Weekly reading – 23rd January 2021

What I wrote last week

A few simple tips to save money that I have from personal experience

I wrote about the debate on whether social media should censor Trump

Business

Internal deliberations at Twitter over whether they should ban Trump

Checkout.com vs Adyen

If you aren’t too familiar with Fintech, this article is a good place to start

A piece on a16z and its media-savvy founder

Apple TV+ is said to have only 3% of the market in which Netflix still remains the leader

21% of Chime’s revenue per user as of June 2020 came from ATM fees for out-of-network withdrawals

Nintendo – capitalizing on nostalgia

A survey shows that Apple may have a problem with Apple TV+ churn on its hands

A profile of the CEO of Edwards Lifesciences

The Story of a Cap Table: Affirm

Technology

The Myth of The Infrastructure Phase. Such an interesting read on the development of applications and infrastructure

The insider story of PDFs

What I found interesting

A beautiful beautiful letter on living a life worth living

Nikkei Asia has a nice piece on Covid-19 as an opportunity for Vietnam, given how the country has masterfully managed the crisis so far

Why cats love catnips

Axios has an 8-part (till now) series of great reporting on Trump and his post-election madness

Simple tips to save money

Saving money is something that many of us share interest in, especially when the financial situation is tight. Here are some methods I use to save money

Use public library

I talked about this on my blog before. With public libraries, folks can have some serious savings on books. The public library in Omaha allows free borrowing of many books and as long as the books aren’t in demand, members can renew their withdrawals several times. Even if you turn the borrowed books late, the overdue fees are usually pretty low. I believe that should be the case for other cities. If you don’t have a problem with reading good old-fashioned physical books, why waste money when you can borrow them for free? Take the book below as an example. I had to read it for a course at school. Instead of $12-$15 to Amazon, I could borrow it for several weeks for free from Omaha Public Library.

Buy international version or used books

There are three versions of books: US Edition, International Edition and Global Edition. The content is essentially the same across three editions. What differentiates them is the copyrights and whether you can resell it legally. Here is what Abebooks says about International Edition Books:

Looking for cheap textbooks? Consider international editions – textbooks that have been published outside the US. These books are usually significantly cheaper than textbooks published in the US. Offering tremendous value, international edition textbooks are created to be sold in different regions and are often printed on cheaper paper and are usually softcover. The content may be the same as the U.S. version, or may have differences such as the book cover, ISBN, pagination, or region code.

Customers located in the US can now purchase international edition textbooks. However, note that the publishers of international editions generally do not authorize the sale and distribution of international editions in Canada and such sale or distribution may violate the copyrights and trademarks of the publishers of such works.

Source: Abe Books

In the US, the difference in prices between US Edition and International Edition can be outrageous. Take Marketing Management by Kotler as an example. If you look for a brand new US Edition of this book on Amazon, it will cost you around $140. The same title in International Edition costs $72 on Abebooks. A used International Edition version costs $5. Even if you could resell a US Edition for some money, that would take away your time and require you to pay up front. Think about how many books you are requested to buy during your degree and how much money you could save. E

Buy groceries at Aldi

Almost everyone in America knows about Costco and its appeal, but if you are a lone wolf or don’t shop enough to justify a Costco membership, I highly recommend Aldi for groceries. I get it. The retailer doesn’t do much advertising and its stores don’t look fancy at all. What you get; however, is cheap groceries. I wrote about why Aldi manages to sell their goods at a cheaper price. The gist of it is that many popular items such as vegies, milk, yogurt, bread or fruits are available at a significantly lower price than they are at other stores, including Walmart. If it’s cheaper than Walmart, how much money could you save from not shopping at Whole Foods or Hyvee?

Source: CNN

Save before spend

I set aside 10% of my monthly salary for my 401k and then a few hundred dollars every time I receive a paycheck is automatically transferred to my Robinhood account for my own portfolio. Thanks to these little tactics, my savings are guaranteed before any expenses kick in. I can safely spend all the rest, though I rarely do, without worrying about whether I will have any left for savings. How many of us end up with no savings every month after all the expenses, even though we plan to in the beginning? Save before spend

Avoid premium gas

I’ll let CNBC explain it

Other small and simple tips

  • If you have a medical procedure, try MDSave. I wrote about my own experience with MDSave.
  • I make my own coffee and food at home
  • Instead of paying a gym membership, I use free and helpful resources like this channel for workout at home. No equipment, no driving and no membership needed

Weekly reading – 12th December 2020

What I wrote last week

How much money could you save from drinking coffee at home?

Business

The economics of the $2B+ Christmas tree industry

Bloomberg’s profile on OnlyFans, a potential major social media on the horizon

Uber sold its autonomous vehicle arm to Aurora. This move isn’t a surprise given that Uber has been trying to offload cash-intensive and loss-making businesses in order to focus on the ones that do make money. Though there is a big write-down from $7.5 billion to $4 billion, investors may find this deal good news

CNBC has a good article on AT&T, HBO and their effort to compete with Netflix and other streamers

Inside Google’s deal with French Media

Many Google employees came out with their version of the story involved Timnit Gebru, contradicting what the company publicly said

WSJ’s profile on a few men that helped build Microsoft’s gaming business today

Online grocery slowed down in the last few months compared to the height in the summer. The basket size continued to be relatively big, compared to the same period last year and pre-Covid months.

https://www.brickmeetsclick.com/stuff/contentmgr/files/1/495948404a0913f7ced51b6524a17539/files/bmc_scorecard_nov_2020_sm.png
Source: Brickmeetsclick

Clover, which belongs to Fiserv and sells hardware & software payment solutions to small businesses, a competitor of Square, seems to have a higher GPV as well as a higher percentage of sellers with $125k in annual GPV. As Clover has more than 90% of its sellers above the $125,000 GPV threshold, the figure is far smaller for Square.

Source: Fiserv

Technology

John Gruber’s review of Apple’s latest product: AirPods Max

What I found interesting

A story on a small coffee business in Vietnam that prioritizes sustainability

Benefits of walking

The US Department of Health and Human Services published a presentation on how unhealthy Americans’ diet is. The information is informative and use, but the presentation is hilariously terrible.

The old Americans get, the more they spend time alone

How much money you may be wasting on coffee shops?

We have all heard about the importance of savings. But what if we look at savings from another perspective? What if we look at how much potential earning excessive spending could cost each of us?

Take coffee consumption as an example. All credit to this Twitter user for inspiration to use coffee as an example. Many of us love to drink coffee every day, but a coffee from a branded or local indie shop can cost around $5-6 per cup. Depending on the consumption level, one person can spend a lot of money on drinking coffee outside per year.

Cups Per Week12345
Total Cost Per Week ($6/cup) (including tips) $              6  $            12  $            18  $            24  $            30 
Total Cost Per Year (52 weeks) $          312  $          624  $          936  $       1,248  $       1,560 

What if we substitute drinking coffee at a shop for drinking coffee at home? We all know that drinking coffee at home will save us a lot of money, but let’s run an experiment and find out approximately how much money can be saved. Here are two combos A) one 12oz bag of ground coffee that is in the cheap range and a French Press from IKEA that costs $9 and B) a slightly more expensive bag of coffee and a Metallisk at $20.

Either of these combos should be enough for a cup of coffee at home every day. For the sake of argument, let’s say every year a person needs 18 of these bags to have one cup of coffee a day. Combined, 18 bags of Dunkin Ground Coffee and the French Press will cost $120/year. Since we like to drink coffee with some milk, let’s throw in another $30 of milk and round it to $150/year. Here is how much drinking coffee at home would save a person:

Cups Per Week12345
Total Cost Per Year (52 weeks) $           312  $          624  $           936  $          1,248  $          1,560 
Total Cost Per Year From Combo A $           150  $          150  $           150  $             150  $             150 
Saving from Combo A $           162  $          474  $           786  $          1,098  $          1,410 

Over a long period of time, the compound interest will make these savings much more valuable in the future. Let’s look at four scenarios where the annual interest rate we can earn from these savings, whether it’s from a bank or investment in stocks or from dividends, is 3% to 10%

Cups Per Week12345
Total Cost Per Year (52 weeks) $           312  $          624  $           936  $          1,248  $          1,560 
Total Cost Per Year From Combo A $           150  $          150  $           150  $             150  $             150 
Saving from Combo A $           162  $          474  $           786  $          1,098  $          1,410 
Annual Rate at 3% $      12,215  $     35,740  $      59,265  $        82,791  $      106,316 
Annual Rate at 5% $      19,570  $     57,259  $      94,949  $      132,638  $      170,328 
Annual Rate at 7% $      32,341  $     94,627  $    156,913  $      219,199  $      281,486 
Annual Rate at 10% $      71,700  $   209,789  $    347,878  $      485,967  $      624,056 

Essentially, what the table above means is that drinking coffee at home using Combo A would save a person on a 3-cup-a-week routine more than $300,000 after 40 years at the annual rate of 10%. Even at a more moderate rate of 5%, it would still be around $100,000, a significant sum for most of us.

Here is what the savings would look like with Combo B and the same criteria

Cups Per Week12345
Total Cost Per Year (52 weeks) $           312  $          624  $           936  $          1,248  $          1,560 
Total Cost Per Year From Combo A $           200  $          200  $           200  $             200  $             200 
Saving from Combo A $           112  $          424  $           736  $          1,048  $          1,360 
Annual Rate at 3% $        8,445  $     31,970  $      55,495  $        79,021  $      102,546 
Annual Rate at 5% $      13,530  $     51,219  $      88,909  $      126,598  $      164,288 
Annual Rate at 7% $      22,359  $     84,645  $    146,931  $      209,218  $      271,504 
Annual Rate at 10% $      49,570  $   187,659  $    325,748  $      463,837  $      601,926 

From this example, there are two lessons. 1/ the compound interest is a powerful tool to learn and have in our favor. The sooner a person learns about it, the better and 2/ If a person is even only decent at maths and knows the power of compound interest, explaining savings in this manner could be more powerful than just talking about it. Personally, I wish my parents or teachers in Vietnam had taught me this when I was 15. I would have saved so much money from all the shenanigans and earned some from putting the money into an index fund or a high dividend yield stock.

You may argue that the scenarios are a bit extreme and that each of us should enjoy what life has to offer. Well, that may be right, but coffee isn’t our only sin, is it? How about regular food from Chipotle, the 5th streaming service of the month, the 20th bottle of perfume or the 15th pair of shoes? The point of this exercise isn’t to arrive at the exact figure, but to look at the opportunity cost of excessive current spending. A moderate control of spending and savings will help each of us save a lot of money, even after we enjoy the occasional delicacies.

FYI, here is a Future Value calculation I made, using Financial Calculators

Book Review – The Psychology of Money. Likely the best book I read this year

I waited for this book to come out for a while, and it surely doesn’t disappoint. The Psychology of Money by Morgan Housel is an excellent book on personal finance, our thinking towards money and how that drives a lot of our decisions in life. Not only does the book contain a lot of wisdoms and high quality content, but it is also well and crisply written that you can finish it in a weekend, unlike a lot of other books that are unnecessarily lengthy.

If you care about growing your net worth, investing and making important decisions in your life (who doesn’t?), I really recommend this book. It will transform what you think about money and life. Below are a few nuggets from the book. Have a nice weekend!

The premise of this book is that doing well with money has a little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach, even to really smart people.

Few people make financial decisions purely with a spreadsheet. They make them at the dinner table, or in a company meeting. Places where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together into a narrative that works for you.

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

“At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, “Yes, but I have something he will never have … enough.”

The idea of having “enough” might look like conservatism, leaving opportunity and potential on the table. I don’t think that’s right. “Enough” is realizing that the opposite—an insatiable appetite for more—will push you to the point of regret.

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Think of it like this, and one of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.

Be nicer and less flashy. No one is impressed with your possessions as much as you are. You might think you want a fancy car or a nice watch. But what you probably want is respect and admiration. And you’re more likely to gain those things through kindness and humility than horsepower and chrome.

Go out of your way to find humility when things are going right and forgiveness/compassion when they go wrong. Because it’s never as good or as bad as it looks. The world is big and complex. Luck and risk are both real and hard to identify. Do so when judging both yourself and others

Less ego, more wealth. Saving money is the gap between your ego and your income, and wealth is what you don’t see. So wealth is created by suppressing what you could buy today in order to have more stuff or more options in the future. No matter how much you earn, you will never build wealth unless you can put a lid on how much fun you can have with your money right now, today

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Jim Simons, head of the hedge fund Renaissance Technologies, has compounded money at 66% annually since 1988. No one comes close to this record. As we just saw, Buffett has compounded at roughly 22% annually, a third as much. Simons’ net worth, as I write, is $21 billion. He is—and I know how ridiculous this sounds given the numbers we’re dealing with—75% less rich than Buffett.

Why the difference, if Simons is such a better investor? Because Simons did not find his investment stride until he was 50 years old

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Savings in the bank that earn 0% interest might actually generate an extraordinary return if they give you the flexibility to take a job with a lower salary but more purpose, or wait for investment opportunities that come when those without flexibility turn desperate.

If you have flexibility you can wait for good opportunities, both in your career and for your investments. You’ll have a better chance of being able to learn a new skill when it’s necessary. You’ll feel less urgency to chase competitors who can do things you can’t, and have more leeway to find your passion and your niche at your own pace. You can find a new routine, a slower pace, and think about life with a different set of assumptions. The ability to do those things when most others can’t is one of the few things that will set you apart in a world where intelligence is no longer a sustainable advantage

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

The idea is that you have to take risk to get ahead, but no risk that can wipe you out is ever worth taking. The odds are in your favor when playing Russian roulette. But the downside is not worth the potential upside. There is no margin of safety that can compensate for the risk.

Room for error does more than just widen the target around what you think might happen. It also helps protect you from things you’d never imagine, which can be the most troublesome events we face.

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Where debit meets credit – This debit card features credit card benefits

I came across an interesting startup called Point, which offers Point App and Point Card. Point App is a mobile wallet application from which you can apply for and manage your Point Card. Point Card is a debit card that offers benefits similar to those of a credit card. Benefits include 5x points on subscriptions such as Netflix, Spotify, Hulu and some others, 3x points on food delivery & ride share, 1x points on everything else, no foreign transaction fees and more. Instead of banking on your missing your payments, Point makes money from interchange fees which are a small percentage of your spend and a subscription fee. In order to use Point Card, a customer must pay $7/month or $5/month on an annual plan.

I think this card will be helpful to those who are conscious of their budget and interested in credit-card-like benefits. 47% of Americans carry credit card debt that amounts to $890 billion in total in Q1 2020. Failure to make payments on time results in a high interest which often comes in the range of 13% – 26%. Further inability to make payments repeatedly will put a revolving customer in a vicious cycle as in that case, compounding interests work against him or her. I work for a bank and a credit card issuer and let me tell you: we want you to be delinquent on your credit card debt. It’s a significant source of revenue and profit to issuers. With Point Card, the risk of delinquency is taken away as you can only spend money that you actually have. There is no temptation to make impulsive purchases on credit and break personal budget.

Point Card may not make sense for every one, though. I mean, if you are willing to pay a few bucks a month to have a cool-looking debit card and some nice features that mimic those of Apple Card, by all means. If you want to break even on a $5/month annual subscription at 1x points redemption rate, you’ll need to spend at least $500/month for this investment to make sense financially. If a family puts all utilities, car insurance and subscriptions, and other discretionary expenses on a Point Card, it can easily exceed $500 while the family can avoid the risk of delinquency.

I do think it’s an interesting concept that can appeal to a group of consumers. As a fan of personal finance, I want to see more folks in control of their own finance and stay away from the temptation from card issuers. I hope that as Point scales and continues to be nimble without a big budget in marketing as well as physical branches, it can offer more rewards to attract more customers.

Book review: The Wealthy Barber Returns

I saw a hedge fund manager recommend this book on Twitter, but accidentally grabbed the newer version instead of the recommended original. Nonetheless, here is my review. This short and easy-to-read book which is a compliment contains some common sense regarding personal finance. If you just begin to dip into the personal finance space, this book can be a good place to start, though I am sure there are better books. If you want to enrich your personal finance knowledge, there may be some ideas from the book that can be interesting. If you live in Canada, this book may even be more interesting as the author spent a significant part of the book discussing matters specific to the Canadian systems only.

The two main take-away points from this book, if that’s all you will leave it with, are this: 1/ live below your means and 2/ save early.

There is no surer way to approach financial independence than keeping your expenses below your income. In fact, the lower your expense is than your income, the better. It’s quite common to see folks who spend most or all of their income every month. Those are the paycheck-to-paycheck folks. When life throws them a twist as it very often goes, there will be no saving for a rainy day. If you look at the current pandemic (as it is still going on), not only is it not a rainy day, it is a freaking storm. People lose jobs and health insurance. Income is gone, but bills are still there to pay. In fact, 40% of Americans are reported not to have $400 for an emergency. That’s so crazy to think about. Even though the idea of living below your means is so laughably obvious, the reality clearly shows that it is a foreign concept to many.

The book emphasizes a key trick in making sure that you save money every month: save before you spend the rest, not spend and save the rest. Say, if you earn $3,000 a month, put 10-20% somewhere as savings and spend the rest. That approach allows you to save at least $300 a month. After two months, at least you can say that you are NOT among people who don’t have $400 in cash for an emergency. On the other hand, if you decide to save whatever is left after the first 28-29 days of the month, you likely won’t save much. As human beings, we are terrible in self-control.

“You don’t have to become a miser and live a life of austerity. You just have to exercise a little discipline and a little common sense. You’re probably wondering, “If that’s the case, why aren’t there more successful savers? Why haven’t we all been able to slightly reduce our spending?” The blunt answer? A little discipline and a little common sense are a little more than most of us can muster.”

Excerpt From: David Chilton. “The Wealthy Barber Returns.” Apple Books.

The second key take-away is that you should start saving early. The earlier and more consistent you save, the better. Instead of typing out why you should, I’ll let these charts from JP Morgan demonstrate the power of compounding interest, which is usually called “the 8th wonder of the world”

chart jp morgan retirement
Source: Business Insider

As you can see, the earlier and longer you save, the more compounding interest works in your favor. To reach $1 million at retirement, you can either save $361 monthly, starting at the age of 20, or save $1,400+ a month at the age of 40. Which one do you feel is more daunting? Especially given the more responsibilities and expenses that come with being older? Exactly!

There are other topics addressed in the book such as:

  • If someone asks you to do something that involves spending, practice saying “I can’t afford it”
  • When you should take out a line of credit
  • What is good debt and what is bad debt?
  • A basic primer on index funds and why you should strongly consider them as an investment vehicle

Overall, I think the book does offer value. I can see that it’s even more helpful to teenagers who are interested in building wealth and strategizing their life to financial independence and happier life. To those who may argue that saving fir the future will come at the expense of today’s sacrifice and the enjoyment of life, here is what the book argues, which I agree with

One of the most damaging misconceptions in personal finance is that saving for the future requires sacrifices today that lessen people’s enjoyment of life. Surprisingly, it’s quite the opposite! People who live within their means tend to be happier and less stressed. That’s true not only for the obvious reason — they know their financial futures look bright — but also because they’re not consumed with consumption. They’re not in the emotionally and financially draining race to acquire the most stuff they possibly can. A race that, it should be noted, has no finish line and thus no winner.

Excerpt From: David Chilton. “The Wealthy Barber Returns.” Apple Books.

Buying or renting a place

Let me save you the suspense. This answer to this question is pretty much down to each individual case. It differs from one person to the next. Nonetheless, I still think it’s legitimate to put on the table some arguments. Personally, I prefer renting.

It’s not “building or increasing immediately your equity”

Some of my friends, after settling on the decision to become a home owner, told me that they wanted to start building equity. However, what exactly does “building equity” mean? In the trading world, equity means stocks. In the accounting world, it’s the difference between total assets and total liabilities. Hence, equity in the personal finance world simply refers to the difference between one’s assets and one’s liabilities.

Let’s say if you have $100k in cash and want to get $300k in mortgage, in addition to $50k from your own money, to buy a $350k house. Excluding all the administrative expenses related to buying a house, the moment you buy that house, your equity doesn’t increase immediately. Your original equity was $100k since that was what you had in assets and no liabilities. After you buy a house with the mortgage loan and half of your cash, the house and the leftover money will push your asset to $400k, but your liabilities will also increase to $300. The notion that your “equity” is built or increased immediately upon the closing of a house is simply false in my opinion.

“It’s a high return investment”

Yes it is, but with caveats. When you invest in stocks, unless you are day-trading which may involve fees and continuous monitoring, there is no other expenses involved. Personally, I spend time on researching which stocks I like and want to buy. Afterwards, it’s a case of “sitting on my ass and letting my return compound”. I don’t spend a single dollar on anything else. To become a home owner; on the other hand, can involve a lot of other expenses such as home improvement, broker fees, house evaluation fees, mortgage payments, maintenance, housing taxes and so on. One of my friends was told by a seller that she would have to pay to repair the street leading to the house in question after closing the deal. It would have added another $20,000 to the equation.

Similar to the fact that noone can tell with certainty whether a stock will go up or down, noone can predict exactly when to sell a house to get the biggest profit. Take this current crisis as an example. The housing market was great before February. After the crisis hit, it is in shambles. It is an opportunity for those who can afford to buy as houses are cheaper, but it’s an absolute disaster for those who were poised to sell as the prices won’t be as good any more. The point is that owning a house comes with a lot of expenses that can make what seems to be theoretically a sound investment no longer sound. Of course, if all works out well, investors can reap out much bigger rewards from a house than from owning stocks. One has to be aware that there will likely be numerous expenses involved and that a big payout is not guaranteed.

An unpredictable event can turn your investment on its head

Ask yourself this question: would you borrow to invest in a stock that you don’t know will increase in prices?

If the answer is no, then put some more thoughts on whether it’s a good idea to borrow money to invest in a house. Institutions have teams working 8-10 hours a day to come up with models that can help the institutions make as much money as possible with their assets. Do you think car dealerships put you on a payment plan with lower downpayment out of the goodness of their hearts? Do you think banks give you a mortgage simply because you are a good and nice person? No, they do it because they believe that they can have a reasonable return on investment. If you default on the payments, your car or house or your other assets can be collaterals. If you think you own a house, try to default on your 29th or 30th year of your mortgage and see who actually owns the house. Covid-19 put many out of their jobs and stripped their ability to pay mortgages. Nobody could foresee this pandemic. How many can actually factor this kind of crisis in their investment plan?

The way I look at the idea of owning a house is that I’d have to borrow money at a significant interest (compounding), endure a lot of expenses in a foreseeable future and still have no desirable outcome guaranteed. It’s an awful lot to ask. That’s why I prefer renting and investing money into stocks which offer a much better degree of liquidity, a much lower level of maintenance and still reasonable odds of return on investment. Of course, when there is an emotional reason to invest in a house, there is no counter argument as it’s purely personal. From purely a logical investment perspective, my choice is rent, for the time being.

Pandemic creates an inflection point

There is no need to talk about the havoc that this pandemic has brought on to our society. Everybody in the world should all feel it now. Terrible as it is, the pandemic presents an opportunity for us to look at the issues that we overlook in normal times

Paid sick leave

The US is one of the only few, if not the only country, where citizens don’t get paid sick leave. When there is a risk of a wide-spreading pandemic, the lack of this benefit forces workers to go to work even though they may be sick; which increases the threat of a spread. After this catastrophe blows over, perhaps it is time for us to bring this issue to the national spotlight and to pressure lawmakers into taking actions

Stock buybacks and corporate bailouts

The fact that corporations are asking for a big bailout after years of continuous stock repurchases and lucrative executive compensation is inexcusable and intolerable. While there is a case to be made that bailouts chop off a body part to save the body and corporations should be forced to return the money once healthy again, it doesn’t make it right the fact that tax payers’ money is used to bail out companies whose failure to prepare for a macroeconomic risk is the executives’.

Regulations over gig economy

For months, gig economy companies such as Lyft and Uber have fought regulations that would require them to treat workers as employees. What that means is that workers would be entitled to healthcare insurance, paid leave and other benefits that white-collar workers usually enjoy. Some folks I saw on Twitter, most from Silicon Valley, even blasted the regulations. However, a study by The Hustle may change perspectives on this. According to The Hustle, 57% of the surveyed drivers would still drive because that’s the only way to make ends meet. Some are not even making enough to pay for their rented vehicle. Furthermore, the lack of health insurance means that they and their family are vulnerable than ever. In light of this crisis and the impact on gig economy workers, is asking for a well-designed regulation to protect workers too much to ask?

Source: The Hustle

Healthcare system

The lack of tests in the US, compared to what is going on in other countries, is seriously shocking. Ask any American and it’s very likely that you will get told that the US has the most advanced healthcare system in the world. That’s true…for rich people and for very sophisticated treatments. However, when it comes to healthcare for ordinary folks and normal ailments, there is a lot to be desired for in the US. The country had disappointingly managed to fail to deliver a universal healthcare solution even before the pandemic broke. Now, the case cannot be made even more pressing. Recently, it’s reported that a woman was hit with a $35,000 bill for COVID-19 treatments and tests. How was that acceptable? It could happen and bankrupt any of the middle class Americans, or, worse, paycheck-to-paycheck folks.

Work from home

This one is polarizing. Proponents of WFH must be ecstatic to make their case when essentially everybody is required to work remotely now. On the other hand, some will experience cabin-fever, frustration and the drop in productivity. Personally, I prefer going to the office. I prefer meeting my colleagues face-to-face and have a setting that helps me focus on my work more than my comfortable home.

Furthermore, WFH presents an opportunity to test a company’s infrastructure. For most of last week, my colleagues and I experienced a laggy and slow connection. Even though home internet bandwidth can contribute to the issue, it’s undoubtedly our company’s network being not set up for a spike in traffic. Additionally, mass remote working can change how managers keep staff productive and keep track of their work.

Personal finance and change in lifestyle

Many of us now face, if you haven’t already, layoff or a drop in salary as companies are downsizing to survive the pandemic. Income may dry up, but the bills will still be there. Without a fund for a rainy day like we are going through, a financial struggle or bankruptcy is likely. The 11-year bull market since the 2009 crisis which many didn’t experience makes folks become complacent. After this COVID-19 disaster, it’s a great time to ponder hard decisions and establish sensible personal finance practices.

This is a scary and confusing time. But what happens in the next few months will be very interesting as decisions are to be made.

Soaring student debt

The Walls Street Journal had an unbelievable and scary article on the state of student debt in this country

A record $89.2 billion of student loans was in default at the end of June, New York Federal Reserve data show. Of the $1.48 trillion outstanding, 11%, or $160 billion, was at least 90 days behind on repayments—and the true rate is likely double that, because only half the loans are currently in repayment.

Source: WSJ
Source: WSJ

It never stops amazing me how students in this country can get into so much debt by trying to acquire education and the means to make ends meet. A high school friend of mine has a 6-figure student debt with monthly INTEREST payment of $500. I personally know people from my university in Omaha who accumulated debt and struggle to find jobs. Jobs may wait to meet us, but the bills and interest usually can’t wait to break us.

There is a proposal from some politicians to wipe out student debt. It’s impractical and what problem does it solve? The debt will fast pile up again for the next generations. I don’t think anything will change unless there are solutions to the issues:

  • Ridiculously expensive tuition fees for degrees that fast decrease in value
  • Laughable expensive books that benefit no-one but publishers and professors who work with them
  • Lack of knowledge on personal finance by students

Of course, the reality is highly complicated. Yet, I believe it would be hard to think of a worse scenario than what we currently face. Real solutions should be in place, yet the graph above shows that none has been since 2004. Else, the amount would have gone down instead of going up. If other countries such as those in Nordic countries, France or Germany or many other in Europe can get it done, why can’t the US?