Thursday, September 8, 2011

give yourself some grace

One of the most interesting phenomenons I've seen while working in my finance internship, is that people are sometimes so fearful of making the wrong move in the market, that it cripples them from taking any action at all.

I've seen this firsthand with my mom. She really doesn't know anything about personal finance or investments, and she doesn't pretend to. (As a side note, people that don't know anything about investments and pretend like they do are my least favorite types of clients to work with.) She recognizes that she doesn't understand anything about finance, and the thought of learning about it is so overwhelming, she'd rather not think about it at all. So she never educated herself, and she hasn't changed anything in her 401K for years and years, because she was too afraid she would make the wrong move. Instead, she left her investments as is because someone in finance, long ago, set up her 401K for her and told her what to invest in, and she agreed, knowing that he or she knew much more about finance than she did.

You know, gosh, we put so much pressure on ourselves in so many different situations to do the "right" thing and avoid feeling like a failure. Fear gets the best of us and we don't act on anything at all. And in this case, it cost my mom decades of growth in the stock market.

If there's anything I've learned in college with the various projects I'm involved in, if something doesn't work, abort ship and start over. There is no shame in failure. We are so uncomfortable with it, but failure is actually quite valuable. Even though my last blog post talked about my killer interview skills, I actually walked into my first finance related interview last year, and crashed and burned miserably. I mean, I couldn't answer any of the technical questions they asked me. It was awful! But as killer as the experience was (I still cringe thinking about it), it helped me get serious about learning the art of interviewing. Yeah, failing that interview felt so uncomfortable, but I was a 20 year old college student, barely even starting my finance classes at that point in time; what could I have really expected?

In my Psychology class, I learned that college students have the highest rates of depression. A lot of it is linked to the fact that we have lots of opportunities to fail. Whereas a mid-level career person might possibly fail at a project or a presentation once every month or few months, we get the possibility of failing a test or a class nearly every week. With an atmosphere so highly charged with other smart people accomplishing so much, the pressure can get very intense to succeed.

The only person who has the ability to control the amount of pressure on you is you. And, speaking as a Type A overachiever, this realization has brought me a long way. Yes, I still feel the pressure, but now I ask myself if I'm working toward a goal because I'm drawn to it or because I feel obligated to do it. While it doesn't change the desired end result, it definitely changes how I feel about getting there. Sometimes I need to remind myself that I need to give myself grace.

Monday, June 6, 2011

the secret to standing out in the interview process

In the last 9 months, I have gone to about 8 interviews. Of those, I received offers from 6 of those places, one of which was offered to me on the spot following my interview.

Not to toot my own horn here, but toot toot! I tend to excel at interviews. A lot of people ask me for advice when it comes to interviewing, but it is very, very simple.

There are three main components that enable you to get the internships/jobs/positions you want.

1. A good resume (this is what gets you that interview)
2. A good cover letter (essentially, an elevator pitch in written form)
3. The interview

For me personally, I've spent a lot of time and energy crafting a very thorough and professional resume. I've had scores of business professionals look it over and rip it apart, until I believe it's in the best shape it can be. This was really important for me, because so far, my experience hasn't been totally relevant for the positions I've been applying for (mostly financial internships).

I needed my resume to look the best it could so that I could get a second look. The average HR person really only spends somewhere between 10-30 seconds looking at your resume. You have to make sure you make a good impression on paper in that short of a time.

In general, I feel that I can articulate myself well on paper, so the cover letter is essentially a summary of my background, experience, and why I think the company would value me. I know, pretty standard.

In the interview process, I think I've really hit on a winning combination. My ratio of interviews to offered positions is abnormally high, so I would like to think that it gives my theory some sort of validation! (Try it out for yourselves and let me know how it goes.)

First and foremost, you need to be competent for the position you're applying for. You can't fake talent. Let's just get that out of the way. But even if you have just an average level of competency in the skills required for the position, you can still stand out by simply having a lot of humble confidence. What I mean by humble confidence is this: have a firm handshake, look them in their eyes, speak clearly and confidently, but with a smile and a keen interest in your interviewer as a person. I cannot stress the last point enough.

In a corporate setting, people have to wear suits and sit at a desk and act professionally, all day long. They work with coworkers, not their girlfriends (or bros). They can't just talk about anything they want to; their talk revolves around the company and the job. Furthermore, hiring managers have to hear people talk about themselves and the company in interview after interview. It is very rare that interviewees will turn the table around and ask questions to get to know the interviewer. The simple connection on a human, personal level seems almost intimate given what they're accustomed to. In the workplace, individuality is stifled. By astutely perceiving what they're passionate about and politely inquiring further, they feel like you see them as a whole person. It's acknowledging that who they are is so much more than just their job.

That's what makes you stand out. Establishing a personal connection with your interviewer is invaluable! It's refreshing for them. Sure, some people receive offers because technically, they're simply smarter and more experienced. To be transparent, my GPA isn't all that great. I know that there are candidates who are much more qualified for positions than I am. But I'm still getting job offers. It's much easier to make a personal connection than to ensure that you are the best qualified of all the candidates, since you don't know who else is applying. But by assuming that you are average, it's easy to believe that you probably aren't the smartest/best qualified.

Another component that I think is as almost as great of importance is showing initiative. I talk about The Storybook Ending, and how it came to be. I talk about this blog. I talk about EPICONOMICS, which is a 3-part seminar series on personal finance tailored for college students that I concocted because I wanted to help my friends understand their money. Just show that you're capable of self-motivation, however it looks like. It could be hosting dinners every week to try out new gourmet recipes. It could be starting a YouTube channel to showcase your musical ability. These are your natural passions, so you will naturally begin to get excited when you share about what you've done. Once you see your interviewer as a complete person, they start to view you as one, too. Their job is simply one facet to their lives, so that's how they think about you, too. You don't need to be the most qualified candidate. Just give them something to show how you fulfill the necessary requirements, and your natural passion for your hobbies will convince them that you'll be a highly motivated worker.

It is amazing to me how underrated personal connections are in the corporate world. This is not to be confused with networking which is, in general, an over abused process which doesn't bring to mind much depth. By contrast, when you begin to treat a person like they're of immense worth, it's met with curiosity and respect. And they will remember you for it.

One of my favorite stories:

During my second year of college, our professor gave us a pop quiz. I breezed through the questions until I read the last one: What was the first name of the janitor that cleans the school?”

Surely this was some kind of joke. I had seen the cleaning woman several times, but how could I know her name? I handed in my paper, leaving the last question blank.

Before the class ended, one student asked if the last question would count toward our grade. “Absolutely,” the professor said. “In your careers you will meet many people. All are significant. They deserve your attention and care, even if all you do is smile and say hello.

I’ve never forgotten that lesson. I also learned her name was Dorothy.


Monday, April 11, 2011

harnessing irrational behavior for monetary gain: eBay

Question: How can a company like eBay increase prices and attract MORE buyers?

I am an established seller on eBay, and I recently got an email from the company talking about how they've implemented new fee policies. Before, eBay used to charge just to post an auction-style listing, as well as a percentage fee based on the ending price of an auction. Now, they're eliminating listing charges to entice more sellers to sell more items on eBay.

People are lured in by lower costs. Basic economics, right?

Well, here's the catch. eBay is eliminating insertion fees, but jacking up final value fees, which is a percentage of the price an item sells for. Since listing fees run $0.25-$2.00, depending on how expensive the starting price is, sellers are only saving money if their items don't sell.

For me, I normally start listing items in the $9.99-24.99 range, which cost $0.50 per item. This means that for every 10 items I list under the new policies, I save about $5. However, the final value fees increase from 9% to 10%, and the fee amount will be calculated with shipping costs included in the final price. If my auctions ended at an average price of $40 and shipping costs me $5, it actually costs me $9 more to sell on eBay with the new fee policy ($36 would be my final value fees under the old policies, and $45 would be my new final value fees). And that's not even counting PayPal's transaction fees, either. (Not surprisingly, PayPal is owned by eBay.)

So let's take a closer look at the psychology behind eBay's strategy. By simply understanding that people are risk averse, they are essentially eliminating all the risk associated with paying a small premium to list items on eBay. eBay is enticing first-time sellers to try out their services.

It feels cheaper. It feels less like a gamble.

Now, eBay has to make up for that lost profit from forgone listing fees somehow. So they decide to increase their final value fees (which they've been doing steadily since I've joined eBay), and start calculating them based on the ending price plus shipping costs. In essence, they are actually charging more for their services, which, if you've taken any basic economics course, you know would cause buyers (which, in this case are actually the eBay sellers who are consuming eBay's online market services) to stop using eBay. But instead, eBay is appealing to people's risk aversion by making them indifferent to selling.

And that's how they're raising prices and attracting new buyers.

Irrational? Yes. Genius? Yes.

Irrational behavior is profitable.

Wednesday, March 16, 2011

Convenience is the death of discipline

It's been a while, but finals are over, and I can now reclaim my life! All I want to do is sleep in late, stay in my PJ's all day and order in, watch a movie and lie on the couch in my snuggie.

Sound familiar?

We have a penchant for comfort. We have been trained through positive reinforcement that comfort is a luxury. Spa days and do-nothing days are pure bliss; TV remotes and microwaves give us what we want, fast. So that becomes what we strive for. We want the most efficient washing machine and dryer, the fastest internet, TiVo to skip through commercials, etc.

In the midst of all this convenience, we have forgotten discipline.

If you truly want to maintain a high level of productivity, you must stay disciplined. If you truly want a healthy retirement fund, you must stay disciplined. If you truly want better health, you must stay disciplined.

You see, the problem with convenience is not convenience itself. No, it is the mindset that we slip into when we enjoy it. It is so easy to come home and sit on the couch and reach for a remote. The motivation I have to study dissipates after a few minutes of watching Glee. I start to relax, thinking that I "deserve" a break. As soon as the show is over, I still have no motivation to get back to work.

Discipline is counter-cultural and unexciting, but it helps maintain long-term goals when faced with short-run distractions.

The solution? Barriers. Set up barriers to block yourself from falling into the convenience trap. The TV can be so tempting after a 12 hour day, but if you've taken out the batteries of the remote and placed them on the opposite side of the house in a hard to get place, I guarantee that the extra effort used to find and replace the batteries of the remote will deter you from plopping down on the couch to watch your shows.

Note, however, that if you have planned a movie night, the extra effort will barely be a hindrance at all, because you have intentionally set the time aside. It becomes just another step in your list of preparations, along with cleaning the living room and making popcorn.

Now that spring break is upon us, it is so tempting to go to bed late and sleep in the next morning, but in order for me to maintain some semblance of productivity, I've scheduled myself for morning appointments the remainder of this week.

In the moment, discipline fails. With some preparation and strategically erected barriers, we won't need to rely on how motivated we "feel." We will have no choice but to perform at a high level.

Similarly, no matter how knowledgeable we are on financial matters, when we deposit our paycheck, we get this itch to spend. Now that we know there's money in our account, all of a sudden we start to notice things in store windows we were passing by earlier, and they're looking like they would fit perfectly into our lives. We know that short term gratification will keep us further from our long term goals, but we've worked a lot of hours this month and we "deserve" a little treat.

Solution? Automation, baby. Have your paycheck deposited into your savings account, schedule automatic bill payments and an automatic transfer of 15% (or however much) into your investment account, and then transfer a certain amount (play around with the percentages, keeping in mind how aggressively you want to reach your savings goals) into your checking account. This way, you can only spend the amount that you pre-set to transfer into your checking account. I guarantee you that your savings rates will go up.

By planning ahead of time, we can negate the short term temptations by blocking the enticing convenience aspect, which forces us to stay on target with our goals.

Wednesday, February 16, 2011

assume you are average

Let's face it; we're human. We have this intrinsic gravitational pull to compare things together. We compare ourselves, our stuff, our achievements, etc with others. We love to compare.

But why?

It's because of our desire to fit in, to belong with a group. Maslow's third tier in his hierarchy of needs is dedicated to mankind's desire for love and acceptance. We want to be accepted. The next highest tier looks at man's need for self-esteem or confidence. We want others to perceive us a certain way. We want others to respect us, to look up to us.

And so we need a benchmark to measure ourselves against. We want to know what the norm is, so we can discern how we are doing in comparison with everyone else. If we excel at something, we only excel at something in relation to how others are faring. If we want to be better at something, we need to know how others are doing.

Sometimes, comparisons can be deadly, like eating disorders that many young women develop by constantly comparing themselves to how they believe beautiful women should look like. Or we get depressed because we feel like we can't measure up to society's standards of what a smart college student is, or even that we are a failure in our parents' eyes because we aren't a doctor or lawyer and we are Asian (or not).

But we can also use comparison for our advantage. Remember when I talked about the dangers of perfectionism? It's the same kind of concept here.

Just because you know that your job wasn't completed perfectly doesn't mean that everyone else does. Remember when your parents signed you up for piano lessons and your teacher would make you have recitals? Remember how you would cringe and feel like a failure every time you messed up a note, but when you talked to everyone afterward, you realized the only person who noticed was you? Yeah, that's pretty much how the rest of the world is, too.

When people pay you to fix stuff for them, they're not really paying you to do an amazing job (well kinda, but stick with me here); they're paying you to just do a better job than they could. People don't expect you to do things perfectly, just better than them.

This means that all the people you're intimidated by, aka all the bestselling authors, influential businessmen, etc aren't any different than you and I; they've just learned to do things better than everyone else.

So find the benchmark, and learn how to become one step above it. For 99% of things in life, this is good enough. Lower your expectations (counterproductive though this may seem), but the projects you'll complete will be good enough to get the job done well while still impressing others. How do I know this?

Because I am average, too. And I am very impressed by people who know how to do things I don't have any idea of how to do, like change the transmission of a car. Or write a software program. The average person has no idea how to do this stuff. If this is your field, major or interest, you can safely assume that a business will hire you to write a program for their company, and they have absolutely no idea what any of your technical jargon means.

No, I am not endorsing slacking off; I am encouraging productivity and a mindset of increased job satisfaction. Think of it as diminishing marginal utility. The more effort and time you put into problem solving, the better the solution becomes. But once you've solved all the main problems, all your left with is basically minutiae, whose results are not worth the amount of time you have to put in. I hope I am being clear here. Your goal is to add value, so do not waste your time on tedious details that do not provide much output for the amount of input you invest in it.

I landed a gig doing website maintenance for an engineering professor on campus. How? Honestly, I have no idea. I had never even used Dreamweaver before. I walked into the job with only basic HTML knowledge (and we're talking REALLY limited HTML here), but this professor is elderly and didn't really know anything about all. So I got by because I knew more than he did, and what's more, he is actually quite impressed by my technical knowledge. I knew enough to fix his website problems, and that was enough. But if I couldn't fix his problems, if I couldn't complete the task he hired me for, there would be no point in me taking the job, and it would certainly be unethical for me to charge him.

Comparisons are not inherently good or bad; they are merely a tool to help you understand which actions are bringing you value. Ever heard the phrase that 85% is good enough? Comparisons tell you where the 85% mark is.

Monday, February 7, 2011

something is better than nothing

What's a college student to do when she realizes she has three midterms, a job interview, and class registration all in one week?

Well if you haven't already realized, the "she" is me, and I usually start by running around like a chicken with its head cut off. Then I sit down, make a to-do list, get overwhelmed by the to-do list, then tuck myself into bed and whimper.

After that, I snap out of it, prioritize my list, and start my tasks using the Snowball effect. And all would be nice and dandy if life worked just like that and I accomplished all my goals. However, let's be realistic. We have time constraints that prevent us from accomplishing all that we would like to do, even if we're still feeling motivated. The fact is, sometimes at 2 AM, I'm feeling productive and ready to get a bunch of stuff done, but it would be unwise to stay up another 2 hours, because I would be tired the next day and unable to focus on my work.

So when I have a task that will take many hours to complete but only have a fraction of the time to do it in, I find it extremely easy to procrastinate, saying that I'll do it "later," when I "have more time." As we know, later never comes with more time, so I have to figure something else out to maintain productivity even when the satisfaction of achievement isn't involved.

To get around the time constraint and to compensate for the lack of euphoria of completing a task, just work on your task for however long you have.

For instance, at work, I'm supposed to be overhauling our website. There are many revisions on each of the say, 50 pages or so, that will take me hours to complete. While yes, all 50 pages must be revised, I do not have hours and hours of time, energy and resources to just sit at the computer and edit web pages in one sitting. No, for a big project like this, I'll choose three web pages that require major revisions, and I'll get to work emailing the people I need updated information from, etc. This is what I call the "something is better than nothing" approach.

I realize that this seems like a fairly obvious tip, but let's unload this a little more. People know that it's best to break up big projects into smaller, bite-sized pieces to accomplish tasks. Yet so few people do it. I know this, and I still don't do it as often as I should. This is called cognitive dissonance.

What is preventing me from putting this into practice? I hate feeling like I spent a bunch of time on a zillion different things without accomplishing anything. This makes me not want to work on starting a new chapter on a tedious subject (ahem, economics) if I only have 15 minutes, because I won't have enough time to finish it.

The magic of this tip comes from a mindset change. Fifteen minutes of reading a chapter is better than nothing at all. Likewise, $10 of savings/week is better than $0/week. I think a lot of times we feel like our contributions are just a drop in the bucket. We feel like they're so small, they don't matter at all.

This is why we're so surprised at the end of the month when we look at our bank accounts and see that our $5 daily coffees added up to over $100. The little things DO matter. We can harness this for our benefit by eliminating the useless little things while progressively chipping away at our goals/tasks.

The other part of this mindset shift is that we have to set our own goals customized to our life/schedule/finances, etc. And we have to allow ourselves to be satisfied with our progress.

I constantly have to remind myself to be pleased with myself after I accomplish even a little something. Today, I spent 30 minutes working on the website overhaul, and I told myself I accomplished something today that I should feel proud of. I also spent 1.5 hours wading through my economics book. This is also something I should be proud of. Even though I didn't finish my website task and even though I didn't finish my chapter, I finished 3 web pages and I got to the halfway point of my chapter. Now I need to allow myself to feel pleased. When I don't, it's because I'm letting my perfectionism get the best of me, or because I am comparing my progress to what I think it should be. This is dangerous, but can be twisted into a very useful lifestyle hack. I'll be exploring this concept more in a later post.

it's now or never

Cheesy as this title is, it's so true.

There are so many things that we put off completing because we are too swamped, too tired, too overworked, too cranky, too this and too that. But we'll work on it later, we'll swear.

How many times has this happened to you? Just today, I told myself I was too tired to wake up early this morning to finish some reading before class. Then I told myself I was too busy to finish a bunch of projects at work that have been dragging on and on. Then I realized how stupid I was being.

"Later" never comes about. Now is the new later. I realized I had to just suck it up and get 'er done.

Procrastination is such a sneaky bastard. Even knowing how bad I am when I procrastinate doesn't make me change anything. What actually happens is that I get annoyed with how much I'm procrastinating, but I tell myself I'll motivate myself and process through why I'm procrastinating later.

Get it?

Being aware of my own procrastination habits just make me feel more bad and guilty for not doing the things I know I should be. To deal with this cognitive dissonance, I simply push all thoughts of work away and focus on something else that is generally not at all what I should be doing, ie blogging instead of studying for midterms. So what can I conclude? Procrastination simply leads to more procrastination.

So how to break this cycle?

I use the "Snowball effect" to increase productivity.

The "Snowball effect" is a method that is used to pay off debt. It involves listing the various debts you owe in the order of smallest to greatest, and paying off the smallest amounts first. It harnesses the psychological high of achieving small feats in order to keep the debtor motivated to tackle the largest debts. Critics of the "Snowball effect" argue that it's not financially the smartest thing to do, since interest rates on the bigger debts will make the total amount you owe higher than if you paid them off first. This is beside the point. If most people were faced with $10,000 of debt, what do you think they would do? They would probably try really hard to save money and live frugally and at the end of the month pay off as much as they could and then get really discouraged that they still owe $9,500 and figure it's not worth depriving themselves of lattes and going out to lunch just to save their credit score. So they stop their debt repayment efforts altogether and push their guilt to the back of their mind.

Similarly, when I make a to-do list, I write out every single gosh darned task that I know I need to do. While most people would then prioritize them and adjust their time to spend more on the biggest tasks, I actually organize them by the time/effort it will take me to complete them. For instance, my psychology homework takes very little time, concentration and critical thinking. I would start off doing it before I start my economics homework, which takes upwards of 2-3 hours of extreme focus to complete.

Start small, go big.

Psychology is more powerful than you think. Learn to harness it.