Another coffee day

How come his snoring never wakes HIM up?

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I hate it when DRIPS stop dripping

Darned stock name changes and stupid online accounts not notifying me and me not paying attention.  I really need to move EVERYTHING to Vanguard.  Stupid Charles Schwab.  Stupid Etrade.  Stupid me for not checking Charles Schwab when Etrade did the same thing to me months ago.

And darn it, tax protected retirement accounts shouldn’t realize losses– only taxed accounts should realize losses.  Why did I have Sun Microsystems in my account ANYWAY?  Where did that come from?

Eventually I will untangle all the investments my father did when I was too naive to take control myself.  Of course, that year will be a nightmare come tax time.

RBOC: Wednesday edition

  • I sure do hate it when spiders invade my shower.  Ok, spiders are good for the environment and all, what with eating the bugs and so on.  But picture this: you stumble out of bed.  It is first thing in the morning, so you are groggy and sleepy.  You haven’t put your contacts in yet, so you can’t see.  You are about to take a shower, so you are naked.  And THEN there are creepy crawlies in the bathtub and you can’t find anything to smash them with… you make noises like “aieee!”  and flail blindly and wildly.  After the adrenalin wears off, you want to crawl back under the covers.  What this place needs is a gecko.
  • I just finished Warbreaker, by Brandon Sanderson.  It’s a stand-alone fantasy novel with a really ingenious and unique magic system, which is explained smoothly and thoroughly without info-dumping.  It’s written pretty well.  I didn’t much like one of the main characters (Vivenna) and I kept wishing we could get back to hearing about Siri, but other people may not agree with me.  Around page 355, I was sure I had figured out something about the plot and I was proud of myself for figuring it out.  Around page 500, I changed my mind, and I thought that was even better.  It actually turned out to be neither one of the things I suspected (as I found out on page 588), and that made me admire the writing.  I stayed up too late reading it.  You should read it!  Yes, you.
  • On the other hand, you probably should not read Waking Beauty by Paul Witcover — not, that is, unless you really like weirdness.  It reads like the author put into a blender: fairy tales, the Bible, the climax from The Lord of the Rings, Dune, and a Whole Lot of Weird.  Once again, it suffers the fatal flaw of losing the narrative at the end, in favor of philosophizing about the nature of reality or something.  Warbreaker didn’t do this; I mean, it did feature a God-King, but even all the way to the end he was doing things, rather than reframing the whole world of the book.  Erg.  I’ve also seen reviews that said Waking Beauty is erotic, and I disagree.  It does mention sex, courtesans, etc., but it’s not sexy.  It’s not bad; just odd.
  • I have dreams that are, to me, interesting, but I try not to talk about them too much because I think hearing about other people’s dreams is boring.  Last week I had one about playing Trivial Pursuit with John Cleese.
  • I also have an idea for a memoir about one topic, not one I blog about.  *I* think it’s an interesting idea, anyway.  For now it shall remain a secret.  Besides, when do I have time to write a book?  Other people’s memoirs are often interesting to me though.
  • Is it weird if I wonder what my library records say about me?

Satisficing as a life philosophy

I use the term a lot.   The links to definitions of satisficing are the most popular links in the blog so far.  (Just barely beating out sexy library guy #2)

What does it mean?

Wikipedia says:  Satisficing “is a decision-making strategy that attempts to meet criteria for adequacy, rather than to identify an optimal solution.”  The study is mainstream enough now that it’s showing up in Intro Psych books.  Nifty.

Sometimes it is best to optimize.  Sometimes (ironically) satisficing is really the optimal way to make a decision.

The key is that most decisions take time to make and some even require additional effort on top of the time.

Say you’re an employer.  Obviously you want top employees.  But you may want the *best* employee when you’re trying to decide between 50 applicants/10 finalists for a CEO position.  You would want to optimize.  However, if you’re hiring for 5 retail positions and have 5000 applicants, you probably just want employees that meet a certain standard.  You’ll take the first 5 people who meet that standard and stop  interviewing after they’ve been chosen.  There may be more qualified or better candidates that never made it to the interview, but the additional benefit from those candidates (times the probability that they actually are better) would not outweigh the additional costs of searching.

There is a famous study looking at jam.  People bought more jam when they got to choose between 6 types of jam than when they had to choose between 24 types.  The theory is that when given too many choices, they became paralyzed and rather than optimizing, they made no choice at all.  They’re paralyzed by the paradox of choice.   Not so important when we’re talking about buying jam, but tremendously important when we’re trying to figure out insurance or retirement or any other number of difficult decisions.  Can you blame me for just going with the super expensive Ing guy who came to my door?

People who optimize tend to objectively make better choices.  BUT people who satisfice tend to be happier with their choices, even if they’re not optimal.  When you optimize you worry that you made the wrong choice, that there’s something better out there.  Your loss aversion goes into high gear.  When you satisfice, you know that there’s probably a better choice out there, but you are controlling the decision not to bother finding it.  AND you saved a bunch of time not looking for it.  You know your choice was good enough compared to the objective measure you picked.

Optimize when it is really easy to do or when the added benefits from optimizing are large (or the added problems from not optimizing are large).  Satisfice for everything else and stop worrying about it.

Another life-changing book for us was The Paradox of Choice by Barry Schwartz. Definitely worth a read.
As Voltaire said, “The perfect is the enemy of the good

Matchmaking through difficult problem sets

See, kids, this is why study groups are so important.

P.S. Last month I married X, the <student> who was in our <difficult first semester> class. It was because of your first class that we ended up swapping phone numbers so I think I should thank you in part for helping that work out.

We hate budget cuts

That is all.

Adventures in Retirement Saving Part 2: What not to do

First off, a disclaimer:  Don’t do NOTHING.  Doing something is better than doing nothing.   Satisficing is better than being paralyzed by The Paradox of Choice.  I got this one right!  Yay!

If you’re overwhelmed and have no time, then sure, signing up with the ING guy without asking him in detail about fees or probing him when he side-steps your question on how he gets paid since he’s the only one who cold-calls new faculty is much better than doing nothing.

Which, of course, is exactly what I did.  I went with the first and only vendor who knocked on my door.  I’m not the only one– he visits many faculty who, by experience and training, should be more savvy about these matters than I.  And, in my defense, first year professors are VERY busy.  I knew doing something was better than doing nothing and I figured that I would figure things out later when I had more money and more time.  I have both this summer.

(The other one of us chimes in: I actually don’t like ING for a variety of reasons.  However, I found the TIAA-CREF guy to be very helpful when I threw myself on his mercy.  He had a number of useful tools that helped me find out that I’m actually doing better than I thought.  He also helped me set up another account for additional savings.)

My university has SEVEN potential providers.  Vanguard is not an option.  Two of them only provide annuities, so that leaves 5 different companies to figure out. Of those, 3 or 4 of them provide information online and the remaining must be called for information. I never called.  I never looked at the information, so I never made an appointment with a nice TIAA-Cref person (or Fidelity person or etc.).

The Ing guy stopped by with all his forms.  I asked him for a target-date fund.  Ing didn’t have them yet.  I asked for low-fee index funds, and we talked about percentages.  Some percent large cap, some percent small cap, some percent international, and a small percent in bonds based on the rest of my holdings.  I already had some international exposure through an IRA (back when my risk-seeking father was making IRA choices for me) so we didn’t put any of that in my account, but did put some in DH’s.  I think we ended up with a relatively diversified portfolio and I’ll probably keep something similar when I move over this year.  It pretty well matches a diversified target-date fund for my age.

So what’s the problem?  Fees. Fees will eat your savings alive over the course of your working and retirement life.  Turns out that in exchange for sending around the nice Ing guy, Ing charges an additional 0.7% on top of whatever investments you make.  Individual funds also charge their fees, and each low-cost index fund wasn’t a nice Vanguard fund (those are in Ing’s portfolio, but apparently not available to me), but an Ing fund identical in every way to Vanguard’s except that it charged a fee of 0.75% instead of 0.18%.   That’s 1.45% in fees alone.

How big is 1.45%?  Consider that a common recommendation is to draw down 4% per year in retirement, give or take.  Or that the stock market is predicted to get 7%/year.  Or that savings accounts are currently getting something like 1%/year.  Or that some financial planners charge 1-2% to completely take care of your finances for you.

Or, consider simply that I could get the exact same portfolio for 0.34% from TIAA-CREF, and if Vanguard were an option I could get it for 0.18% instead.  That’s 1.11% more fees/year than my next best option, just for me to not to have to pick up the phone to set up an appointment and for a one sheet desk calendar at Christmas.  (And who knows, maybe TIAA-Cref will send a calendar too).   That difference in fees was somewhere around $450 for me this year, and over $300 for my husband.  $750 would buy a really nice gas grill.  Next year, with regular contributions (and not too much stock market tanking) it would cost me even more.  By the time I retired… oh, it is unthinkable.   It is definitely time to make a change.

Next up:  A long post on how DH and I spent 8 hours together on a recent Friday.