from time to time a serious blow-out party buying shots for everyone. Yes, young, restless and stupid. Things have changed when I entered a business school and moved abroad. Suddenly I found myself living in a country with several times higher consumer prices, suddenly my rent was an issue, my budget became critical and yet I did not start one. I was still living on my parents money, and in many ways I still am. I am blessed with this constellation, I am blessed that my parents allow me to study abroad and do and experience all the things many people can’t. And I am also haunted how badly I fail at times. My income has multiplied several times and yet I am still facing the same exact problems. Something must be wrong with my business model.

Unfortunately, this is not just a story of my life. I see it being reproduced everywhere around me. People from different cultural backgrounds, family incomes and career aspirations fail miserably on the same accounts. Why do we act so stupid? How many of your friends have a budget? How many of your friends or your peers know an answer if you ask them how much they spend on beer per month, how big of a proportion of their income does the cloth buying habit come up to? I would say only a few. We know rough estimates. We know how much money we can spend per month and with how much we end up at the end. We know when the bill comes, we have to pay it and know roughly the amount, but it comes down to the more subtle things. By the end of the month, majority of people ask themselves: “Damn, where did all my money go again.”

I am sure you might be thinking how can I make such a preposterous claims without any evidence. Well, I don’t know, I just do. I don’t have any hard facts on my hand, but I talk to people about these things, I know myself and hey, millions of americans drowning in credit card debt can’t be wrong, can they?

So what I am saying is that majority of people in their 20’s know jack-shit about investment, budgeting and savings. Yes, there are people like me who study business and they think they know, but reading about how to manage finances of a company and applying those to your own life sounds so far fetched, right? Well, that is exactly what I am about to propose.

I came to a conclusion that if all the things I am learning about business management and finances cannot be applied to my personal life, then it is all useless. I have decided to run my life the way I would run a company. I have my institutional investors, in this case my parents, I have my management, in this case my mind and I have a revenue stream, that would be my job. I also have a obligation to the society and to all the stakeholders, that would be to continue and advance in my studies and become a better person in the meantime. So there we go. Today I am starting a new venture: Jakub Vajner Inc.

I was going to write about how stupid I can be with money. Instead I found a link that shows how we all can be stupid with our stuff.
While having breakfast I browsed some of the usual daily feeds and found a link via Wise Bread to YouTube videos how to hustle people in bars for drinks. These videos are entertaining, but I warn you, do not watch the other videos posted on YouTube from The Real Hustle show. Why? First, you would probably become a cynical bastard and distrust all people around you and secondly, you will probably spend next two and half hours of your life going through them. Yes, stupidity is addictive and we are all prone to it. So enjoy
And remember, if it looks too good to be true, it probably is.

I know, I know, this is a completely irrelevant post, but today when I was reading the Japanese news, I was shocked to read that Daiwa funds Cyberdyne’s wearable robo suit. I mean does that ring a bell? Cyberdyne, anyone? The company that developed the Terminator machines? Soon we will hear about Skynet. The apocalypse is upon us.

I guess I need to see the Terminator movies again. It’s been long time. And it would fit perfectly in my recent 80’s retro mood. I will get to it once I am finished with all the DVDs in my Miami Vice collection

Update: Thinking more about it, there is something to be learned from this post. It is not a complete BS. First, I thought, who would name their company Cyberdyne if most movie and technology buffs know that it is THE evil corporation? But then again, I would not even write about it if the company was called RoboSuits Inc. So in some way, it was ingenious move. I love shocking naming. Anyone wants to name their new fast-food joint Salmonella? Or when is the Umbrella corporation going to start producing medicines (this one is for the game buffs for a change)

I have returned to Japan, I have returned home. And this time, I did it in style.

I got lucky today and got upgraded to business class on my flight from Shanghai. It never happened to me before, yet sooner or later I would use my mileage points for an upgrade anyway. I was always determined to find out if the business class is really worth the insane price difference. And what is the conclusion? It sure is (if someone else is paying for it

I knew that business class is not just about more legroom, but the complexity of the experienced really surprised me. The lounge access is one of the great pleasures of traveling. About a year ago, I was working in the Copenhagen Airport doing interviews for IATA of passengers flying business and first class, so I had access to both of them. Already there I have realized how different do these people travel. They don’t stress about it. They arrive at the airport well in time, enter the lunge and relax until it is time to board the plane. None of that last moment check-ins because you hate staying two hours in overcrowded gate or in rip-off duty free shops. I might be overgeneralizing, but most of the people I have interviewed seemed so relaxed, that it amazed me.

Today, I was able to experience this bliss of traveling. Everything went smooth, none of the usual hassle if my carry-on is really 5 centimeters over the airline rules, none of the long wait at a gate. Priority boarding makes another of the usual travel headaches go away. You are in the plane before everyone else, the attendants take your coat to a hanger, you put the carry-on in the empty compartments, get your newspaper and magazines and wait to see all the other people flock in.

I don’t want to go over the whole service (which is even in economy always fantastic with ANA) or the attention to every detail and difference. I am sure some of you have flown business class at one point or the other, but I just want to stress out one point that I have realized today: business class is not about more legroom, it is about slow traveling and enjoyable experience. Did you realize that priority departure from the plane also means that these travelers are first at immigration and thus not have to endure the painstaking lines? Or that they have priority baggage so theirs come first on the belts.

All in all, I just love it. I am already experiencing the flexibility of business class with my tickets (Star Alliance Around the World ticket with free change of date, time and flight at any point) and I fell in love with this way of traveling. If something changes in your schedule, call your airline, rebook a flight, get comfortable to an airport, relax in lounge, enjoy a fantastic service on board and finally get out of the airport with your baggage before the other passengers even get through immigration. Business class is worth it. But would I pay for it? No. So far, I will just use my miles for upgrades and later on when I actually start doing some business I might consider it. Did I mention that for example in Nissan all employees fly business regardless of age, position or time they have been with the company?

Maybe I should be ashamed of it. I am 24 years old and this is the first time I have set up any budget for my life. I mean it is a bit silly, but now I am thinking how could I ever live without it. I always considered my budget whatever I have received from someone and then I tried live on it for a month. That’s it. I guess when you are a kid you don’t have that many other options. But the worst thing is that when we grow up (a bit) we tend to use the same pattern of spending. Do you?
I am trying to change mine. I have just started and honestly speaking, this is the most interesting topic that I would like to talk about here from now on.

But not yet.

First, I am struggling with my exams at the moment, trying to live a Japanese lifestyle in the meantime (i.e.. drinking with my classmates, more on that some other time) and traveling. Beside, I still need to analyze my January budget and see what I can learn from it, before I can share some thoughts on it. I don’t think I will be able to manage to do it before my departure to China on monday, so consider this a teaser.
Many people can disagree with many points I am making here, but when it comes to budget and finances, I believe there are universal truths and unfortunately many (most) people are blind enough not to see them. And I feel like I have barely open one eye. But you know how it goes, in the land of blind…. (And damn, damn listen to the ego kick in again