STREETSMARTS

Beyond the diploma

Jim RandEl

It is not the critic who counts The credit belongs to the men and women who are actually in the arena, whose faces are marred by dust and sweat and blood, who strive valiantly, who err and come short again and again, who know the great enthusiasm, the great devotion, and who spend him or herself in a worthy cause, who at best know achievement, and who at worst if he or she fails, does so while daring greatly so that his or her place shall never be with those cold and timid souls who know neither victory nor defeat.
~ Teddy Roosevelt, 26th President of the United States

other books by this author: The Skinny On Series

TM

Confessions of a Real Estate Entrepreneur The Real Estate Game

Street Smarts: Beyond the diploma

Jim Randel

Copyright 2011 by Jim Randel no part of this publication may be transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or by an information storage and retrieval system, or otherwise, except as permitted under Sections 107 or 108 of the 1976 U.S. Copyright act, without the prior written consent of the Publisher. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. it is sold with the understanding that neither the Author nor the Publisher is engaged in rendering legal, accounting, financial or other professional services. if legal advice or other exper t assistance is required, the services of a competent professional should be sought. neither the Publisher nor the author shall be liable for damages, directly or indirectly, arising herefrom. project manager: donna Hardy design team: Rebecca Kunzmann Kim lincon For information address Rand media Co., 265 Post Road West, Westport, CT, 06880 or call (203) 226-8727 Printed in the United States of america The Country Press, inc., middleboro ma iSBn 10: 0-9844418-7-5 iSBn 13: 978-0-9844418-7-7 E-Book iSBn 13: 978-0-9841393-7-8 lOC: 2011920564 10 9 8 7 6 5 4 3 2 1 9254919

Table of Contents
topiC 1:

YOU, Inc.

Lesson
1 2 3 4 5 6 7 8 9 10 11 12 13

YOU, inc. The Road to Success is Solitary Hanging on to Your Passion Crafting an Elevator Pitch an Expectation of adversity adding Value Equanimity Becoming an Entrepreneur Black Swans and murphys law Failure isolate Your Weakness Create a Board of directors The most important Gap

topiC 2:

Communication Skills
14 15 16 17 18 19 20 21 22 23

People Skills Critical Beats Rereading, Rewriting, and other double Checks People are attracted to Energy Find a Commonality When Silence Really is Golden Rabbit Ears Public Speaking Occams Razor a Judicious Use of Humor

topiC 3:

Career Advancement/Networking

Lesson
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

networking: Find a Connector Keep a People diary First impressions You Can never Have Enough Social Capital Competition Self-Promotion Common Courtesies Boomerangs and Karma Contacting Someone You dont Know The Job interview You meet the Same People on the Way Up as on the Way down Social networks, introductions, and Referrals Six degrees of Separation Golf Working for Free

topiC 4:

Time Management & Productivity

39 40 41 42 43 44 45 46 47 48

Time management - awareness To do lists Priorities: Urgent versus important Punctuality advice from a Productivity Expert Beating Procrastination Routine Batching, multi-Tasking, and Focus making notes Paretos Rule

topiC 5:

Sales & Persuasion Techniques

Lesson
49 50 51 52 53 54 55 56 57 58 59 60 61

momentum The law of Scarcity Get People nodding learning to Watch and listen negotiation Strategies When You need an idea name dropping BaTna never Back Someone into a Corner Reframing the Question Gilding the lily Prepare to Persuade Why People Buy

topiC 6:

Financial Literacy
62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78

Utilizing Float making a Budget Renters insurance The difference Between Gross and Take-Home Pay Financial Statements Social Security, iRas, and 401(k)s The internal Revenue Code Bankruptcy Credit Scores and Reports Five Credit Card Suggestions Checking accounts, aTms, and debit Cards automobile insurance Understanding liens and mortgages Compound interest Buying a Used Car How to Get a Bank loan liquidity

topiC 7:

Savvy

Lesson
79 80 81 82 83 84 85 86 87 88 89 90 91

The Bait and Switch Contracts and Peppercorns Security deposits What to do if You are arrested Three-Card monte Small Claims Court Fine Print What does He/She Really Want? Recommendations machiavelli The Statute of Frauds identity Theft Finding a Place to Rent

topiC 8:

Investing
92 93 94 95 96 97 98 99 100 101 102 103 104 105

Homeownership The Stock market a Primer on Real Estate investing Currency Exchange Rates investing in Bonds Why People Buy Gold Other Peoples money investing in Stocks Understanding Your Financial Blueprint The Rule of 72 Buying Your First Home Globalization Understanding the Economy (and the Media) The Past is Prologue

topiC 9:

Personal Development

Lesson
106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125

no Excuses The Power of Positive Thinking Grit and Persistence life isnt Fair Strategies for developing Willpower Flex Your Creative muscles by acting Childlike ideas for improving Your memory Getting Comfortable with the Uncomfortable mental Fortitude a Prodigious Work Ethic A Cost-Benefit Analysis Visualization Serendipity Goal Specificity Burning the Boats Fear Control Kaizen Your Vocabulary integrity and longevity

Introduction
The book you're holding speaks to information that traditional textbooks and curricula don't cover what we call street smarts. Street smarts is the aggregate of skills and experiences that you need for real-world challenges. it is about selling yourself, protecting yourself, communication and negotiation skills, networking, building your economic value, entrepreneurship, financial savvy and a lot more. Our goal with this book is to give you tools you need to survive and prosper in a very competitive universe. Our goal is to help you maximize your potential. The advice in this book comes from many sources. First, we assembled a group of prestigious advisors (our advisors), success stories from a wide spectrum of disciplines athletics, business, entertainment, military, and politics. We asked our advisors for guidance on the real-world skills necessary for success. Second, our team of readers consumed all of the selfimprovement literature written in the last 200 years and pulled the most important lessons. in doing so, we learned from great teachers such as Benjamin Franklin, dorothea Brande, napoleon Hill, dale Carnegie, dr. norman Vincent Peale, anthony Robbins, Stephen Covey, and Eckhart Tolle. Their timeless advice is found in several of the lessons in this book. Finally, we reached into a community of experts. From them we identified the most important points one must understand on the subjects addressed in this book. now for a disclaimer: we are not a book that suggests success is easy. Too many people are looking for a secret sauce a shortcut, pain-free path to their ambitions. Unfortunately, no such secret sauce exists. To live the life you want, you are going to have to work at it. You are going to have to take chances, get uncomfortable, deal with adversity, and persevere. We are just giving you the tools. You still have to use them. Finally, a note about our one-page-per-lesson approach. We believe that less is more, that people get overwhelmed with too much information, and thereby retain very little. Our intent is to give you the key points, the headlines. For those who want to drill deeper, we have created a website (www.thestreetsmartsbook.com) and an extensive bibliography.

Foreword
This book contains 125 lessons that my Board of advisors and i think are very important for people to understand and master. Since i am the one communicating these lessons, you should know a little bit about me. Educated as an attorney, i have made my living as an entrepreneur. ive had great years and, not so great years. But, on balance, it's been a very good run. Few of the ideas in this book are original. They are the result of 25 years of my reading about and observing successful people. i have tried to take the best of what i have seen, heard, and read and put it into this book for your use. One of my favorite stories is about dale Carnegie (addressed in this book). in 1936 mr. Carnegie wrote what became the most successful self-improvement book ever penned, How to Win Friends and Influence People. But when the book was first published, it was roundly criticized by educators, commentators, reviewers and all sorts of other smart people. The complaint was that the book contained few original thoughts that it was oversimplified and even sappy. Carnegie responded in a speech delivered in front of many of his critics: I know theres considerable criticism of my book. People say Im not profound and theres nothing in it new to psychology and human relations. This is true I deal with the obvious. I present, reiterate, and glorify the obvious because the obvious is what people need to be told. Street Smarts: Beyond the Diploma is my attempt to pull together for you the best of whats known on various subjects and present it to you in a concise, easy-to-read, and entertaining format. i dont claim that the thoughts herein are original to me. Rather they are the sum total of lots and lots of thinkers, writers, and educators. a WoRd aBoUt GendeR: The first draft of this book contained a lot of him or her and he/she. it got tedious. So in the book i jump around from the male to the female example. There is no bias all of the lessons herein are equally applicable to men and women.

YOU, Inc.
Best-selling author, Tom Peters (In Search of Excellence), was the first to emphasize the concept of YOU, Inc. He suggested you think of yourself as a brand or a product, and do everything you can to add value to the unique entity that is YOU. The next 13 lessons will give you some ideas for maximizing the potential of YOU, Inc.

Topic
YOU, Inc.

YOU, inc. The Road to Success is Solitary Hanging on to Your Passion Crafting an Elevator Pitch an Expectation of adversity adding Value Equanimity Becoming an Entrepreneur Black Swans and murphys law Failure isolate Your Weakness Create a Board of directors The most important Gap

1 2 3 4 5 6 7 8 9 10 11 12 13

Many people invest more in their car than they do in themselves.

YOU, Inc.
So, what is YOU, inc.? YOU, inc. is the enterprise of which you are the sole shareholder, CEO, and Board of directors. it is an entity with one asset the sum total of your skills, knowledge, and experience. it is the value of your network of contacts. it is your worth in the marketplace. it is the reason that someone will pay you for your advice, your product, or your services. You should continually work to improve the value of YOU, inc. You should be doing that whether you have a job, or dont. You should be thinking about the value of YOU, inc. even if you are still in school someday soon someone is going to hire you or not based on the value of YOU, inc. author, Tom Peters, suggests you think of yourself as a brand and work hard to stand out: The good news and it is largely good news is that everyone has a chance to stand out. Everyone has a chance to learn, improve, and build up their skills. Everyone has a chance to be a brand worthy of remark. YOU, inc. is also your safety net against the vagaries of the economy. if you have a set of skills that someone can utilize to make money, you will be employable. Whats more, in a challenging economy, those people who provide the greatest value to their employers are usually the ones who stay employed. in other words, a strong YOU, inc. will survive recessions, lay-offs, and downsizings. Finally, the value of yoU, inc. will contribute to your personal freedom. So long as you have an ability to provide people with an economic benefit, you are not beholden to any particular job or lifestyle. You can craft your life as you see fit. You can start your own business if you want. You can structure your day to mesh with your life goals. as long as you can provide others with something of value, you are holding the right cards. There are no sure things in life, of course. But, a good bet is that the more you do to maximize the value of YOU, inc., the greater the chances that you are going to live the life you want.
you have no asset more valuable than the aggregate of skills and information that make up yoU, inc.
To learn more, visit: www.thestreetsmartsbook.com/youinc

The fight is won or lost far away from witnesses behind the lines, in the gym, and out there on the road, long before I dance under the lights.
~ muhammad ali

The Road to Success is Solitary

almost everyone has a dream inside. it is a vision of how he or she hopes his/her life will turn out. The specifics of the dream dont matter. What matters is that almost all of us have one. Those closest to you will root for your dream to come true. But, even these people dont feel the pain or anguish of your setbacks, nor the intensity of your aspirations. They have their own dreams they may not relate to yours they may not even understand your vision. and so, the climb to where you want to go can sometimes be a bit lonely. From the athlete who trains for hours by herself to the writer whose life is almost Spartan to the entrepreneur who works when everyone else is sleeping, the path can be very solitary. Here are some suggestions just in case the path you are on is a bit lonely: 1. Try using visualization techniques to help you get through rough spots. The feeling of you against the world can be overcome with a virtual visit to your destination. The point is to beat back feelings of loneliness by envisioning the goal line. 2. Remember that the mind can only process one dominant thought at a time. When you feel that tug of aloneness, supplant it with ideas for projects you are working on. as we will discuss in lesson 114, a thought is a thing and, as such, can be moved into and out of your mind. 3. Periodically discuss your dreams with those closest to you. They may not truly feel your ups and downs, but their support can keep you on course when you feel the pressure of laboring alone against the winds. There are no shortcuts from where you are to where you want to be. as you travel the path, you will hurt at times physical and mental exhaustion, frustration, disappointment, and sometimes loneliness. This is a natural part of the journey.

Fight off loneliness with a very clear vision of you arriving at your destination.

To learn more, visit: www.thestreetsmartsbook.com/youinc

Communication Skills
A talent for powerful and effective communication is hugely important if you are going to reach your potential. The next ten lessons will help you learn to communicate with others in a way that will enhance the delivery of your message.

Topic
Communication Skills

People Skills Critical Beats Rereading, Rewriting, and other double Checks People are attracted to Energy Find a Commonality When Silence Really is Golden Rabbit Ears Public Speaking Occams Razor a Judicious Use of Humor

14 15

16 17 18 19 20 21 22 23

You can close more business in two months by becoming interested in other people than you can in two years by trying to get people interested in you.
~ dale Carnegie

14

People Skills
People skills are the bundle of abilities that generate affection, respect, and trust. many people in business contend that people skills are as or more important than technical knowledge. The ability to persuade others, to generate enthusiasm, to gain trust and respect these are all critical components of business success. The guru of people skills is a man named dale Carnegie who lived from 1888 - 1955. in 1936, Carnegie wrote a book titled, How to Win Friends and Influence People, which became an international bestseller. Here is our summary of Carnegies suggestions: 1. ask people about themselves. 2. Win people over with your warmth and smile. 3. Show pleasure in seeing friends and acquaintances. 4. express admiration for others accomplishments downplay your own. 5. When you are going to meet someone for the first time, prepare for the meeting by learning what you can about her interests, and direct the conversation to these topics. 6. listen more than you talk. 7. make the other person feel important to you. 8. Strive to find consensus. 9. look at things from the other persons point of view. 10. Show respect for others opinions. Some people feel that Carnegies suggestions are disingenuous or corny. We feel that so long as you dont compromise your essence to make another person like you, Carnegies points still have great value today.

people skills are as important as technical skills.

To learn more, visit: www.thestreetsmartsbook.com/communication

Never forget to put your brain in gear before you put your mouth in motion.

15

Critical Beats
many of our advisors suggest that you teach yourself to put several seconds between thoughts and the verbalization of those thoughts. When speaking, we all tend to get carried away at times. We may be very passionate about a subject, we may be upset or angry, we may be in a hurry to join a conversation with our ideas. The problem is that sometimes we blurt out comments that are harmful, hurtful, or inappropriate. it is critical that you develop the ability to wait a few seconds between the formation of a thought in your head, and the articulation of that thought. This is a skill that can be learned. When you feel yourself getting upset, excited or just tired, that should be a warning to you. in this condition, you may not be watching what you say as carefully as you should. When you feel that happening, a little red flag should pop up in your mind. Its time to remember this page. its time to slow things down just a little bit and consciously insert a couple of seconds between thought and speech. and, there is another reason to develop a skill for putting beats between thought and speech to improve your persuasiveness. Skillful communicators learn to tailor their comments to a specific situation or audience. They know that their words will have greater impact if crafted to connect with what will move the other party. Therefore they become good listeners and watchers (see lesson 52). While they are listening to the person they wish to influence, they are also playing in their mind comments that might move their position forward. They listen to these possible comments. What will work and what won't? They then select the words to verbalize. all this happens in seconds. Great communicators avoid saying the wrong thing and are more likely to say the right thing because they learn to put a few seconds between thoughts and comments.

practice inserting two seconds between when a thought hits your consciousness and when you actually articulate it.
To learn more, visit: www.thestreetsmartsbook.com/communication

Career Advancement/Networking
The next fifteen lessons are intended to help you move your career forward. If you want to maximize your success in the business world, you must become a good networker. We include several lessons on this skill set.

Topic
Career Advancement/ Networking

networking: Find a Connector Keep a People diary First impressions You Can never Have Enough Social Capital Competition Self-Promotion Common Courtesies Boomerangs and Karma Contacting Someone You dont Know The Job interview You meet the Same People on the Way Up as on the Way down Social networks, introductions, and Referrals Six degrees of Separation Golf Working for Free

24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

Connectors are super-evolved networkers.

24

Networking: Find a Connector

One of the most important skills you can develop is a talent for networking the process of meeting, establishing relationships, and staying in touch with people from various walks of life. the human instinct is to pull back from strangers. networking is about breaking down this interpersonal barrier. Once you have met someone even if for a short period you have an opening to follow up with that person. His or her resistance to meeting with a stranger is now lowered. another way to approach someone you want to meet is with an introduction. if you know someone who knows the person you want to meet, ask for an introduction. That definitely facilitates the process of getting to the person you want to meet. Great networkers allocate time every week to building and maintaining their network. They are proactive. They realize that networking is a critical component of business development, and they devote significant energy to this activity. although almost always worth the effort, networking can be a lot of work. it takes a commitment of time and energy to be a great networker. But, you may not have the time or inclination to be a great networker. Fortunately, there is a way to shortcut the process try to meet a connector. Connectors are super-evolved networkers. these are people with a wide range of contacts. They instinctively reach out to people. and most of them are adept users of social media. if you can meet a connector within your area of endeavor, you may be able to establish a relationship with him or her. and under the right circumstances, you may be able to leverage off his/her contacts thereby expanding your expertise tremendously.

Find people who are well connected in your chosen endeavor and win their trust.
To learn more, visit: www.thestreetsmartsbook.com/career

Contacts are the building blocks of a career. You start with relatively few and keep adding and multiplying until you have a strong, interlocking web of people whose talents and reputations help boost your career.
~ Ken Kragen, Life is a Contact Sport

25

Keep a People Diary

One of the best pieces of advice my father gave me when i graduated college was to keep a diary, log, or some other written record of everyone i ever met. He suggested index cards (well before the computer) with each persons name and contact information, what they did for a living, how i met him or her, and other commonalities (e.g., she is a jogger, or likes movies). He proposed that i review my index cards every six months and reach out to people i had not been in contact with. He noted this was a great way to keep my information updated. He said the goal was to keep in touch with as many people as i could because you never know who will one day be in a position to help you. He was totally right. Today, keeping track of people is so much easier than it was 30 years ago. index cards have long since been replaced with easy-to-use digital options. But you still need to create a system, update it, and use it. The specifics of your system are not as critical as an understanding of these general points: 1. Your ability to succeed in your chosen endeavor will often depend on your relationships with other people. 2. Every person you meet has the potential to help you at some point in your life. 3. Having met someone even once makes things a whole lot easier when you need that persons assistance. 4. develop a system for finding people as and when you need assistance any process that helps you recall and reach out to people who can address a particular need you have. Remember my fathers index card system? Way out of date today but the methodology remains important: a record of everyone youve met, what they do for a living, and so on. You might catalogue this information by name, occupation, location, or expertise just so you can find who you need when you need help.

Keep a record of every person you meet.

To learn more, visit: www.thestreetsmartsbook.com/career

Time Management & Productivity

The next ten lessons range from traditional ideas for managing your day more effectively, to thoughts about increasing your personal productivity. Needless to say, making the best use of your 24-hour gift is very important to achieving your goals. Hopefully our suggestions will help.

Topic
Time Management & Productivity

Time management - awareness To do lists Priorities: Urgent versus important Punctuality advice from a Productivity Expert Beating Procrastination Routine Batching, multi-Tasking, and Focus making notes Paretos Rule

39 40 41 42 43 44 45 46 47 48

47

Making Notes
your mind is constantly at work (even when you are sleeping). as a result, thoughts are continually flowing in and out of your head. Some of these thoughts may be very valuable to you. But, if you dont capture them, you may forget them. We strongly suggest you become a contemporaneous note-taker someone who records ideas immediately as they arise. in that regard you should always carry some means for capturing ideas. it does not matter whether you prefer digital, or pen and paper. all that matters is the ability to memorialize these thoughts as they happen. the point of note taking is to take pressure off your memory. Generally our memories are limited, especially short-term memory. We can remember maybe seven items at once before things start falling out. i think of my short-term memory like a vending machine: put three things in and one falls out. When you make notes, you give your memory a break. Once you make a notation, you no longer have to rely on your memory. at some later point, you can reread your notes. Creative thinkers are usually prodigious note-takers. These people have learned that good ideas can arise at unusual times and in unpredictable situations. So, they train themselves to be ready at all times with some means of capturing their thoughts. leonardo daVinci, perhaps the greatest creative genius of the last 500 years, was a huge note-taker. We know of 7,000 pages of his notes. Scholars believe these to be only about 50% of his total output. Some inventors even sleep near their desks so to capture ideas the minute they wake up. They figure that occasionally they will get a good idea while dreaming, and they do not want to waste one minute looking for pen and paper. That sounds a bit extreme to me. However, i do understand the fear of losing a good idea. Thats why we recommend contemporaneous note-taking so that you never have to ask yourself: now what was i thinking?

always keep close at hand some means of memorializing your ideas.

To learn more, visit: www.thestreetsmartsbook.com/productivity

48

Paretos Rule
Vilfredo Pareto was an italian economist who lived from 1848 1923. One day, while tending his garden he identified one of the most important rules in productivity thinking. Pareto noticed that 80% of his edible vegetables were coming from only 20% of his plants. So he asked himself: Why dont I dedicate my efforts to just those plants that are producing edible vegetables and neglect the others? And Pareto did that and the output of his garden increased dramatically. Paretos rule, also commonly known as the 80-20 rule, is hugely important because it is not necessarily about working harder, but rather smarter. Pareto devoted the same number of hours to his garden. He just reallocated his effort. the 80-20 rule has application to many life situations. For example, salespeople will tell you that 80% of their sales come from 20% of their customers. And investors will tell you that 80% of their profits come from 20% of their investments. And so on. Granted, it is not always easy to know in advance which 20 will produce the 80, but once you have any inkling, that is when you need to readjust your efforts. Here is our thinking as to how you can apply the 80-20 rule to your life: 1. identify a goal that is important to you right now. 2. List five things you are doing to move you toward the realization of that goal. 3. Analyze which of the five things you are doing seems to be having the most impact. 4. Focus on that thing it may be the 20% from which 80% of your success will flow. The 80-20 rule is not a precise measure. it is instead a strategy and way of thinking. if you sit back and think about your life or business, and if you are like most people, you may find that a lot of what you do makes little (if any) contribution to your bottom line. These are the things you need to deemphasize in favor of those that are providing the biggest bang for the buck.
apply the 80-20 rule to your life. What is actually working and whats not? Consider reallocating your energies to that which is paying you the highest dividends.
To learn more, visit: www.thestreetsmartsbook.com/productivity

Sales & Persuasion Techniques

If you can sell, you can do anything. Every transaction ultimately comes down to selling and persuasion. The thirteen lessons in this section are about honing your sales and persuasive talents.

Topic
Sales & Persuasion Techniques
momentum The law of Scarcity Get People nodding learning to Watch and listen negotiation Strategies When You need an idea name dropping BaTna never Back Someone into a Corner Reframing the Question Gilding the lily Prepare to Persuade Why People Buy

49 50 51 52 53 54 55 56 57 58 59 60 61

The journey of a 1,000 miles begins with a single step.

~ lao-Tzu

49

Momentum
inertia is a powerful force of nature. inertia is actually two principles of nature: 1. a body at rest will remain at rest unless acted upon by an outside force. 2. a body in motion will remain in motion unless acted upon by an outside force. momentum is about getting inertia to work in your favor. Momentum is about taking that first step no matter how daunting the challenge ahead of you. Some people look up at a big mountain and turn away. They dont see how they will ever get to the top, and so they never start. This is an example of the first principle of inertia at work. It is true that a first step can be frightening at times. It is one thing to have something in your mind a thought that someday you will do X. But, actually doing X is another thing altogether. a challenge far off in the distance is not very threatening, yet quite scary when right in front of you. Still, you have to take that first step. Otherwise, the someday you talk about will never occur. and that means a loss before the game ever starts. the good news about inertia (and momentum) is that once you marshal the energy and the courage to take that first step, one step turns into two, and two turns into four. in other words, once you get some momentum going, the second principle of inertia takes over. You are now a body in motion and, as such, tend to stay in motion and move forward every day. now the wind is at your back! Good business people know that if they can just get their foot in the door of a new account or customer, momentum often takes over. Once that initial hurdle to a new relationship is overcome, barriers break down, conversations start, and all sorts of good things can happen. and so good business people focus on getting a "foot in the door" any way they can to get inertia working in their favor.

Get going!

To learn more, visit: www.thestreetsmartsbook.com/sales

one day Sale!

50

The Law of Scarcity

One of the most powerful laws of human nature is that people generally want what they do not or cannot have. This rule is sometimes called the law of Scarcity. Back when cave men and women roamed the earth, humans survived (or not) by grabbing for whatever food and shelter they could find. There was no time for deliberation; if you were hungry and a potential meal walked by, you went for it. as a result, some psychologists believe that humans are wired to want whatever they dont already have (whats not already in their belly). Researchers proved this in a fascinating study with children. a playroom was divided in half with a small glass divider. Toys were placed on both sides of the divider. Children were brought into the room and because they could easily reach the toys on both sides of the divider, they showed no preference for the toys on the far side. Then the children were taken out of the room and a new, much higher divider was installed. When the children returned, they could not reach the toys on the far side of the divider. now, those were the only toys they wanted! marketers understand the law of Scarcity. do any of these phrases sound familiar? FoR a limited time only While SUpplieS laSt the FiRSt 100 CUStomeRS one day only

you can sometimes enhance your ability to sell or persuade by creating a perception of scarcity, exclusivity, or time pressure.
To learn more, visit: www.thestreetsmartsbook.com/sales

Financial Literacy
All of us can improve our financial literacy our understanding of and comfort with the principles and products of finance. The next seventeen lessons are going to boost your financial literacy. There is a lot more to learn about finance, but this is as good a starting point as any.

Topic
Financial Literacy

Utilizing Float making a Budget Renters insurance The difference Between Gross and Take-Home Pay Financial Statements Social Security, iRas, and 401(k)s The internal Revenue Code Bankruptcy Credit Scores and Reports Five Credit Card Suggestions Checking accounts, aTms, and debit Cards automobile insurance Understanding liens and mortgages Compound interest Buying a Used Car How to Get a Bank loan liquidity

62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78

64

Renters Insurance
if you rent an apartment or a house, your landlord will most likely require that you get what is called renters insurance. among other things, he wants to be sure that if someone is hurt in your apartment, they have someone to sue besides him. By the way, the lease you sign will probably say that the landlord is not responsible for any injuries that occur within your apartment. Renters insurance has two main types of coverage: 1. physical damage your insurance company will pay for damage inside your apartment which results from a wide range of potential causes fire, water damage, and theft are the big three. if you have something particularly valuable in your apartment, you should bring it to your insurance companys attention, and ask that it be specifically identified in your policy (in case it is damaged or stolen). 2. liability this is the primary reason to have renters insurance. liability coverage insures you against any event that could lead a third party to sue you. Here are some examples: a) someone slips and falls inside your apartment, b) your aquarium leaks and causes damage to the property of the tenant in the apartment below you, c) you have a party and someone who had too much to drink gets into a car accident. Your insurance company will have a limit on how much it will pay in the event you are sued by a third party. You should obtain at least $1,000,000 of liability coverage. Even if your landlord does not require you to obtain renters insurance when you sign a lease, you should get it for your own protection. Under the heading of you never know, renters insurance will protect you against the unforeseen problem. and generally the cost of renters insurance is reasonable. Heres a good website for learning more about renters insurance: www.insureuonline.org/course_singles.htm#all

if you are going to be a tenant, get renters insurance.

To learn more, visit: www.thestreetsmartsbook.com/finance

$$ YCHEC
PA

$$$ $$$K $

65

The Difference Between Gross & Take-Home Pay

Whenever you get a paycheck, there is going to be somebody right next to you with his hand out. That somebody is Uncle Sam. Every check you receive from an employer will be reduced by: 1. Withholding taxes an estimate of what you are going to owe the government in income taxes at the end of the year. The amount withheld depends upon the number of exemptions you claim on a form known as W-4. Your employer will ask you to complete this form when you are hired. The number of exemptions you can claim is generally tied to your marital status and the number of people who are dependent on your income. 2. Social Security your contribution to paying for your retirement. in 2011, the government will take 4.2% of your gross pay for this purpose. 3. medicare your contribution to a healthcare system provided by the government for individuals 65 years of age or older. The government takes 1.45% of your gross pay for this purpose. lets look at an example. lets say you are single and earning $40,000 a year. Here is what your weekly paycheck will look like: GRoSS pay: Federal Withholding (based on 1 exemption): Social Security (4.2%): Medicare (1.45%): taKe-home pay: $ 769.23 - $ 83.00 - $ 32.31 - $ 11.15 $ 642.77

note: State taxes will also be withheld if you work or live in a state with an income tax.
you must be aware of the difference between gross and take home pay when you make a budget.
To learn more, visit: www.thestreetsmartsbook.com/finance

Savvy
As you know, the title of our book is STREET SMARTS. Another word for street smarts is savvy when used as a noun to mean shrewdness, knowledge, and understanding. We want you to be as savvy as possible so that you are able to handle yourself in any situation you encounter. The next thirteen lessons will help.

Topic
Savvy

The Bait and Switch Contracts and Peppercorns Security deposits What to do if You are arrested Three-Card monte Small Claims Court Fine Print What does He/She Really Want? Recommendations machiavelli The Statute of Frauds identity Theft Finding a Place to Rent

79 80 81 82 83 84 85 86 87 88 89 90 91

05102005 POLICE DEPT.

82

What to Do if You Are Arrested

Hopefully, this situation will never occur. However, just in case, here is our advice: 1. Be polite. depending on what the police think you did, they have a lot of discretion as to what crime to charge you with and whether to take you to jail (they also have a say as to whether bail will be required and how much). So, no matter how upset you are, do your best to be courteous. Do not challenge them. Do not raise your voice. Yes, Officer and No, Officer is enough. You will be upset, but take a deep breath. 2. Be Smart. In this situation, the arresting officer is not your friend. you are not required to talk to him about the incident. if he is going to question you, he has to give you miranda warnings including that you have the right to remain silent, and that anything you say can and will be used against you. But, if he does not start questioning you, he does not need to advise you of your miranda rights. So, no matter what, dont just start talking to a police officer about the incident. The line as to when to offer information (or not) sometimes gets fuzzy. it is not always clear whether the police are about to arrest you, or are just asking questions to assess what happened. Generally, unless it's clear that the police are not about to arrest you, our suggestion is to not volunteer information. 3. as soon as possible, make notes of what happened, including the identities of any potential witnesses. While events are fresh in your mind, try to remember every detail you can and write it down. 4. Get a local lawyer who specializes in criminal matters. do not hire an attorney who is a general practitioner or family friend. Your selection of a good lawyer is critical. Get recommendations. Google different lawyers. You want one who is local, and who is constantly in and out of the courtroom in which you will appear. These are the attorneys who usually know the police, the prosecutors, and the judges, and thereby may get you a little better shake from the court system.

Stay calm.

To learn more, visit: www.thestreetsmartsbook.com/savvy

Who are you going to believe me, or your own eyes?

~ Groucho marx

83

Three-Card Monte
three-Card monte is a card trick. The performer stands on the street with a little table and three playing cards one an ace, one a King, and one a Queen. He then offers to bet passers-by that they cannot follow the ace once he turns the cards over and moves them around. Using sleight of hand, he pretends to move the ace in one direction but actually moves it in another. 99 out of 100 people miss what he is doing and lose the bet. The performer knows that, of course; he knows that most people can be easily duped. There will be people you meet who are like the performer in Three-Card monte. These people are trying to separate you from your money. Your job is to know when someone is trying to dupe you. Talented salespeople know how to play with a prospective customers mind. They know how to push your emotional buttons, how to confuse you, and how to use the power of suggestion. These people may sell you something you dont really need or, at a price higher than you should be paying. The problem, of course, is that they are not holding three playing cards when they are talking to you. Here are our suggestions when you are unsure whether you are being played with: 1. Be cautious about fast talkers and big words. if you dont understand something, ask questions until you do. 2. make the salesperson repeat what he/she is proposing. listen carefully for inconsistencies. 3. Watch his or her eyes (the windows to the soul). Shifty? 4. ask for names of satisfied customers. 5. Try to personalize your prospective purchase (it is for my bed-ridden mother). does the salesperson pause or blanch? Unfortunately, sometimes you just need to be a little distrustful.
When someone is trying to sell you something, maintain a level of skepticism.
To learn more, visit: www.thestreetsmartsbook.com/savvy

91

Finding a Place to Rent

Finding the right apartment (or condo or house) to rent may be challenging. Here are our suggestions: 1. First define the perimeters of where you want to live. Proximity to where you work is of course important. But so is proximity to places important to your social life and needed services (transportation, grocery, drug store, dry cleaner). Obviously your budget is also a factor. Where can you afford to live? 2. Online services like Craigslist and For Rent sections of a local newspaper are good starting points. 3. in some areas of the country, brokers can be helpful. 4. no matter how tight the rental market, try to see at least three apartments before you choose one. You have no sense of perspective until you see more than one possibility. 5. Obviously the appearance of the apartment is critical but also check less-obvious factors such as cell phone reception, water pressure, and whether there's a laundry room. 6. What do the common areas of the building look like - elevators, stairways, the lobby? a landlord who doesnt attend to the common areas may not be very responsive to your leaky toilet. 7. if you see another tenant in the building, ask how he likes living there. 8. Try to find out early in your search process what will be expected by way of a security deposit or guarantor (essentially a co-signer). 9. if you are going to be renting with others, understand that most leases do not divvy up responsibility for the rent. in other words, if you and another person sign a lease, and he or she leaves, you are on the hook for the entire rent - not half. 10. Have a lawyer, parent, or older friend review the lease agreement. dont just sign on the dotted line.

Considering you will be spending hundreds of hours in your rental, spend as many hours as you can finding the right place.
To learn more, visit: www.thestreetsmartsbook.com/savvy

Investing
Of course making money is a good thing. But knowing what to do with it once you make it that is a really good thing. People who become good investors are the ones most likely to enjoy financial freedom. The ensuing fourteen lessons are a primer for building your knowledge about investing.

Topic
Investing

Homeownership The Stock market a Primer on Real Estate investing Currency Exchange Rates investing in Bonds Why People Buy Gold Other Peoples money investing in Stocks Understanding Your Financial Blueprint The Rule of 72 Buying Your First Home Globalization Understanding the Economy (and the Media) The Past is Prologue

92 93 94 95 96 97 98 99 100 101 102 103 104 105

92

Homeownership
The decision to buy a home is a very important decision. There are arguments for and against: FoR: 1. Homeownership is an inflation hedge. Over the long term, home values generally keep pace with inflation. 2. Homeowners build up equity by paying down a mortgage. Equity is the value of a property minus its debt. Contrast renting. Paying rent does nothing for a tenant. 3. Homeownership is entitled to certain tax deductions payments for mortgage interest and real estate taxes reduce taxable income. This is the governments way of encouraging people to buy a home. 4. Homeownership is a lifestyle choice. as a tenant, you are always dealing with a landlord who can raise rents or neglect a building. as a homeowner, you have control over the conditions of your occupancy. aGainSt: 1. Homeownership is an illiquid investment. although you may have equity in your house, you cannot always access it when needed. Under certain conditions, you can borrow against your equity (a home equity loan), but that is not always easy to do. 2. Homeownership restricts mobility. When there are more jobs in one area of the country than another, people generally move to where there are jobs. But homeownership makes moving difficult since selling a home is not quick or easy. 3. it is expensive to sell a home. Even when you can sell, the costs of doing so will put a significant dent in your equity. Brokerage and other costs are usually about 5% - 6% of the sale price. 4. There are a lot of hidden costs in homeownership. People almost always underestimate maintenance expenses.

dont get stars in your eyes about all the money you are going to make from homeownership its primarily a lifestyle choice.
To learn more, visit: www.thestreetsmartsbook.com/investing

97

Why People Buy Gold

Until 1971 a U.S. dollar was backed by a specific amount of gold $35 per troy ounce. A troy ounce is a measure about 10% heavier than an ordinary ounce. Accordingly, anyone who wanted to convert dollars to gold could show up at Fort Knox and start buying bars of gold. Then in 1971, President Richard nixon said, Hey, this is silly. The dollar is perfectly safe. it does not need to be backed by gold. and the U.S. went off the gold standard. But just because the U.S. said that the dollar is good as gold, doesnt mean that the investment community had to agree. There are, in fact, several reasons why some investors prefer gold over dollars: 1. the U.S. treasury can print dollars whenever it wants. an increase in dollars usually spurs inflation and decreases the buying power of the dollar. While gold can be mined and more brought into the system, it is harder to mine gold than to print dollars. 2. Even when the Treasury does not print dollars, inflation can occur for any number of reasons. If the price of commodities like oil spike, that can cause inflation and reduce the buying power of the dollar. 3. Governments can manipulate the value of their currencies. When the U.S. Federal Reserve lowers interest rates, the dollar weakens in value against other currencies. Gold is not affected. 4. World instability drives people into gold. in times of chaos, people feel more comfortable with a hard asset like gold (than they do paper). Gold also has a residual value e.g., jewelry. By the way, when people own gold they rarely take possession of gold bars. instead, they own shares in a fund that takes ownership of the gold. So, an investor does not have to worry about storage or security. The price of gold fluctuates over time. However, in general, the price of gold has risen significantly since the U.S. went off the gold standard. in 1971 gold was valued at $35 per troy ounce. as of February 2011, the price of gold is about $1,350 per troy ounce (a much higher increase than the rate of inflation).

over the last 40 years, gold has increased in value 40 fold.

To learn more, visit: www.thestreetsmartsbook.com/investing

Whats mine is mine, and whats yours is mine. Now, lets move on.
~ Something Bernie madoff might say (now in prison for 150 years).

98

Other Peoples Money

There is an expression in business opm or other peoples money. This expression is about using borrowed money (leveraging) to boost the return on your investment. For example, lets say you buy an asset for $100,000 that is generating $7,000 per year. if you bought that asset with all cash (no borrowed funds), you would be earning a 7% per year return on investment. now lets say you borrow money to buy this asset, i.e., use OPm. lets say you can borrow 70% of the purchase price ($70,000) and pay an interest rate of 5% on that borrowed money ($3,500). Now the return on your cash (usually called equity) is 11.7%: $7,000 - $3,500 = $3,500/$30,000 = 11.7%. This example illustrates the power of leverage as you have increased your return dramatically. The two points i want to make about OPm are: 1. The use of the phrase Other Peoples money is really a misnomer. Unless your debt has no personal liability attached to it (what is called non-recourse debt), the money you are borrowing is really your money. if your lender does not get its money back when due, it is going to sue you and try to grab your money. 2. Even if the OPm presents no legal liability to you, you should treat it as if it does. money that comes to you as investor or partnership capital, or a non-recourse loan, should be thought of as if it is ym (your money). The only way to insure your longevity in the business world is to think of opm as ym. in other words, always treat other peoples capital as if it is your capital. Work as hard as you can to see that your investors, partners, and lenders get the return they bargained for. if you do that, you will always have a large supply of capital available to you when you need it.

think of opm as ym.

To learn more, visit: www.thestreetsmartsbook.com/investing

Personal Development
All of the topics in this book are about helping to make you a more capable individual. The twenty lessons that follow will help you elevate your game and make you as effective a person as you can be.

Topic
Personal Development

no Excuses The Power of Positive Thinking Grit and Persistence life isnt Fair Strategies for developing Willpower Flex Your Creative muscles by acting Childlike ideas for improving Your memory Getting Comfortable with the Uncomfortable mental Fortitude a Prodigious Work Ethic A Cost-Benefit Analysis Visualization Serendipity Goal Specificity Burning the Boats Fear Control Kaizen Your Vocabulary integrity and longevity

106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125

Do or do not There is no try.

106

No Excuses
one of the things that drives customers, employers, lenders, and investors crazy are excuses: I would have been here sooner but . Its not my fault that . Due to events beyond my control . now, let me ask you: if you hire me to do X, and i dont do X, how interested are you in my excuses? if you lend me money with the agreement that i will pay you back in 30 days, and i dont do that, are you open to my many explanations? if you are depending on me to take you into town tomorrow, and i dont show up, do you want to hear my personal problems? needless to say there are times in life when you cant do something because of unforeseen circumstances. in the law, there is even a concept called force majeure which excuses one party from his obligations under a Contract. Force majeure is a big-deal event that no one could reasonably have predicted (think earthquake). So, here is our point: whatever you commit to do, whether the commitment is to yourself or to another person, forget about excuses. in other words, whatever you commit to do, do it. thats it. end of story. We can all find excuses when we dont deliver. But the reality is that no one cares. From the point of view of the person to whom you have made a commitment, you either delivered or you didnt. Want to advance your career? Be known as the person who never makes excuses. You will be surprised by how clients, customers, lenders, and investors will flock to you.

never utter the words i would have BUt .

To learn more, visit: www.thestreetsmartsbook.com/development

A pessimist sees the difficulty in every opportunity; an optimist see the opportunity in every difficulty.
~ Winston Churchill, Prime minister of Britain during WW11

107

The Power of Positive Thinking

One of the most important ideas a person needs to understand is the power of optimism, a can do attitude what some people call the power of positive thinking. The phrase, the power of positive thinking, gained tremendous popularity in 1952 when dr. norman Vincent Peale wrote a book by the same name. That book was a huge bestseller. So what is the power of positive thinking? Well, perhaps Henry Ford said it best: There are people who think they can, and people who think they cant and both are right. The power of positive thinking is an attitude. it is an unwillingness to give up. it is unbridled optimism. it is a faith in ones underlying ability to get done what he or she has to. and, that point of view in and of itself often gives people the strength and courage to continue against adversities and struggles. Positive thinking is a self-fulfilling prophecy. It stands for the proposition that if you think you can do something, then you are more than halfway there. Here is the good news about positive thinking: you can build your optimism over time. The process of competence, and even excellence, is something that comes with effort, practice, and persistence. By dividing a challenge into small manageable steps, one can develop a competence and, at the same time, self-confidence and a positive mindset. The power of positive thinking stands for the proposition that those who live with a can do attitude and strong work ethic usually find the way to accomplish that which they set out to do. Life cannot deny itself to the person who gives life his all. dr. norman Vincent Peale

optimism and positive thinking are acquired traits. Start with small challenges, and build up your confidence.
To learn more, visit: www.thestreetsmartsbook.com/development

WHaT TO dO iF YOU aRE aRRESTEd

STRaTEGiES FOR dEVElOPinG WillPOWER

WHaT YOU mUST KnOW aBOUT REnTERS inSURanCE

METRIC CITY 05102005 POLICE DEPT.

HOW TO USE namE dROPPinG TO YOUR adVanTaGE

Bennett

This book is about realworld wisdom that often gets learned the hard way, in the school of hard knocks. Street Smarts eases the way highlighting 125 life lessons and information that high achievers have identified as critical for anyone to understand. in a highly competitive and challenging job climate, this book also gives the reader an edge on the path to success.

SaVE YOURSElF FROm THE laW OF SCaRCiTY

JamiE
drew
SaRaH