The time value of Money

 

One of the things I love to do, and invariably envisage when engaging others, is "adding value."
Interacting in ways that make a difference, have meaning and add value is what I consider key aspects of my life's work. Hopefully, a life well lived.

But what is value?
Value is basically the usefulness, worth or importance of something.

* * *

Lately, I have been thinking a lot about value, and how it is related to both time and money.
Thing is, life in the modern world revolves around making and then spending money. In some cases, there's a bit of managing money in between making and spending it.

And since money is a store of value, many of us have got to a point where we value nearly everything in terms of money. Only that it isn't entirely possible. But that's beside the point.

My focus today is the time value of money.

* * *

There are several ways of looking at this:

The first one, and the easiest and most useful way is how a single human being who only has 24 hours in a day, can get so many things done within that same time that s/he isn't able to do alone.

How this is done is by using the time resource of others. And this is what is at the core of employment, where one commits his or her time (in addition to other resources such as skills and effort) and in return, gets compensated/renumerated (wages or more commonly, salary).
In this way, labor becomes a key factor of production which can be multiplied many times over through addition of people. The sum total of this is measured as man-hours.

A second one is the effect passage of time has on the value of money. And I'll give an example:
About a dozen years ago, I contracted someone to make for me several windows and doors. I have so far used six of those windows in the house I currently occupy. Four windows still remain in storage, and will likely be used to build a new house.

Earlier this year, I decided I needed two new windows in a smaller size than what I already have in storage. Upon enquiry, I realized that those smaller windows now cost more than twice what I paid in 2010. And worse, the metal used to make such windows these days is of a lighter gauge (poorer quality).
In short, the amount of money I used acquiring those ten windows a dozen years ago is not enough to buy five windows today.

The economic term for this is inflation. That over time, money loses value. It is for this reason that storing money in the bank in a savings account or under the mattress in the form of notes and coins is a very bad idea.
Most of the things money can buy today, the same amount of cash cannot buy in the future.

But there is yet another way of looking at this.

* * *

Using the same example of my windows in storage, they haven't changed one bit and can still be used to build a house. The same goes for any construction material e.g. sand, ballast, stones that does not degrade over time. Cement is obviously an exception, since it contains active ingredients whose viability is only guaranteed for about 90 days... I digress.

The point here is that buying construction materials or storing money in terms of items that do not degrade is not an end in and of itself. Stagnation is no value addition.
Suppose what I did was build a house that then got occupied by tenants. Or a shop from which I would be selling things at a profit. Or a store that I would be leasing out...

There is an opportunity cost arising from merely storing items of value without putting them to good use. Gainful use. In other words, the time value of money is increased significantly when things acquired using money are in turn used to make more money.

Using the analogy of an airplane in the sky, it not only takes having a pilot in the cockpit to fly that plane. The pilot has to be doing the right things for that plane to fly.

So, with the time - which cannot be stored nor recovered once it passes - we each have each day, are you merely storing value, or actively adding value?

* * *

Having a brand new computer is no guarantee for a bright future in sales. One has to seize the day, starting today. At least we have a much easier time in that we can linearly and serially plan our time unlike Dr Manhattan for whom everything happens right now!

 

 

 

Why Making Money Shouldn't Inform Our Career Choices

NOTE: This post has been cross-posted on CCM, titled The danger of making money the top priority in life.

The Green Card

A little over a fortnight ago, I had an informal chat with Liz. She is as old as, and a former classmate of one of my younger sisters.

Well, Liz told me about the American 'Green Card' lottery. She wanted to apply quite early in the one month window to avoid the last day rush that can at times cripple the computer systems.  She also proceeded to tell me why she was so keen on leaving Kenya for the United States.

Interestingly, the top reason is her belief that in America, you stand better chances of getting rich. Filthy rich. To validate her assertion, she cited examples of people in our village who have won the 'green card' and within months of leaving their home country, their family members start receiving dollars from diaspora with which they can build better and bigger houses, start businesses, buy land, trade in the stock market.. in essence, they start living large.

Listening to Liz, I couldn't agree or disagree with her. I clearly saw in her the collective sentiment that prompts many to seek greener pastures in distant lands. Which is for all intents and purposes, a good thing.

The problem, however, is the underlying conviction that all it takes for one's life to totally rock is money.  And worse, the unwavering belief, shared by many across the world, that one stands better chances of making big, quick money in a foreign land.


Lucrative Careers

Early this year, a very informal conversation with a friend made me think about 'making it' and why we spend just about twenty years of our young lives in school. Her contention was that I am writing and designing, instead of using my Bachelors Degree in Mechanical Engineering to get a very well paying job. To her, and I believe to many others, a career or a job is not what engages a worker's time to solve solutions and meet societal needs, offers him or her comfortable living, stimulates one's creativity and offers a great sense of personal fulfillment.
It is whatever one does and gets paid lots of money every end-month.

Forget the hooey about discovering talents, gaining social skills, wholesome enlightenment and the appreciation of other cultures that is constantly peddled in education fora and seminars.

For many a parent, kids are taken to school so that upon completion of tertiary or post-graduate education, they can get well-paying jobs and hopefully make great careers of the same.

In short, education in Kenya, and I believe in many other countries is no longer about learning and self improvement. It is about getting a job that pays the maximum possible amount of money.

And is there any problem with that?

Actually, no. Every person should be adequately compensated for his or her skills and time. After all, the majority work in corporations which solely exist to make money.

What I find most unsettling with this model is that people will do everything possible to land jobs where their only driving force is making money.
In the recent past on CCM, we have asked if you work because you are passionate and love your job or simply for the money.

Years ago, I was a fan of Boston Public which aired on NTV Kenya. It is a television drama series that highlights the plight of both faculty and students in American public schools.
A recurring theme in the series was that the educators were in it for much more than monetary reward.

More recently, I watched the hilarious movie Jarhead starring and Jamie Foxx. It is the story of American marines in the Iraq desert during Operation Desert Storm in 1991.
Towards the end of the marines' stay, Marine Staff Sergeant Sykes (Jamie Foxx) tells Anthony Swofford (Jake Gyllenhaal) that he had other more rewarding choices in life back in the US, but still opted to be a marine in the Middle East because he loves the job.

Following is the scene:



Pre-emptive Salary Raises

We have seen in this country, time and again, how elected officials always begin their terms with hefty salary raises. Parliament did that in 2002, 2008 and in 2013, this malaise of greed spread to members of county assembly in all counties and legislators in both houses.

Not to be left behind, doctors, nurses and other civil servants sought pay rises and as we speak, teachers and threatening the government with strike action should their unreasonable and unsustainable hefty pay rises not be granted.

Teachers have gone on strike in Kenya so many times I can no longer count. Whereas I sympathize with their demand for appropriate remuneration, what do they time their strikes in such a way to adversely affect students at a time when these kids need them most?

We have seen this all the time, I remember teachers were on strike when I was preparing for KCSE in 1998. Again in 2004, a lecturers strike extended my stay in campus from the envisaged completion date of December 2004 to April 2005. Thankfully, this did not adversely affect my grades and I do hope for the many others who were affected in these years.


The Root of All Evil

"For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."

1 Timothy, 6:10 (KJV)

Without a doubt, the good book is right.

The above sentiments, including personal anecdotes, all illustrate what ails our country and our mind sets. The fact that we all go to school so that we can eventually get jobs that pay really well will ensure that people never get into careers for the right reasons.

What happened to a career being a calling?

I have long believed that society can change, but the horrific punishments to the seven deadly sins in SE7EN make me somewhat understand how the rot in society can drive some beyond the cliff. The trends being set by elected leaders and civil servants, will set the pace for a greedy generation in coming years that only sees a job as a way to make money. Not to solve any problems. Not to meet any individual or corporate needs. Not to serve society. Not to make one better at what he or she does. Not to make the world a better place.

Making money, it seems, is the only reason we wake up every morning.
How unfortunate!

To Labour and to Wait

Get Rich or Die Trying

Yesterday, I chanced upon this very profound Sunday Nation article by Sunny Bindra.
He addresses the sickening and vain obsession many people have with showing off material things and worldly possessions. He asks:

What is it for, this self-conscious display of possessions? When did we start thinking it is a good thing to brag about what you have bought in a shop, as though that’s an achievement?

To a great extent, I  do share his sentiments in the article. When Mr Bindra questions this irrational urgency to get very rich at the youngest possible age, I was reminded of how we mistakenly consider what is merely urgent, important. To echo the enduring words often attributed to Sir Isaac Newton, many among us, consumed by a mindless quest to great riches, forgotten that it is more important to be defined by value rather than success. After all, it's all about the 'Benjamins' for many of us.

I have in the past explored this same theme, where I examined what it actually means to "make it" or be "successful". Apparently, the in-thing is to make a lot of money, even if unethically, as fast as possible. Afterwards, one becomes a condescending braggart and inevitably
In other words, to use a language many of us find rather endearing - living on the fastlane.

More Money, More Problems? 

You see, more money in itself does not make life better. What money does is facilitate more choices. And please note, having more money gives one more choices. Not better choices.
Every day, people from all walks of life fail to make value judgments.

In any case, is it what you do that defines who you are, who you are that defines what you do or simply the way you do it?


It Takes Time

I have in the recent past taken time to find out how people of great achievement, those with an enduring legacy got to acquire both tangible and intangible wealth. It all boils down to at least four character attributes:

• sacrifice
• focus
• determination
• discipline

Even more important, none of the above result in any achievement sans the passage of time. In other words, organic growth is essential in any meaning life. "Easy come, easy go" is indeed a true assertion. It takes time, and this premise is very well explained in the parable of the fern and the bamboo.

We should not compare ourselves with others. Your purpose in life is most likely different from mine. However, we all have a reason to be and despite our diversity, we each have a reason to be. What the media and society define as "success" or the "good life" may not exactly be right.
Your calling is to shape an uncertain destiny. To live a life of meaning. To make a difference. To add value. To leave an enduring legacy.
None of these can be done instantly. It all takes time.

I'll end with timeless words by Henry Wadsworth Longfellow:

Lives of great men all remind us,
We can make our lives sublime,
And departing, leave behind us,
Footprints on the sands of time...

Let us be then be up and doing,
With a heart for any fate,
Still achieving, still pursuing,
Learn to labor and to wait.

House of 9: What would You do to Survive?

"I've always thought that a film should first of all be an emotional experience.
It should make you laugh, or cry or be scared.
But it should also inspire and provoke you, and make you reflect."
- William Friedkin, Director of 'The Exorcist'.

[caption id="attachment_75" align="aligncenter" width="300" caption="Watching Movies: Sound, check! Lights, check! Remote, check! DVDs, check!"][/caption]

The Challenge

A while back, I decided to challenge myself and do what some people cannot even dare think about - watch between five and ten horror movies in two days. Alone.

So I grabbed some DVDs, checked my sound system, turned down the lights and turned up the sound.....
I opened my mind, my ears and my eyes as the movies started.

First on queue were Hostel I and Hostel II. I watched both movies without flinching, wondering "Ni kitu gani watu huogopa?" [Trans: What is it that people fear?]. Next, I watched Demon Hunter. Here, I liked the suspense.

The Human Condition

Then came Saw I and Saw II. And something I had never before experienced happened in my life. Suddenly, there was a lot to learn, even in these shocking, disgusting and sadistic flicks. Some of them are packed with insights and lessons about the Human Condition, stuff that is largely ignored and rarely explored elsewhere. And all this reminds me of this post about how people go wrong and become monsters...

House of 9

[caption id="attachment_69" align="alignright" width="204" caption="House of 9: Nine strangers. One house. Only one will get out..."][/caption]

The next movie I watched was House of 9. It is a movie about nine unconnected strangers who realize that they are locked inside a deserted house. As they begin to wonder why they are there, a watcher who's viewing everything on surveillance cameras hidden throughout, tells the house guests through an intercom that they've been brought there to play a game of survival for his entertainment. The last person left alive after this game will receive an award of 5 million dollars.

Each of the nine people captive in the house try different methods of getting out but all attempts fail. When they see no way of escape, the house soon turns into a killing fest, until the final survivor remains; unaware of the twist in store for them... [read more on Wikipedia].

Worth Watching?

Watching this movie, I was reminded of just how much we are willing to ensure that we have the upper hand.

I was shocked to realize, to what length even seemingly good people can go when there is the possibility of reward, when there is competition, and most important, when they find themselves in harm's way.

An Open Mind

One of these fine days, take time to watch a movie, with an open mind and without any prejudice. Forget about other users' opinions. Forget the cover and the title (okay, I know that's a bit hard). See if there is anything to learn in some of these movies.

All in all, House of 9 is a movie worth watching. So is the SAW film series.
Next in the Movies to Watch series, I'll be sharing something about The Exorcist.

Let us learn, share and grow!