Macroeconomics lesson in two easy rap videos – Hayek v. Keynes – FIGHT!

Yo, son!

Hear the two macro heavyweights John Maynard Keynes (in the stimulus/top down corner) and F.A. Hayek (in the libertarian/bottom up corner) spit some fierce econ battle rhymes.

Professor and economist Russell Roberts is behind this piece of youtube brilliance.  Check out his excellent podcast at

Round 1

Round 2

Chef vs Meth

For more famous rap battles, two of the Wu Financial‘s finest duke it out here:

Ramit Sethi will teach you to be rich – 4 links to wealth: negotiate, automate, cut costs & earn more

Ramit Sethi is my favorite financial blogger and advice-giver for the ‘basics’ (which can still be complicated) of personal finance: spending, saving and earning income.  He recently railed against those who worry about things that they can’t control, yet fail to do the simple steps that will really matter.

His quoted question below to these people (and everyone else who needs to take control of their money) have 4 excellent starting points (links) for personal financial freedom.  Check out each of these and apply them to your financial life.

“Have you negotiated? Automated? Earned more? Taken the 30-day challenge to save $1,000?”


Ramit stresses the importance of negotiating all things financial, from credit card interest rates, getting out of bank fees, to your next salary raise.


The best way to save is to automate the process so that no active effort is required on your part.  This can be anything from setting up direct deposits on your paycheck (most employers allow you to split the check into multiple accounts, the better to target your savings goals), having 401k deductions come out of your check, or using Vanguard (or whoever your mutual fund provider is) to invest money from your bank account on a regular schedule.  (If you already have a Vanguard account, go here.  If you need to set up a Roth IRA or other financial account, go here.)

Earn More

Expenses are only half of the financial coin of savings.  Earning a healthy salary is also a big help along the road to wealth.  Here’s a few ideas on how to make more money:

Get an education (academic or vocational, formal or informal) that increases the worth of what you know, and your ability to apply that knowledge and make money (or other benefits) from it.

Ask for a raise at work.

Start your own business on the side, or find a part-time or freelance job that you can do in your spare time.  (Make it something you enjoy and that energizes you, otherwise it’ll be hard to force yourself to do it given your other work/life commitments.)

Save Money – Enter Ramit’s ’30 day challenge’

Ramit put together a fantastically useful list of 30 tips (described in each of the links below) to save money.  These aren’t the typical ‘stop buying lattes’ ideas generated on so many financial blogs.  Instead, they’re likely to save you big bucks without taking away the things that you really enjoy in life.

While I’ve copied Ramit’s entire list below (with his links for the details of each tip), his original post can be found here.

Full list of Ramit Sethi’s tips from
Tip #1: Pack lunches for the rest of the week
Tip #2: Turn your thermostat down 3 degrees
Tip #3: Sell something on eBay today
Tip #4: Involve your friends in your savings challenge
Tip #5: Optimize your cellphone bill
Tip #6: Use gas prices to become your own hedge fund
Tip #7: Create a “No Spending” day once a week
Tip #8: Implement the A La Carte Method
Tip #9: Only buy new things when replacing something old
Tip #10: Use the free rewards from your credit card, car insurance, and workplace
Tip #11: Never pay full retail price for clothes or eyeglasses again
Tip #12: How I’m saving $2,000+ on eating out in 2009
Tip #13: How to negotiate your car insurance
Tip #14: Use self-persuasion to share how much you’ve saved so far
Tip #15: Forget going to a bar — ask people over for dinner
Tip #16: Cancel any large purchase this month
Tip #17: Buy generic for the stuff you don’t care about
Tip #18: No Christmas gifts this year
Tip #19: Save Money, Eat Well and Look Hot in Less Than an Hour
Tip #20: Change the date of Christmas
Tip #21: Save thousands by pre-paying your debt
Tip #22: Analyze your progress in the 30 Day Challenge (plus, see how I’m doing)
Tip #23: Go cash only for 15 to 30 days
Tip #24: Cut your commute expenses by 40%
Tip #25: Earn more money using your God-given skills
Tip #26: Gardender? Cleaning lady? DIY instead
Tip #27: Use barriers to prevent yourself from spending money
Tip #28: Use price-protection guarantees to always get the lowest price (travel, retail)
Tip #29: Stop being a loser and spend money to save money
Tip #30: How I’m saving $25,000+ in 2009


10 tips on how to get rich from Warren Buffett

Okay, the tips are technically from Buffett’s biographer… as told by Parade magazine.  STILL, it’s a decent list, and as a HUGE Warren Buffett fan, I can’t help but share them.  The original Parade story is HERE.

I’ve copied the 10 items below with my own take on how to make them actionable in your life.

1. Reinvest your profits
This is key.  When your income goes up, invest/save a large portion of that increase (like, 75% of the gross!)  This keeps your lifestyle in check while allowing you to build more wealth.  For youngish people, continuing to basically live like college students after graduating and getting a ‘real’ job is brilliant.  You don’t feel like your neglecting yourself because you’re used to living cheap, and you can get a great start on retirement, saving for a house, paying off debt, etc.

Another corollary to this rule is to do what I call ‘banking windfalls’.  This just means that when you run into unexpected cash (a bonus at work, an inheritance, or a tax refund check), save it or pay off debt, don’t blow it.  To celebrate, treat yourself to something small like a nice dinner out with your significant other rather than immediately take a vacation or buy a big screen TV.  This allows you to feel good while preserving most of the windfall.

2. Be willing to be different

Buffett talks frequently about the importance of having an ‘Inner Scorecard’, “judging yourself by your own standards and not the world’s”.  This is really key to being financially successful (or successful in many other ways) because success by its very definition usually means doing something that the majority of people have not and will not do.

For personal finance, this means saving a large chunk of your income and investing in a smart-yet-unflashy way (hint: stock index funds!)  It also means forgoing what others might think of as ‘normal’ or at least highly desirable: spending a lot of money going out, driving an expensive car, not talking about money, etc.  Instead, take control of your own money by deciding exactly what’s important to you AND what’s not.  You should splurge on things you love, but make it up by cutting costs aggressively on things that are less important to you, and always keep track of how this spending relates to your financial goals.

3. Never suck your thumb
“Thumb-sucking” is Buffett’s phrase for not taking action when you should be.  Personal finance is full of this behavior.  People ignore their debt, investments and other parts of their financial lives because of mental blocks they have dealing with these areas.  Instead, take action on the areas of your personal finance that you know deep down need work.  If you’re not even sure where to start, read through this blog, talk to a friend who you know is on the way to wealth (it may not be who you think; ask for balance sheets as proof 🙂 ), or contact a professional advisor like me who can help you.

4. Spell out the deal before you start
This means always knowing the price, rates, and any other terms of any financial agreement, formal or informal, small or large.  On the small scale, this means simple stuff like knowing how much drinks or that delicious-sounding special on the menu is going to cost you (AFTER factoring tax and tip.)

(A personal aside: I HATE it when waiters rattle off the specials without telling you how much they are!  I suspect this is because 1) they know you’ll feel like a cheapskate if you ask how much they are and 2) they are usually much more expensive than the ‘regular’ items on the menu.  Same thing with bars that don’t list prices next to alcoholic drinks, what the hell is up with that!?  I want to know what beer is going to cost BEFORE I order it damn it!!)

Large scale financial deals require proportionally more caution.  Understand all the terms of any loan, investment (check expense ratios and other fees), credit card, real estate purchase, job offer, insurance, etc that you buy.

For me, the key things to ALWAYS be aware of are 1) Price, 2) Fees, 3) Interest rates/historical rates of return (investment sellers try to trick you here, so be careful accepting what they seem to indicate you should expect), and 4) periods of payment or any timelines associated with getting or giving a good or service.

5. Watch small expenses

I would note that while this is true, pay even more attention to LARGE expenses and small, recurring expenses that add up to large expenses (think, your cable or cell phone bill.)  An extra $50 per month for a cell phone data plan may not sound like a ton, but that’s $600/year, which is roughly $12,000 in present value (a fancy term for adding up all future payments and discounting them back to the present.)   For comparing recurring expenses to one-time purchases, I use a rule of thumb of multiplying the yearly expense by 20.  So, saving $20/month on your heating bill by turning the thermostat down 3 degrees amounts to $240/year or ~$4,800 in present value (assuming you keep it up for the rest of your life.)

Improving your credit score to secure a lower mortgage interest rate in the future will similarly save you dramatic amounts of money in interest payments saved.  Buying a cheaper model of used car vs an expensive used or new car will similarly make a huge difference in your finances.

6. Limit what you borrow
Try to never incur high-interest debt like that associated with credit cards or car loans.  I recommend always paying cash for cars, and never financing a house with less than 20% down.  In both instances this forces you to avoid buying things that cost too much relative to your saving ability, and to keep interest payments low.  Keep lower-interest debt like that associated with student loans and mortgages to the bare minimum too.  You want to have your money making interest for you by investing in stocks and bonds, rather than letting someone else (bank, credit card company) use their money to keep you paying them.

7. Be persistent
Stick to financial goals.  The easiest way to do this is through automatic investing and debt-paying.  Use direct deposit and paycheck withdrawals to fund savings and retirement.  401k plans are great for this.  Set up automatic transfers that take money out of your paycheck BEFORE the rest of it goes into an account for you to spend on discretionary items.  (You’ve probably heard of this rule as ‘pay yourself first’.)

Being persistent also means continuing with a well-thought out plan in the face of adversity.  When the stock market tanked in 2008 and 2009, did you keep you money in there and keep investing?  I and many others did, and it paid huge dividends.

8. Know when to quit

Just like a bad relationship, you need to break off financial deals when they aren’t working.  This might mean giving up smoking to improve your health and wealth, switching to a no-fee credit card or checking account, or moving your money from high-priced, broker-pushed mutual funds or annuities into index funds, perhaps with the help of a no-commission financial advisor.  It could also mean asking for a raise, leaving a job where you’re underpaid (find out if you are here), or getting a new job where you’re paid more.

9. Assess the risks
Know the potential risks of decisions you make.  This does NOT mean avoid risks.  On the contrary, it means taking appropriate risks for your situation.  My entire retirement portfolio is in stocks.  Is this risky?  For me, absolutely not.  I don’t plan to retire for at least 20 – 30 years, so what do I care when the market dives in between this period?  (In fact, I viewed ‘bad markets’ as great opportunities for youngish investors like me to buy more of the market at a cheap price.)  On the other hand, if I was a widow(er) living on a social security and some small personal savings, having ANY amount of money in the stock market might be too risky.

Take risks that you can afford that have large upside and only moderate downside (or downside that can be mediated) given your situation.  When you’re young and living well below your means, you can afford to take more risks to make you even better off.

Just make sure you’re being honest about the upside of your investments and not just abusing the notion of ‘taking risks’ to gamble in negative expectation situations (casino gambling, lotteries, penny stocks, picking individual stocks, etc.)  Even though I’m in an all-st0ck retirement portfolio, that money is safely invested across thousands of companies and in the hands of a secure financial company.

10. Know what success really means

For me, being wealthy doesn’t mean having a huge house, expensive car, wine collection, etc.  It means being able to live in comfort and security and do the things I really care about doing: spending time with my family & friends, traveling (on a modest budget), eating well for cheap, reading, and savoring the world’s greatest beers.  This essentially boils down to being able to control how I spend my time, rather than slaving away at some job I don’t like just to pay for an expensive lifestyle that doesn’t make me any happier than I would be without it.

Lest you think wealth has to only be about you, I also would like to have efficiently given away a large sum of money to help those most in need by the end of my life.  Whatever your philanthropic impulses, I encourage you to factor them into your financial plan as well.

I’ll leave you with a great quote by Mr. Buffett himself on this subject (bolding mine):

“I know people who have a lot of money,” he says, “and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. When you get to my age, you’ll measure your success in life by how many of the people you want to have love you actually do love you. That’s the ultimate test of how you’ve lived your life.”

Life Insurance – Why you need it, and what kind to get (Term!)

Quick life insurance takeaways up front

1) AVOID buying ‘cash value’ life insurance policies (whole, universal, variable).

2) Instead, buy TERM life insurance with guaranteed level-premiums.

3) Buy a term of 30 years. The term you choose should be long enough to make sure all of your dependents will be financially independent when the term expires and you are no longer covered. This means your kids should be out of college & gainfully employed, your house paid off, and your spouse & yourself should have plenty of retirement money socked away by the end.  Err on the side of a longer term than you think you’ll need: it’s usually not much more costly than a shorter term. Policies are cheap when you’re young and healthy (so quit smoking/don’t smoke.)

4) Get a death benefit of $1,000,000. The ‘death benefit’ should be large enough to pay off your family’s debts and provide at least 5 – 10 years’-worth (or more, especially if your spouse doesn’t work) of living expenses. If you make a lot and live life relatively high on the hog, you might want $2,000,000. If you’re strapped for cash and used to living on less, $500,000 might do it.

5) Go get a quote HERE.   Also, check with your employer to see what coverage they offer and compare rates.  Many employers offer a little coverage for free (say, 1-2x your base salary), and give you the option to buy more.

6) Make a decision and buy coverage from a company with an AM Best or Moody’s financial strength rating of at least A or A- to protect your family!

Why I hate insurance, even though I need it & buy it

If there’s one thing I hate, it’s high-fee financial products.  Of these, insurance products are often some of the worst offenders.  The main perpetrators are ‘cash value’ life insurance and annuities (although there are plenty of other useless types of insurance to avoid.)

Anyone with dependents (those that depend on your income) needs life insurance.  That being said, Ward’s rule #1 when buying insurance is ‘DON’T!’  What I mean by that is ONLY buy insurance for things that can’t be planned & paid for by your own savings.  If you were fabulously wealthy and had already saved, say, 25 times your family’s annual spending needs in your retirement fund, then you probably don’t need any life insurance at all.

Alternately, even if you aren’t rich: if you don’t have any significant debt, have no dependents, your spouse makes enough money to live off by themselves, and you have other savings, you may not need any life insurance either (or at least no more than the paltry amount offered by your employer as part of your standard benefits package.)

For most of us, especially when we’re young, starting a family, and relatively low on the net worth totem pole, we need life insurance to protect our families in the unlikely-but-possible event of our early demise.

The only life insurance you’ll ever need

Most insurance companies will try to sell you some type of ‘cash value’ life insurance policy.  These include ‘whole life’, ‘universal life’, and ‘variable life’ policies.  Cash value policies all have an investment component to them as well as a ‘death benefit’ (a lump sum paid out to your beneficiaries when you die, regardless of your investment amount in the policy.)  The catch is that these policies are awful because they hit you with high fees (often in the form of the terrible investment choices with high expense ratios that come with your cash value life insurance policy.)

My general rule of thumb (and by ‘general’, I mean you should nearly always do this!) is to keep your insurance and investments strictly separate! Therefore, say it with me, “I will NEVER buy cash value life insurance no matter what an insurance agent or financial salesperson (sometimes disguised as an ‘advisor’) tells me!”*

Okay, so what life insurance SHOULD you buy?  Term life!  Term provides one thing, a death benefit, and that’s it.  Fortunately, that’s exactly what you need.

How term life insurance works

When you buy a term life policy, you pay an annual premium.  The older or more unhealthy you are, the higher the cost (since there’s a greater probability that you’ll die, forcing the insurance company to cough up the dough to your heirs.)  If you die within a certain period of time (the ‘term’, often 20 or 30 years), the insurance company pays the beneficiaries listed in your policy a ‘death benefit’ of some fixed amount of money that you’ve specified when you buy the policy (typically in $100 K increments, the most common amounts being $500 K or $1 million.)

Example: You’re a 28-year-old non-smoking male in good health.  You determine that your wife and child would need $500 K to live on if you were to die.  You figure that in 30 years your kid will have graduated from college and your wife will be doing fine, so you buy a 30 year term policy with a $500,000 death benefit.  You would likely pay a premium of around $400 – $500 per year, less than the price of a cell phone plan!

Make sure you buy a ‘guaranteed level-premium’ policy.  This means you are essentially renewing the policy each year and paying the same price to do so.  Without this your rates can fluctuate and/or you can be denied coverage if your health changes for the worst.

You can always cancel your policy if, say, you strike it rich and no longer have a need for the insurance.  (Although, it may pay to keep the policy anyway if you’re deep into the term since the premiums are relatively cheap compared to what it would cost you to buy new term life insurance at your decrepit old age.)

How big of a death benefit do you need?

This is a tricky question, but some general rules of thumb are helpful. If you don’t want to go through this exercise and you can afford it, just get $1,000,000 and call it good.

To be more precise, consider your family’s annual expenses, your outstanding debts, and your assets.  Most people want enough so that their spouse can pay off the mortgage, cover the kids’ college, and pay for any funeral expenses and other miscellaneous debts you leave behind, as well as have enough to live on to make up for your loss of income for the next few years, and any necessary single-parent help like childcare for the kids.

For most families, somewhere between $500 K to $1 M should do it.  The more assets you already have, such as your 401k, stock accounts, any social security death benefits accrued, the more money your spouse makes, and the closer your kids are to being financial independent, the less life insurance you need.  If you’re young, term is cheap, so err on the high side for the death benefit.

A sample calculation might go like this: 10 years of annual family expenditures: $60,000/year x 10 years = $600,000 + mortgage and other debt of $300,000 + today’s cost of 4 years of college at Your State University for 1 child ($100,000) = $1,000,000.

How long of a term should you get?

If your spouse works and could support themselves (not including the costs of raising children), then I would recommend getting a term policy to get your kid’s through college.  So, estimate when your last child will graduate college and be self-sufficient (the two are not necessarily synonymous) and get a policy that will last at least that long.  Again, err on the safe side, so if you or your wife is pregnant with what you expect to be your last child, round up to a 30 year policy.

Get a quote and buy a policy from an A-rated company

I like for getting comparable online term life insurance quotes**.  You can play around and get a feel for premium costs when varying term length and death benefit amounts.

Compare these quotes to the prices offered by your employer for life insurance (and check to see what they might already give you as part of your standard benefits package.)

Lastly, make sure that the insurance company you buy a policy from has an AM Best or Moody’s financial strength rating of at least ‘A’ or ‘A-‘, which means ‘excellent’.  This helps insure that the company is stable enough to still be around if and when your family needs the payout. The quotes you get from the above sites will tell you the rating.

Tip: I’ve found that round number periods like 20 and 30 years seem to cost much less than one would think given the relatively expensive 15 or 25 year periods.  Also, the more benefit you buy, the cheaper it is per dollar of premium; another reason to err high on the death benefit.


* The only situation where you MIGHT consider cash value life insurance is the following: you’re wealthy and in a high tax bracket AND you’ve already maxed out ALL of your tax-advantaged retirement savings (401k, IRAs, HSAs if applicable, college savings plans if you need those for someone.)  Not only that, but you must have AT LEAST 15 – 20 years until retirement in order to offset the fees with the marginal tax benefits from cash value life policies.

SO, if you are within 15 years of retirement, STOP, don’t buy cash value life.  Similarly, even if you ARE 15+ years from retirement, max out all of your (far superior) tax-advantaged retirement savings options before even considering cash value life.  Even if you pass these two criteria, give this some serious thought with a fee-only financial advisor.

** I also used, but I DON’T recommend them because you don’t get instant results online (instead, some insurance agent will call you up to give you your ‘free’ result, which is really just an excuse for them to sell you a policy.  I hate being sold to!) I also struck from the list because they called me (twice! by two different salespeople!) to give me the ‘hard sell’ after I got the online quotes.  This really irritates me.

Two new FANTASTIC retirement calculators

Financial awesomeness

I just discovered two really excellent and easy-to-use/understand retirement calculators from Vanguard (who else?) These are both essential tools for planning for retirement.  They will help you determine if you’re going to run out of money in retirement, how much to save for retirement, and how to retire earlier.
#1 Retirement nest egg

The first one computes the likelihood that your portfolio will last in retirement given your spending amounts, how much you start with, and what your asset allocation is.

This is a great tool for determining how much you’ll need in retirement, and if your current nest egg will get you through retirement.  You can even include information about any company matching you might receive

It also gives you a feel for the safety of different asset allocations.

#2 Extra savings

The second calculator shows you how much more money you’ll have in retirement if you increase your current contributions by 1 to 2%.  You can also use it to simulate how much you’ll have if you increased your contributions beyond that, or with whatever other variables you want to look at.

Missing some cash? Search for unclaimed property to find out

Ever had the feeling that you didn’t get a check or payment you were due, or just want to see if anyone owes you money that you forgot about?  Search your state’s unclaimed property records to see if there’s some ‘found money’ just waiting for you to pick it up.

Go to and select your US state(s) &/or Canadian province(s) of past & present residence, and  search for any unclaimed property in your name (or the names of family/friends).

It’s quick, easy, and who knows, something may turn up!

P.S.  For those in my native state of Washington, you can go straight to this link to skip directly to Washington’s unclaimed property search.  Click here if you’re an Oregonian, and here to search California.

Find out how your rent compares and then save on it!

As you may know from reading my articles on home-buying, I’m not a huge fan of buying real estate.  Instead, I prefer (and counsel others) to rent a reasonable home and use excess cash to max out my retirement accounts and other investments.  For most people, housing costs are usually the most expensive item on the monthly set of bills.  It really pays to scrutinize big bills because even small percentage savings equal high dollar values.

Find out what people in your neighborhood are paying for rent

When looking at rental rates when shopping for a new place to live or contemplating your current lease, use Rent-o-Meter to find out what a reasonable rent is in your area.  I just used this tool for the condo I’m renting and got a lot of nearby comparisons.  (My rent’s reasonable, but not dirt cheap 🙁 )

Slash your rental costs

Smart Money published a very good article with 5 ways to cut your rental expenses (read it!)  The most important thing you can do is be very picky when shopping for a new rental.  Look closely at many units and pay attention to prices at each one.  The best way to get a good deal is knowing how much your alternatives cost.  Set yourself a rough budget to stay inside of.

I recommend trying to keep your rental costs to a maximum of 10 – 20% of your gross salary.  Keep to the low side of the percentage if you’re on the high end of the income spectrum; use the higher side if your income is low.  So, if you make $30,000 a year, you might have to spend up to 20%, or $500/month.  If you make a heftier salary like $80,000, you should shoot for a max around 10%, which would about $1,300.  Obviously these amounts will differ depending on how expensive the city is that you live in.  Rural renters and those in the Midwest should spend much less than those in Manhattan or other major coastal cities.

Don’t forget to add or subtract amounts for utilities like water/sewer/gas that might be included in some rentals (typically apartments or condos) and not others (like houses.)  Also factor in any other savings like splitting cable costs with other tenants.

Get a roommate

If you’re living by yourself and having trouble staying within the guidelines I set above (or just want to have more money to spend/save), get a roommate.  Having a roommate is one of the easiest ways to live in a far nicer place than you could if you were by yourself.  I find that singles and studios are way more expensive than splitting the cost of a two-bedroom.  You’ll save a lot on utilities too by splitting internet, cable and heating costs.  Plus, it can be less lonely and more fun to have a friend just across the living room.  (Although ladies and metrosexual males might want to spring for a place with two bathrooms if possible.)

The savings from adding a roommate seem to decrease after you have 2 people, but adding a third might save a bit more per person as well.  (Even if you know your roommate well, asking your landlord to put you each on separate leases will make you less responsible if your roommate has to move out unexpectedly or gets behind on the rent.)

Ask your landlord for a discount

After doing your homework to see what rentals cost in your area, ask your landlord to reduce your rent.  Stress that ‘times are tough’ and the economy is down.  Emphasize how you’ve been a great tenant (assuming you have been) and how the rent’s been on time, the place is in fine shape, and the neighbors have never complained.  The worst your landlord can say is ‘no’, so it’s definitely worth a shot!  Even reducing your rent 5 – 10% can save you hundreds of dollars over the course of a year.


Rent is a big expense.  All big expenses (especially on-going ones) need careful evaluation.  Research rents in your area and search for a good deal.  Use a rough guide of 10 – 20% of your income as an absolute maximum for spending on rent.  Get a roommate to live larger on a smaller budget.  Negotiate an existing lease with your landlord to reduce your monthly rent payments.

‘Tis the season to give! Words of Ward Philanthrophy for 2013

I’m issuing my annual call for folks to help out those that are worse off than themselves this holiday season through charity.

For those with short attention spans, choose one of the top 3 charities over at, the best charity recommendation site I know of, here.  (I recommend & have been giving to Against Malaria Foundation as the best way to save lives, especially those of children.  For poverty alleviation, Give Directly is the best choice.)

Why (and where) you should give

As comparatively wealthy members of the world, I believe folks like us have a moral duty to improve the lot of others in the world.  Even if you don’t agree with me on that, consider that helping others has been shown to do wonders for the person doing the helping.  Make yourself feel good by donating to charity!

I strongly recommend giving to causes that help those living in extreme poverty outside the US and other ‘first world’ countries.  This is because dollars go the furthest when helping those that have next to nothing.

Think about it this way:

You could save a life for about $2,000 (per by purchasing mosquito nets to protect children in Africa, or you could spend $100,000 – $200,000 on cancer research to extend an American life by 3 – 6 months.  As thinking human being, I know the right thing to do is to save as many lives with my limited resources as I can, even if they are ones across the globe whose names I will never know, and whose pictures I will never see.

I believe that every human’s happiness is just as important as another’s, so I give internationally through charities recommended by Givewell to maximize the good that my dollars do in the world.

I might give token amounts to causes that are emotionally close to me or my friends & family (cancer, Alzheimer’s, a Boy’s & Girl’s recreational club in my neighborhood), but I know that I have a responsibility to donate any significant amount in the most effective way possible, and that the human race as a whole will be better for it.

Give smart!

Something like less than 25% of charities measured are actually shown to produce social benefits, so it’s important to choose carefully when giving. is my favorite charity selector, and has been for years.  They evaluate charities using rigorous standards and provide simple, easy-to-follow recommendations, so that you can be confident that your dollars will go a long way.

Take action

Every year several members of my family and I reduce our holiday stress & increase our feelings of well-being by forgoing presents.  Instead, we commit the same amount of money we would have spent on gifts to worthy charitable causes.  I highly recommend you try this approach (or a hybrid version such as half gifts/half charity) with your own friends and family (excluding those under the age of 18 or so, of course :).)

This yearly activity has several benefits including 1) not having to find & shop for gifts for others, 2) not having to think up gift ideas for things you want others to buy you, 3) making you feel good about helping people, and 4) leaving you no worse off financially than if you bought presents instead.

So, pick a cause and do some good this season!  Click here to pick from a great list of worthy charities, or save a life and donate to Givewell’s top choice, and my personal choice, Against Malaria Foundation.

(And if you weren’t convinced, here’s more good press on Givewell from  You don’t just have to take my word for it!)

Happy holidays and happy giving!

Why picking stocks is a ‘Loser’s Game’

I just read Charles Ellis’s classic 1972 paper “The Loser’s Game“.  In plain English (and only 7 pages), Ellis deftly describes why professional investors fail, and will continue to fail, to beat passive indexes (which are my favorite investment recommendations.)

It’s a good read if you’re interesting in investing.  (If you ignore my and Ellis’s advice, here’s a brief primer on how to go about picking individual stocks.  Proceed at your own risk.)