Explaining Southern California's economy

Invest with James: Spreadsheets for kids — for real

Matthew DeBord

James can't wait to get his hands on a spreadsheet. Right after he gets done with Angry Birds.

Another great post from Fred Wilson, a successful venture capitalist and partner at Union Square Ventures in New York. This one has nothing to do with startups or high-risk/high-reward finance and any of the nice juicy VC stuff. This one is all about...budgets. Budgets...for kids! Here's Fred:

For a long time, probably the first fifteen years of our life together, [my wife and I] lived paycheck to paycheck. Sometimes it was two paychecks, other times it was one. For a brief period as I was starting Flatiron, it was none. I got shingles that year.

As our income went up and down, our spending had to do the same. I created "fredsheets" that we looked over, debated, discussed, and then adjusted and signed off on. Then we created budgets so that each of us would live to these spending plans. It worked. We always made it to the next paycheck. Many times by the skin of our teeth.

In the second fifteen years of our life together, we've had the pleasure of living in a different financial situation. But we still use budgets. We created budgets for our kids which they live up to. We created budgets for our real estate projects, our angel investing, art collecting, and so on and so forth.

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How the Ivy League brought us the financial crisis

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Robert Spencer/Getty Images

Graduating Harvard University students attend commencement ceremonies in Cambridge, Massachusetts. Elite colleges like Harvard have steadily increased their efforts to admit low-income students in recent years.

Ezra Klein has an interesting but also exasperating piece at Bloomberg View about how the Ivy League continues to send graduates into high finance, law, and consulting because an Ivy League education doesn't prepare those students to actually do anything with their lives.

I'm not kidding. 

Let's allow Klein to present the case in his own words:

Wall Street -- like a few other professions, including law, management consulting and Teach for America -- is taking advantage of the weakness of liberal arts education.

For many kids, college represents an end goal. Once you get into a good college, you’ve made it, and everyone stops worrying about you. You’re encouraged to take classes in subjects like English literature and history and political science, all of which are fine and interesting, but none of which leave you with marketable skills [emphasis mine]. After a few years of study, you suddenly find it’s late in your junior year, or early in your senior year, and you have no skills pointing to the obvious next step.

What Wall Street figured out is that colleges are producing a large number of very smart, completely confused graduates. Kids who have ample mental horsepower, incredible work ethics and no idea what to do next. So the finance industry takes advantage of that confusion, attracting students who never intended to work in finance but don’t have any better ideas about where to go.

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Invest with James: It's barter time!

Invest with James-Halloween-MDB

Matthew DeBord

After Halloween, James (left) has discovered the value of a barter economy. Lucia (right) looks on in awe.

Welcome to the second installment of "Invest with James," in which we learn about money, personal finance, and investing through the budding example of my almost-six-year-old son, James, who loves money and all that is associated with it.

Yesterday was Halloween, a day that is like Christmas, the Fourth of July, Thanksgiving, and Rio Carnival all rolled into one for my children. My daughter, Lucia, plans for Halloween in an elaborate, multi-phased way, months in advance, that culminates in the Big Night. 

James had been more of a bystander. But this year, he discovered that there's something of value in Halloween. And that something is called "candy."

Of course, he knew about the candy. But this year, rather than just eat it, he recognized it for the first time as a medium of exchange and an opportunity to create a market. Yes, this was the first year that he sat down with his sister to trade the sugary haul.

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Invest with James: How to make money renting your shirts

Matthew DeBord

James has discovered the value of renting stuff he isn't using.

My almost-six-year-old son James is very interested in money. But unlike some kids who think about ways that they can do jobs for an allowance or create little businesses (Lemonade stands!) in order to get some cash to spend, James wants to divert wealth from other people without actually providing any real services. 

I think this makes him a member of the 1% that Occupy Wall Street is protesting, if not in assets then in philosophy.

His chief target is his older sister, Lucia, who has decided that she doesn't care about money and wants to live for her art.

James is obsessed with separating her from her money. He doesn't really know anyone else who has money he can get his hands on, so this makes sense. 

Money for both of them comes from the traditional sources of pre-adolescent capital: intermittent allowances, gifts, the Tooth Fairy. But James has more of it because he saves it all.

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