According to a recent Deloitte Survey only 21% if the overall workforce (this includes people who are working for themselves) are passionate about their jobs. Which means the rest of the 79% of us are toiling in a job that we no longer love for one reason or the other.  Why is that?  Why are we unable to break the shackles and go after what makes us happy?

I’ve been trying to understand why recently.  I used to love my job but it doesn’t inspire me anymore.  Between constant traveling, unnecessary bureaucracy and escalating micro-management (reaching the level of almost timed bathroom breaks!!), I want out.  Yet I still hang on for some unknown reason.  After some serious soul searching and research I’ve identified 7 reasons why we behave in this irrational manner.

Why is it difficult to quit/change my job and pursue something else?

• Fear of failure : I have written about this before and this is the millstone around my neck.  By nature, I prefer a safe and sure thing over a potentially higher but uncertain more riskier path. Especially with the virality of social media, I fear,  my failures will be more open than ever.

• Premature optimization : I have a good life, or in geek-speak I’m at a “local maxima”. I earn a good amount of money, have an above average life and don’t feel deprived of anything. It is a great life that a lot of people want. So I continue to optimize around this point.  But if I’m  not happy, I should be heading out to find that “global maximum”.

Personally, I have delayed changing jobs by saying that I will do it as soon as I get a promotion, that will make it easier for me to find another job or I have stayed this long let me stay until my 401k vests or my next bonus,… you get the point. We try to squeeze all the small wins before seeing the big picture.

• I am a well trained rat : In 1948, B.F.Skinner, a psychologist designed a famous experiment to study operant conditioning – it means roughly changing of behavior by the use of reinforcement which is given after the desired response.  Skinner identified three types of responses or operants that can follow behaviour – neutral, reinforcers (to strengthen behavior) and punishers (to weaken behavior). In his experiment, one group of rats were given a food pellet after pressing the lever a random number of times, another group of rats received food pellets by pressing the level a fixed amount of time. When they stopped giving the rats food pellets, the fixed schedule rats stopped immediately, but the random schedule rats kept trying.

We are the same way. We would like to think that every unexpected bonus we get or spontaneous praise is due to our performance. But the business folks are trained to give us these “pellets”. So even after we stop liking the job we keep going, we are already conditioned.

• Quitting is actually doing something : This reason triggered the title of this post.  This might be a little counter intuitive, but staying the course is passive. Quitting/changing my job means I actually have to do something.
• It is a big leap of faith : To do my current job, I have been training all my life. I know I am good at it. I know what is expected of me in my job. But going on my own and starting something new from the scratch requires a lot of faith and confidence in myself.
• Winners never quit : It feels like if I quit my job, I am quitting. So what if I don’t like it anymore? Can’t I work even more efficiently and finish the parts of my job that I don’t like and spend more time doing the things that I used to like? Winners never quit right? When the going gets tough, the tough get going, right?
• Confusing passion with escapism : This goes along with the winners never quit thought. Am I quitting because I have passion for something else or do I just want to get out of the current difficult situation? If I quit because of escapism my new venture will never be successful as I will lack the passion to take it to its maximum potential. Am I absolutely sure that I am not quitting for escapism?

It is easier for some people to take the entrepreneur path than others. It also depends on how much I have to lose. Personally, I wrestle with two arguments:

1. When I think about how much I am earning now, how much its taken to get to my current career level and how difficult it is to get back  my job if I take a break, I fear of losing everything.
2. On the other hand, I have nothing to lose and I am in the ideal life stage because we don’t have kids yet, we don’t have any debt or a mortgage, I have a wonderful family who will support me no matter what, my husband works so I don’t have the pressure to bring money from day 1 and I am also fortunate to have insurance through my husband’s job.  This makes me think I’m a coward for not going for it.

I always thought that quitting would be easy, however, throwing in the towel, even on a dead-end job is quite difficult. It always seems that if we could stay just a bit longer then the time would be perfect.

I understand that the only way to create the future that I want is to start living it right now, not waiting for it to present itself on a golden platter, but man, its tough making that call.

Can money buy love? Does money influence your feelings for someone? Does money influence your dating/marriage decision at all?

Before you say “no” and dismiss my question as shallow, think about this - Would you marry someone who has $5000 in debt? How about $100,000? What if the $100,000 was for a law school student loan?

I wouldn’t have fallen in love with someone who had $100,000 of consumer debt. Lets ignore debt for a moment and think about income. If you had to choose between two guys, one making $300,000 per year and average looking, the other earning $30,000 per year but uber-hot, who would you choose?

When generally asked whether money influences their dating/marriage decision, most of us immediately say “no”. We immediately think about all the reality shows along the lines of  ”The real housewives of [whatever city]” where women trade beauty for money.

Words like gold diggers, shallow and superficial rushes to our mind and we can’t wait to prove we are not one of them. Even discussing money during dating is considered taboo. In fact, polls show that half the couples getting married don’t discuss money before getting married.

But really, do you think money has absolutely no influence on who we choose as a partner? No. It has a lot of influence. What is the point in not talking about the big elephant in the room and then regretting it come time of the divorce?

Can money buy love? We care about money but hide it

Coming back to the question of a hot guy who earns $30,000 vs an average looking guy who earns $300,000, all else being equal most people would choose the $300,000 guy. Don’t you think? Studies prove we care about money but we don’t want to admit it, because it gets a bad reputation.

This graph is from okcupid. As you can see, the number of messages men get increases in proportion with their income.

Can money buy love? Yes, but not directly

It comes down to the character of the partner who is in debt.

• Is the debt or low wage due to a temporary condition such as still being in college or a starter job?
• Does your partner show the emotional maturity & personal responsibility for improvement in the long term?

If the above is true, the money situation doesn’t matter.  You don’t want to be the only person saddled with all the financial and emotional responsibility.  That will only cause resentment later.

We need to distinguish the influence of money for money’s sake vs the influence of money on other aspects of life. If that makes me shallow, so be it. I will want to address this for my own peace of mind.

Can money buy love : For both men & women?

Men, go for beauty, women, money. This has been studied a lot and found to be true. Cognitive Scientist Peter Todd and his colleagues in their National Academy of Sciences study found that men go for beauty and women choose wealth and security, they add, ”Evolutionary theories in psychology suggest that men and women should trade off different traits in each other, and when we look at the actual mate choices people make, this is what we find evidence for.”

According to Gian Gonzaga, director of research at eHarmony, when it comes to looks and income, women tend to value financial resources more, and men tend to value youth, beauty and reproductive capacity more.

I don’t think it is that women want more money, but it is the indirect comforts that money brings like security and stability that makes men who earn more, attractive.

To further prove the point, research from the University of Abertay Dundee in Scotland suggests that women’s preferences do change as their income increases. In what these psychologists call “the Clooney effect”—invoking sexy, gray-haired actor George Clooney—when a woman can support herself, instinctive preferences for security become less important while physical attractiveness becomes more important and his age increases.

Addressing the elephant in the room

29% of U.S. adults aged 25 to 55 who are in a committed relationship say they have been dishonest with their partner about spending habits.   If we are brutally honest, money is a big part of any relationship. Some monetary aspects to consider:

• Money personality : Are you a spender or a saver? Knowing each other’s spending habits and money personality will help with an honest relationship.
• Debt, assets and liability : After being financially responsible all your life, how would you feel if you find out after marriage that your spouse has $25000 credit card debt that he accumulated because he has a gambling problem?
• Relationship with money : What if you are carrying psycological baggage from a previous marriage that makes you suspicious of your partner’s financial behavior.  That can poison an otherwise great relationship.
• Future plans : Before entering a long term relationship ensure that you both have an understanding of each other’s future financial goals and personal convictions (like charitable giving).

Here is a post that I hope no one ever has to use.

You know when you realize what is going to happen a second before it actually happens? I had one of those experiences a couple of weeks back.

I travel a lot for work. A couple of weeks ago I was driving on the interstate when a car cut right in front of me. Panicking I practically stood on the brakes and changed lanes in a hurry. I know he was going to hit either me or the car in front of me. And he did. He rear ended the car in front of me. Luckily I didn’t have anyone behind me, so I was able to change lanes in time, but my heart was beating 10x faster for quite some time after that.

I still had a 2 hr. drive after this incident, so I got thinking. If he had hit me, what would I have done? Was I prepared? Nope. It took me 1 hr to calm down even though I was not in the accident. If he had hit me, I would have freaked out, ordered my husband to get there as soon as possible and just cried.

Looking back, that sounds like a horrible way to handle an already horrible situation. Yes, I realize I have to be prepared. Since then I have been collecting resources and making a checklist on what I should have before an accident and what to do if I do get into an accident.

Car accident emergency preparedness kit

No one wants to prepare for an accident, but if I do get into a car crash I now know that I have absolutely nothing to help me. The car accident emergency kit is something I am putting together that will help me survive until I get some help.

Here are the basic stuff that goes in a car accident emergency preparedness kit

• Disposable camera
• Paper/Pen
• Medical information card (for the emergency personnel to check in case you have a medical condition/allergy)
• Emergency phone numbers
• First aid kit
• Cell phone (and a charger)
• Mylar blankets (I had a flat tire recently and had to wait for AAA. The car gets freaking cold even if I sit inside. I was freezing in the middle of nowhere)
• Multi purpose tool or something Swiss army type
• Flash light
• A few granola bars (esp. if you are diabetic or have a blood sugar condition, you don’t want to get hungry in this situation)
• A bottle of water
• Raincoat
• A few trash bags (this can be used as a raincoat or a blanket to sit on, if needed)
• Jumper cables
• Small road cones and emergency flares
• Very basic car repair kit
• 2 copies of accident report forms (details below)
• Local police number (faster if the accident is local)
• Car insurance and medical insurance information

I don’t want these to take the entire space of the car trunk. All these things should fit in a small backpack. Keep them in the back seat (I am not sure if back seat is the best place, my thinking is, if I get rear ended the trunk will be inaccessible.)

Car accident report form

I poked around my insurance company’s website and printed out the information form that they had. I also checked other insurance companies and compiled my own car accident report form. The form has 4 sets of information

• Accident information (road condition, damage)
• Witness information (name and numbers of any witness, name and badge id of the police officer who took your report)
• Other party information (the other party’s name, contact information, insurance information)
• Checklist of things to do after the accident, as a reminder.

You can download the report form here – Car accident report form or click on the image below. Make 2 copies of this and keep it along with your car accident emergency preparedness kit.

What to do after a car accident? – A checklist

I have this checklist of things to do after a car accident. Because if I am involved in a car crash I won’t think straight and a checklist to remind me of what all I should be doing will be a great help.

• Remain calm : Knowing me, this is the exact opposite of what I would do. But that won’t do me any good. It is better to remain calm and check to make sure no one needs immediate medical attention.
• Turn on the hazards lights.
• (If it is safe to do so) Move away from traffic : If the car is not in an operable condition, it would be safe to sit inside the car (unless the car is on fire or it is not safe to stay inside the car) until help arrives.
• Call for help : As soon as possible, reach for your cell phone and call 911 or your local police. Do not leave until the police arrives. Stay at the scene and answer the questions from the police.
• Do not admit anything. Do not say it was your fault or anything like that. Let the police and insurance companies do their job and come to a conclusion. You might not know the exact conditions in your state of shock. You don’t want to say something that you’ll regret later.
• Get the report : Don’t forget to get a copy of the police report.
• Do not say you “are fine”.  This is not the time for medical self diagnosis. You don’t know what is wrong (or not wrong) at this point. Some injuries might not be obvious immediately, which brings us to the next item -
• Start a pain diary : After the accident record any weird pain/concerns and share them with the medical professional to make sure to avoid any lasting damage.
• Photograph (and if needed video graph) and document as much as you can : Fill out the car accident report sheet. Take as many photos of your car and the other car, skid marks, record information about traffic, road conditions, weather, etc.
• If possible, have a written account of the conversation. It might be useful to record your version of the accident and keep it with you.
• Seek medical help : If you didn’t need an ambulance and didn’t have any visible injuries, still seek medical help. Get a general check up, esp. neck, shoulders and back. The sooner you discover any problems the better are the chances for a full recovery.
• Exchange insurance information : Get the other driver’s insurance information and contact information.
• Call your insurance company : Know the reporting period (check that information before it is needed) and report it as soon as possible, even if the other driver insists on settling.
• Do not sign anything : Any waiver or any document before you have taken some time after the accident to clear your mind and read over the document completely.
• Hug your loved ones and say that you love them : People are precious. I am thankful to be alive and have people who love me.

When thinking about starting to save for retirement, the first question most of the young investors have is “Should I invest in traditional 401k or a ROTH 401k“?  There are many variation of the question – ” Should I continue investing in traditional 401k even after the company match or start a ROTH IRA”? Or “Should I invest in traditional IRA or ROTH IRA”? All of these boils down to – is pretax retirement savings more lucrative or posttax savings? Which is better for the bottom line?

Standard advice on 401k vs ROTH 401k/IRA

Most people’s blanket recommendation is to go for the ROTH because you will never be taxed again.  Is ROTH always the better option? The advice inherently assumes:

• The person is not earning much and therefore is paying less in taxes now.
• The tax code is definitely going to change and it will only go up.
• Everyone will have tons and tons of money in their nest egg, so the taxes will be high when they retire.

But the tax advantage of the traditional 401k is too substantial to ignore. And no personal finance advice is one-size-fits-all, so let’s see if ROTH IRA is really the better deal for an average young investor.

401k vs ROTH : The tale of two portfolios

The traditional 401k portfolios grew to much more than the Roth 401k portfolio because we put more money into it, thanks to the tax deduction upfront.

401k vs ROTH withdrawal (pretax vs posttax play-outs)

(the withdrawal amount is per year and same for every year because there is no growth)

Scenario #2 : Money is moved from growth funds to a bond/CD fund. So it will grow at a slower, 3% rate. Every year the person withdraws an amount equivalent to [Whatever is left over in the portfolio]/# of years left in retirement.

As you can see the traditional still gives better retirement income even after taxes.

BUT, I have made a lot of assumptions about the tax rates. I have assumed it will be the same (or very similar) to today’s rate. The #1 argument for ROTH 401k/IRA is that the taxes will go up. There is no way to prove or disprove this claim, which brings us to -

Gamble with taxes

We cannot predict the future tax rates. The only thing we have is the history.  Here is the historical tax rates for all the income groups -

As you can see the highest bracket has changed a LOT in the last 50 years, but the rest were relatively stable, esp. the highest earning 20% and below. So it doesn’t look like the statement that “taxes will go up a lot” is always true.

Taxes can go up, in which case people who had a ROTH heavy portfolio will do better, or it can stay the same/go down, in which case the traditional portfolio would give more retirement income. 

Don’t forget state taxes. We live in CA right now and the state tax rate is up to 9.3%. During retirement, I can control where I live as I don’t have to live in a place where I could find easy employment. So if I move to Washington state or Texas, I can get a 9% savings right there.

Our approach : Hybrid

So why do I have a ROTH IRA in addition to a regular IRA?

• ROTH gives me liquidity to take my  contribution out in case I need it. In fact, I opened a ROTH IRA just to keep my  emergency fund in (read about it here – ROTH IRA for an emergency fund ).
• No Required Minimum Distribution.
• Pass  it on without having our beneficiaries worry about taxes.
• Your employer provided 401k might not be good.
• Finally, I like diversification.

So, Should you invest in 401k or ROTH IRA/401k?

There is a problem in the ROTH is always better advice. You will have to decide what is better for you. And that decision is not set in stone either. Each year evaluate what your situation is for that year.

• If you are going to take an year off, will have very little income and travel the world, contribute to ROTH that year. You could even rollover your Traditional 401(K) to a Roth IRA that year and pay the low income tax rate.
• For someone who is looking to max out their 401(k), they essentially can put away more money in a tax efficient account by investing in a Roth 401(k). Even though the limit is the same, doesn’t mean the value is the same because Roth 401(k) contributions are made with after-tax dollars.
• If you are just little over to fall into a lower tax bracket, you can contribute enough in traditional to let you fall in the lower bracket and then contribute to a ROTH IRA.
• If your income is a over the limit for some deductions, contribute to traditional IRA/401k to bring it down to the level where you can take the deduction.

The worst thing you can do is nothing. So don’t let this question stop you from investing. Even if you picked one randomly, you will do better than not saving for retirement. Both the ROTH and the traditional 401k/IRA are great investment vehicles. Use my spreadsheet, do the math, pick what works for you best.

What do you currently do? Do you maximize the pre-tax potential or want to be tax free during retire, so go all the way with posttax retirement plans or a mix of both? 

“How come there are no ugly CEOs?” I asked my husband as I flipped through the latest Forbes magazine.

“What do you mean there are no ugly CEOs? Have you seen …”.  I am going to leave out the names he mentioned for obvious reasons. It is the hard work and intelligence that matters, not how beauty. He answered.

I thought he was being naive. So I decided to ask you, my readers. You agreed with me via the poll I have been conducting for the last 10 days.

Beauty and Success : Poll results

The results are overwhelmingly biased towards beauty. 84% of the 180 people who took the poll said beauty affects a person’s success, wealth or power in life.

Consider this -

You have two qualified candidates for a job where you are the hiring manager. Both candidates have the same skills, both of them did very well in the interview. The only difference is, one of them is fat and ugly, the other candidate is beautiful. In an ideal scenario, beauty won’t even come into the picture.

After their skills match, you will move on to other soft skills. Will they fit the team? Who will work better with other members of the team? But ideal scenarios are called ideal for a reason, most of the time, the beautiful person will end up bagging the job.

Is it discrimination? Yes. Did the hiring manager purposely discriminate? Mostly probably not. Unless the manager really hired the person because he/she was personally attracted to the candidate, in that case one of them is going to get fired soon enough, it is a moot point to discuss that case. So lets come back to the unintentional favoritism shown toward the more beautiful candidate.

In his/her mind the manager might have equated a beautiful smile to a pleasant demeanor. Other coworkers who spoke to the candidate might have seen that and felt that the person would work well with the team.

So how much of an effect does beauty have on success, happiness and earning potential?

Beauty and Success : What the scientific community thinks?

This is such a socially interesting topic, so as you might expect there have been plenty of studies done on this. Looks like beautiful people do have it easier, much easier.

• Tall people get paid more. Not just in management and sales positions, but even in less social positions like programming and engineering. This is applicable to both men and women. The height effect didn’t stop with pay, but influenced (perceived) work performance too. In an analysis done by Prof. Judge of University of Florida, supervisors felt tall workers were more effective employees.

• Generally, physically attractive people earn more money than average looking folks. And very plain looking people earn less than average.
• Thin women and middle-of-the-scale men are paid higher than their obese counterparts.
• Attractive people are in general happier.
• A Chinese study showed that husbands of attractive women earn more than the husbands of unappealing women, asserting that women have traditionally traded looks for economic support in a marriage.

• We assume what is beautiful is good, this is called the “Halo effect” and has been studied to death (and proved right). We tend to think beautiful people are funny, friendly, interesting, intelligent and generally much warmer even though we don’t know anything about them past this first superficial evaluation.
• Attractive people are more desired as life partners.
• Good looking people make better persuaders.
• Various studies show that attractive people have an easier time getting loans, receive milder prison sentences and higher damages in simulated legal proceedings.

I do not think beauty makes everything easier. For example, I can easily see genuine accomplishments of a beautiful & intelligent woman getting dismissed as something she would have gotten via her looks instead of her skills. But the influence of beauty in work and life is too strong to ignore.

Now that I have read all this studies and researched this subject, I should go back and correct my statement that – Attractiveness influences success instead of beautiful people have it easier.

Beauty and Success : What do I think?

• Beauty does have economical value. It is not because people are shallow (some are, but I am talking about the general population, in which case, most are not). I think it stems from the simple fact that we are genetically hard-wired into preferring attractive (especially symmetrical) looks. This way of choosing a mate proved very effective in figuring out whether the partner we are seeking is fertile or trustworthy. In fact, there is a saying in my home country that curvy women are more fertile. We evolved using cues like this to ease our survival and we are now sticking with it. We might have grown a lot, we are much more intelligent and we might have thousands of other traits that could be desirable in someone.  Even so, we tend to use the age old cue of beautiful is always good.
• Confidence : More than the physical beauty, I think what influences others is the confidence that comes along with beauty. Attractive people are more confident and confidence is commonly used as a measure of competence. So it is not a direct relation, but a strong relation nonetheless.
• Presentation : Dress for success. I don’t wear makeup, I rarely wear skirts, and I don’t even own heels. At the same time, I know that to move to a director level position, I need to both be confident and project confidence, and part of that is a “professional” appearance.
• Fitting : Our fashion industry caters to beautiful people. A very fit girl wearing slacks and a button down blouse looks neat, sharp and professional, where as the same slacks and blouse in a plus size worn by a fat girl looks very sloppy. The clothes are cut out to look flattering on a fit person. It is very important to find clothes that fit.
• Life is a competition : Height and attractiveness may not be deciding factors, but they certainly are *influencing* factors, even conscious ones. Life is and always will be a competition. Why not leverage every possible advantage you have? Keep in shape, eat right, be well-dressed and well-groomed. Even if you’re not a perfect ’10′ (whatever that means) why handicap yourself if you don’t need to? Presentation is key.
• Self-awareness of beauty :  A beautiful person has experienced being the cynosure of many eyes.  That naturally feeds into the confidence they feel about the image they project.
• Social awkwardness : If you were over weight as a child you were the butt of many jokes and taunts.  No matter how much you try to let it bounce off you, it does affect your psyche and make you socially awkward.

So beauty absolutely makes it easier for people to succeed. 

Should we resent attractive people? Absolutely not. They have their own price to pay. What we could do, is to do everything in our control to prove our worth. I am not an attractive person and I don’t dress fashionably either. As a result, a lot of times, I feel awkward and want to just hide myself in a group. I should learn to change that. I could, for instance,

• Dress nicely and find fitting clothes.
• I know I don’t have much confidence, so I am planning on re-starting my Toastmasters club. Anything I could do to boost my confidence can only be good for my career.
• Know my strengths and know how to highlight them. Sometimes, it doesn’t work to be humble. I should learn to speak up.

Source : Fast Company

I think it comes down to using your competitive edge, whether it is beauty, smarts or both.

What do you think? Do you agree that beauty has an economical value? How much influence do you think it has? Should we be concerned or do something about it? May be “tax the beautiful” ?