tag:blogger.com,1999:blog-63012407709146335282024-03-05T08:06:28.087-08:00Business and FinanceAbout Business & Finance empowers people to make the most of their financial lives. Whether you want to plan a family budget, make the most of your savings.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comBlogger128125tag:blogger.com,1999:blog-6301240770914633528.post-48591039385892909112012-07-13T09:24:00.001-07:002012-07-13T19:05:30.041-07:00The Power of IdeasI was invited to attend the second meeting of CGI (Clinton Global Initiative) America, held in Chicago in June. I was part of the new Financial Inclusion working group that was added to the meeting this year. For those who are not familiar with CGI, it was established by former president Bill Clinton in 2011 to address economic recovery in the United States. As their web page states, “CGI America brings together leaders in business, government, and civil society to generate and implement Commitments to Action that create jobs, stimulate economic growth, foster innovation, and support workforce development in the United States.” I witnessed the importance of three principles at the meeting: (1) the power of ideas; (2) the power of translating ideas into action; and (3) the power of leadership. <br />
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The power of ideas. While the meeting had some short presentations and discussion leadership, a large amount of time was dedicated to brainstorming and generating ideas. The group at my table was a very heterogeneous bunch in terms of age, sectors of activity, and reasons for attendance. I ended up sitting near a very young man who I assumed was a college student (though he looked more like a high school student). Through my clumsy attempts to make conversation, I learned that he was 21, had finished college already, and was the founder and CEO of an education firm. It was then that I realized I might well be the dumbest person in the room. Once the discussion started flowing, it zigzagged around for hours, but several strong ideas came together and the moderator articulated them so well at the end of the discussion that it was as if many pieces of a puzzle had come together. It is, of course, part of my daily job to generate ideas, but it was particularly powerful to sit down with a group of people who have just met and are mostly non-academics and ponder and discuss ideas.<br />
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The power of translating ideas into action. As every entrepreneur knows, ideas are not worth much if they are not translated into action. A good part of the meeting was devoted to the creation of “commitments to action.” Some of these commitments originated at the meeting itself. Others had originated earlier but were announced and pledged at the meeting. Still others are in the making, as meeting attendees are now connected, and the organizers have found ways to keep participants involved in the discussions post-meeting. We heard success stories at the meeting—how some CGI groups, small and large, have been able to address specific problems. I was again struck by the many differences among the individuals—and the institutions and businesses they represented—who came on stage to speak about what they did. We had city mayors, government officials, journalists, CEOs, entrepreneurs, and young people (like the one who sat next to me) who described how they would commit to specific projects. And, as one can read from the report linked at the end of this page, from these commitments, new jobs were created and people gained access to training, to capital, and to financial services.<br />
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The power of leadership. What was most remarkable at the meeting was to see the former president reflect on the state of the economy; listen attentively to the guests he had on stage; and shake hands, hug, and thank the people who made commitments. I was impressed by his focus on education: the hard questions he asked about it and the people he brought on stage to discuss it. Neil Tyson, the charismatic director of the Hayden Planetarium at the Museum of National History, shouted: “When was the last time we longed? I have to go back to the 1960s.… The moon was in reach and we were headed there. That compelled everybody to dream about tomorrow.” So many dreams seem out of reach today, but for those of us sitting in the audience, there was comfort in watching a former president reflect on the state of the economy, and showing such concern for it. We could see, in one room, the power of leadership in action and the capacity to motivate, inspire, and bring people together to generate ideas and commit them to action.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-73333993129584573562012-06-18T15:44:00.001-07:002012-07-13T19:05:37.382-07:00Another star athlete, another bankruptcy<div class="MsoNormal" style="margin: 0in 0in 10pt;">As the article linked at the end of this blog describes, another retired star athlete has filed for bankruptcy. In a previous post, I mentioned the statistics describing the number of football players who are bankrupt, unemployed, or divorced two years after retiring from their professional athletic career. Any time I read a new story, it’s a reminder of how ugly this statistics is. This athlete happens to have been a player on one of my favorite teams—not really important for my point—but it is a team close to home. <br />
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There are some commonalities among athletes declaring bankruptcy: significant investments in real estate—from expensive homes to ventures such as theme parks and resort projects, some of which are in court from the beginning—as well as investments in businesses and entrepreneurial projects that go bust. One may argue that this can be an outcome of anyone who engages in entrepreneurial activities—athlete or not. Moreover, as we are well aware, real estate is not an asset that has delivered high returns in the past few years. So, like many other investors, those who were betting on real estate went bust; so join the club.<br />
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But, as I tell my STAR EMBA students, a savvy investor needs to diversify risk. And what is wrong with some plain vanilla index mutual funds? One can live comfortably off the investment returns of a basket of boring stocks (and once the earnings total more than 35 million, one can weather declines in the stock market), which have the added benefit of not causing the investor to be dragged in front of a bankruptcy judge. How about entrepreneurial skills? We all aspire to be the next Steve Jobs, but the reality is that businesses have a high failure rate. When we run our own firm—in which we have invested our own money—we face a double risk as our human capital and our monetary capital is tied up in one asset. So, yours better be a good entrepreneurial idea—an iPhone, for example. As the saying goes, “to end with a small fortune, you have to start with a big one.”<br />
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It is also true that, if you give a very large sum of money to a young and inexperienced person, athlete or not, chances are the money is not going to be invested in the savviest way. And relying on investment advise from a financial advisor is not necessarily the solution. There is story after story of athletes being taken for a ride by unscrupulous advisors. As I have often argued, and as some new research shows, financial advice is not a substitute for financial literacy. In fact, it is a complement; those who have financial skills are better able to choose the right advisors and to ask the questions that ensure the advisor meets their needs.<br />
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I am firmly convinced that athletes have all it takes to be successful in finance. Financial success requires discipline, and who could argue that football players, for example, do not have discipline? Financial success requires perseverance and we know athletes train for long, grueling hours each day. Financial success requires the ability to stay calm in the middle of the storm, and anybody who has watched a quarterback knows what this looks like. Financial success requires knowing the rules of the game, and athletes understand that better than anyone else. What bothers me about this statistics about athletes going bankrupt is that it is preventable. If someone can show up every day for practice, this is all I need to turn him into a successful saver and investor.<br />
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</div>Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-36669917991932355692012-05-27T12:53:00.000-07:002012-07-13T19:01:15.465-07:00BIG IDEAS: A museum for financial educationAs I mentioned in one of my previous posts, I had many wishes for financial literacy this year. One came true last Thursday, May 24. A new Museum of Saving opened in Turin, Italy, with the objective to be a vehicle for financial education. As one of the academic advisors to the museum, I went to the inauguration and watched the ribbon cut by the mayor of Turin, toured the museum with the Welfare Minister, Elsa Fornero—a very strong supporter of financial education who has added financial education to Italy’s pension reform law—and gave a brief talk about the importance of financial education to the museum’s inauguration day attendees.<br /><br />This is a big idea for financial education and a fantastic one. It is the brainchild of Andrea Beltratti, a professor of finance at Bocconi University in Milan and President of Intesa Sanpaolo, the bank that supported the initiative, and of Giovanna Paladino, who put the idea into action. Many Italians and tourists visit Italian museums every day to appreciate and learn about art throughout centuries of history. Now they can do the same to learn about economics and the workings of money and finance throughout the centuries, starting from the advent of money (estimated at VII century BC) and continuing to the collapse of Lehman Brothers (you could say we take a long run view in Italy). And they can do so in a very engaging way. The mascots of the museum are two little ants: For and Mika (combine the two words and you get “formika,” a slight modification of the Italian word for ant, “formica;” and since they are little, they are called the “formichine”) who guide visitors through the five rooms of the museum. As in the Aesop’s fable, they describe the importance of saving.<br /><br />Each of the rooms has a designation, the first one is to “know,” the second to “learn,” the third to “tell,” the fourth to “dream” and the fifth to “experiment” the economic world. In the first room, the “formichine” describe the birth of money and trade from the beginning of time until today, and many topics can be pursued further by watching videos in elegant cubicles in the center of the room or by watching a movie in the multi-media room. At the end of the first room, there is a space for children to play financial literacy video games. In the second room, one can listen to a description of financial instruments and how they work; what is a stock, a bond, a derivative, and so on. They are described in a simple way by picking cards listing the topics and listening to their descriptions. In the “tell” room, one meets (virtually) Dante, Moliere, Shakespeare, and Hemingway. They describe the relationship with money during their lifetime and, in so doing, describe the economy in different time periods. And it is time to dream in the fourth room, where sixty-three monitors project snippets of famous movies covering saving and, in six of them, the role of money in society. The last room features an enormous dream ring on the ceiling with comments about financial instruments and the economy that are taken from economic studies (One of my papers is featured, and I admit, I am very, very proud of it). In that room, there is a possibility to experiment by playing games and simulation. One game is called Risky City, a Monopoly-type game in which one has to buy real estate (a risky game, in case people haven’t noticed yet). But my favorite is the This Is My Life game. It basically describes the actions that one has to take to realize a dream. The player chooses a dream and the game shows how, by saving, you can reach this dream. (My dream is to go back to Turin to see this museum again!) It is an important and powerful lesson: saving allows you to achieve your dreams.<br /><br />When you enter the museum, in addition to many books dedicated to saving and economic topics, you can take a test to measure financial literacy. And yes, the questions are those used in the US Health and Retirement Study and now in the National Financial Capability Study, and one can take the test again when exiting the building (and researchers can figure out whether there are changes in the responses in the population, on average). The test also asks its takers to assess their own level of financial knowledge, and the hope is that witnessing the evolution of money, finance, and the economy over twenty-seven centuries of history can instill some humility as well as the desire to learn more.<br /><br />Throughout the museum, you can hear interviews with experts and economists. At the moment, most of them are Italian (but more are to come) and feature Mario Draghi, the President of the European Central Bank; Ignazio Visco, the Governor of the Italian Central Bank; and also academics who have studied money, finance, and financial literacy. (I am not going to tell you whether I am interviewed; you have to go and visit the museum…). On the walls, you can read the phrases of famous writers and investors (including Warren Buffett) about saving, investing, and the economy.<br /><br />As academic advisors, we had to think of how to assess the effects of the museum and we have designed several ways in which to do so. I did my first qualitative test on my little niece Giorgia. I took her on my lap and showed her the museum on my computer. Looking at the picture of the mascot, she smiled with joy and said, “I like this little kid, we have the same shoes. I am going to do some drawings now.” She saw a kid in the formichina right away, while I saw the shoes only after five iterations (you cannot beat the creativity of a five-year-old). Judging from the pile of drawings accumulating quickly on my desk, I am pretty confident this museum and the formichine are going to be a huge success! You can see them online at www.museodelrisparmio.it.<br /><br />Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-43542719579887568232012-05-15T17:15:00.000-07:002012-07-13T19:01:15.486-07:00Health and financial literacyI spent a good part of the last month at a hospital bedside in Italy. It was a hard time, but it taught me several valuable lessons, including the similarities and differences between health and financial literacy. <br /><br />On the surface, there are striking similarities between decisions about health and decisions about finance. Both affect important aspects of our life and both have consequences. Both require collecting information, evaluating alternatives, and taking some risk. But while financial decisions and health decisions are both difficult, it seems health has received a lot more of our attention. For example, there is normally a greater sense of urgency around health-related issues. This may be because the effects of being ill are visible, often painful, and easy to identify with. But the financial crisis has had some very visible and painful effects too, so there is no reason that we shouldn't give the same level of urgency to our financial well-being.<br /><br />In health as in finance, one party knows more than the other (the doctor versus the patient, the financial advisor versus the investor) and navigating this relationship requires some care. In both cases (health and finance), it is critically important to ask questions, to discuss objectives in detail, and to exercise a good deal of caution. Again, health seems to be doing much better: doctors have been relatively successful in being recognized as experts that the public can rely on, while the “doctors” of finance are hardly seen as such; reliable financial experts are considered a rare species. Yet, it is not obvious to me that the statistics support this perception; there are financial advisors who have led clients into disastrous trades but also doctors who have operated on the wrong leg or failed to notice (as in the case of my father) deep skin lacerations on a bedridden patient (something that is undoubtedly included in any Health 101 course).<br /><br />There are dangers of focusing on a single aspect of one’s health or one’s finances. Tending to retirement savings without dealing first with high credit card debt is perhaps analogous to treating high blood pressure while ignoring a lung tumor. Clearly, we want to be fully healthy, financially and physically—we cannot get by with just a healthy left arm or a well-managed checking account. But while most of us are willing to undergo regular health check-ups (and, if you ask me, some of them are pretty intrusive), many people never went for a financial check-up. We seem willing to swallow bitter medicine and undergo invasive procedures such as surgery, which some research tells us might be unnecessary or overused, but we are reluctant to follow the recommendations of financial advisors.<br /><br />Health issues have also been able to engage celebrities to further their cause. At the entrance of the hospital in Italy, there was a large poster of Pippo Inzaghi, a professional soccer player from A.C. Milan (Pippo is the nickname for Filippo, but in Piacenza, where he was born, we call him Super Pippo). The poster says “Help us to win against cancer.” I really wish we had a Super Pippo for financial illiteracy.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-30525342781499990512012-04-04T14:49:00.000-07:002012-07-13T19:01:15.511-07:00An extraordinary weekHow extraordinary last week was! On Tuesday and Thursday, I sat in a classroom on the sixth floor of Duques Hall, here at the George Washington University School of Business, to listen to Fed Chairman Ben Bernanke explain the recent financial crisis, the Fed’s response to it, and the lessons we can take from it.<br /><br />While there were only 30 (very attentive and somewhat anxious) undergraduate students in the classroom and a handful of professors whose lectures in this course will follow Chairman Bernanke’s four initial classes (no pressure …), the classes were live streamed and are now archived online at http://www.federalreserve.gov/newsevents/lectures/about.htm<br /><br />This was the first time that the Chairman of the Fed has given a set of lectures on the Fed, why it was founded, what its functions are, what it has done historically, and what it did during the financial crisis. This is truly extraordinary and part of the new era of Chairman Bernanke’s leadership, which is bringing transparency and accountability to an institution that has inspired books with titles like “Secrets of the Temple: How the Federal Reserve Runs the Country.” But what was more extraordinary was to listen to the leader of this institution, who more than anyone has done so much to turn the economy away from the brink of collapse, speak with such rigor, depth, and also humility. As he stated in his classes, because of what we do not know, we have to be humble.<br /><br />I recognized in Chairman Bernanke the brilliant professor from Princeton, who finished his slide presentations right at the minute he was supposed to end, whose historical perspective was so deep and impressive that the students gave him, at the end of his set of lectures, a framed page of the 1933 issue of the New York Times as a gift. The front page of that issue announced that the United States was abandoning the gold exchange standard, a topic Chairman Bernanke covered in class in fascinating detail. But he also brought to the classroom the mastery (and agony) of leading a very powerful institution at a time when problems are not only domestic but also global.<br /><br />And what a difference it made to be able to see him reflect on the lecture notes that were projected on the screen, walk around the classroom, call the students by name, and stay a few minutes overtime to answer questions. At the end of his last lecture he took a group photo with both the students and the faculty. It was extraordinary!<br /><br />As if this wasn’t enough for one week, on Friday I got to go to the Clinton Global Initiative University here at the Smith Center to listen to former President Clinton speak. He launched the Clinton Global Initiative University (CGI U) in 2007 to engage the next generation of leaders on college campuses around the world. As described on their website, each year, CGI U hosts a meeting at which students, national youth organizations, topic experts, and celebrities discuss solutions to pressing global issues. <br /><br />As many as 1,200 attendees came to GW, and at Friday’s opening session President Clinton spoke with an infective passion about this initiative. On stage with him was Madeleine Albright, who spoke of her experience as Secretary of State and her fight to protect human rights; Ray Barcott, a former marine with an MBA from Harvard Business School who described how he founded Carolina for Kibera, an organization aimed at breaking cycles of violence in and developing leaders from the Kibera slum of Nairobi, Kenya; Sadiga Basili Saleem, who founded and directs schools for girls in Afghanistan; the President of George Washington University, who spoke of the GW Center for Civic Engagement and Public Service and his involvement and promotion of the Center. And also on stage was Usher, yes, Usher, who spoke of his foundation and the work they do. Written questions were submitted to the panelists, and a student asked Usher about his inspiration, noting that “singing the answer is encouraged.” Usher reply by singing Whitney Houston’s “Greatest Love of All.” It was extraordinary!<br /><br />And so I spent my week listening to the wisdom all of these amazing people, taking from each of them some lessons I hope to apply to my work on financial literacy.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-82375070671893184942012-03-07T08:56:00.000-08:002012-07-13T19:01:15.617-07:00The Financial Literacy Seminar Series restartsI am very happy to announce that the Financial Literacy Seminar Series restarts this week. I have mentioned the series in previous posts and I am eagerly anticipating the inaugural seminar of the spring term to be held this Thursday, March 8.<br /><br />After our last seminar in December we fielded a short online survey to ask our seminar attendees about the series. We received a lot of feedback and we have been analyzing it to continue to improve the series. Because we are nerdy economists, I cannot resist providing some of the statistics from the survey (but I will spare you the graphs and pie charts). As many as 76% of seminar attendees rated the seminars of consistently high quality—a finding that boosted my ego. Given that we had different seminar formats last fall, we asked what was preferred; nearly half of respondents prefer a seminar with one discussant and about one-third like short presentations with a panel discussion. We also asked about seminar topics. Retirement planning/saving, measurement of financial literacy, and financial education programs are the topics of interest cited most frequently by survey respondents.<br /><br />Armed with all of this evidence and determined to do better each term, we have implemented the following changes to the seminar series: <br /><br />Starting this semester we will have a Distinguished Financial Literacy Lecture. For this special seminar we will invite a speaker who has made a long-standing contribution to the field and who will discuss his or her research program rather than a specific paper. The distinguished speaker for the spring 2012 term is Peter Tufano, Dean of Oxford’s Saïd Business School. <br /><br />We will coordinate our seminar series with DC meetings of other groups focused on financial literacy to maximize attendance. This spring, we plan to coordinate the seminar series with events organized by the American Savings Education Council (ASEC), the Insured Retirement Institute (IRI), and FINRA Investor Education Foundation. <br /><br />We will conduct short interviews with the speakers about the main findings in their papers. These interviews will be posted on the FLSS web page along with the papers and presentations. Together with blog entries written to provide a summary of each seminar, we hope to distill the research presented in the series to its essential findings and implications. <br /><br />We are exploring ways to encourage interaction between our seminar series and researchers and practitioners beyond the DC area. We are making contact with several national networks of researchers and practitioners working in financial literacy and plan to make use of technology to connect with remote audiences. We will also explore the possibility of sponsoring a conference on financial literacy, potentially with several government agencies interested in this topic.<br /><br />Finally, we will have not only discussants but also a panel of experts to present work on effective financial education programs, and we will try to cover several of the topics that were of interest to seminar attendees. <br /><br />We are thrilled that Peter Tufano has accepted our invitation to give the Distinguished Financial Literacy Lecture this week. His accomplishments are so many that I can’t begin to list all of them. He has developed courses on consumer finance, founded a non-profit R&D lab for new financial product development (www.d2dfund.org), and served on advisory groups in the US (and now the UK) addressing the issue of financial inclusion. Before joining Oxford, Tufano spent 33 years at Harvard, most recently serving as Professor and Senior Associate Dean at Harvard Business School, as well as being the co-Founder of the Harvard University Innovation Lab (i-Lab).<br /><br />I can only say that I cannot wait to hear Peter’s talk this Thursday!<br /><br />The program for the spring 2012 Financial Literacy Seminar Series is provided on our web site: http://business.gwu.edu/flss/.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-47284956539181804182012-02-20T12:10:00.000-08:002012-07-13T19:01:15.636-07:00New wave of STAR EMBA studentsThe new wave of STAR EMBA students has arrived on campus, and they started classes last Friday. I have written about this program in previous posts. This is an Executive Master in Business Administration (EMBA) at the George Washington University School of Business for Special Talent, Access and Responsibility (STAR) students, targeted to athletes, celebrities, and others. In addition to active and retired football players, the current class includes PGA golfers, Olympians, a TV personality, a music mogul manager, and a filmmaker. It is impossible not to spot them in the hallways of the business school, not only because on the first days they are wearing business suits and moving in groups, but also because of their “size,” in particular the football players.<br /><br />As the School mentioned in the description of the program, “we continue to strive toward our mission of creating a powerful, informed and educated group of athletes and entertainers who are starting businesses, building media platforms, and getting recognized as national change makers and philanthropists.” It is exciting to have such a group of students, and I look forward to teaching them next week.<br /><br />There are a few characteristics of this program and these students that are especially noteworthy. First, most of these individuals are very active in the community; they are involved in charitable organizations or have or plan to start their own foundations. The majority of these foundations are devoted to helping underprivileged children. Second, the program is open to spouses, as well. As with the first wave of students, in the second wave we have three spouses participating in the program. Finally, women are a growing group in this program. Let’s not forget, there are a lot of STAR women!<br /><br />A group of faculty had dinner with this class last Friday both to welcome them to campus and to have them meet with Washington, DC-based students from the previous class. It was good to witness their enthusiasm for the program, passion for their work and activities, and curiosity to meet the other students. We had a guest speaker for dinner—an entrepreneur who spoke about his new firm, from how the idea originated to what it took to create and launch it. He spoke for a long time (and since dinner was not served until he finished, for me it felt very long), and so many hands went up after his talk that he kept answering questions for another hour (yep, and the dinner was delayed even further). I sat between two football players, one of whom was from the New York Giants. Of course we talked about the Super Bowl game but I refrained from asking him about the last five minutes of the game. Now that I know a lot more about football, I can have some good conversations with this group of students, and it is a lot of fun. Naturally, they are very conscious about their healthy eating. Since no one ate their bread, I could stuff myself with my and their bread while waiting for dinner to be served. The dinner—when it finally arrived—was very good, but the company was even better.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-71084343539870555192012-02-15T10:59:00.000-08:002012-07-13T19:01:15.736-07:00After the Super BowlI have watched most of the football games this season and now that the season is over, I wonder how I will spend my Sundays. Since I am new to this sport, I have sometimes watched the games while reading “Football for Dummies,” a book that turned out to be much better than I expected and does not deserve the smirks that my colleagues have offered (but perhaps they are smirking at the fact that I am such a football nerd). With football in mind, I want to discuss three topics in this post: fun, skill, and inspiration. <br /><br />The games were very fun to watch and I enjoyed what comes with them as well. For Super Bowl, we had a pre-game party at my place, with all of my football fan friends. We ended up in an interesting discussion about strategies; I may have eaten too many nachos, but I did not understand the last five minutes of the Super Bowl game. We also enjoyed the commercials of course; I could not take my eyes off the TV screen.<br /><br />Throughout the season, I saw great skill displayed on the field, the capacity to make critical decisions in a split second, the strenuous defense that some teams were able to put up, the ability to be so very precise, and the capacity to stay calm in a crisis. I have watched so many reversals of fortune just minutes before the end of a game that I have learned that one often cannot predict the winner until the second before a game is over. It is a tough game.<br /><br />In addition to the games, I enjoy listening to player interviews. The players are articulate and succinct (a rare quality, believe me), and they are aware that many of their fans are watching. Like many, I like Tim Tebow a lot. He is unusual, but like other players, he is using his power and growing fame to make a difference in the lives of young people. Because of their enormous fame, football players have the capacity to influence so many people, to inspire them, to be role models.<br /><br />And speaking of role models, when I talk about football players to young students, I point out that all of the players have college degrees and many of them from very good schools. I listened carefully to all of these schools at the Super Bowl when the players were running onto the field. Hey, Tom Brady is from the University of Michigan, and Eli Manning is from the University of Mississippi, and guess what, Eli majored in Business—how about that!<br /><br />Another inspiring talent that players have is the capacity to inspire and motivate their team. I watched the video of Ray Lewis talking to his team after the loss against the Patriots. That was a very tough game and Ray offered both comfort and motivation to never give up and to do better the next time. The video ended with Ray greeting a very young fan and one of the players of the Ravens holding a little curly haired girl. Priceless! I, too, am a fan, and I can’t wait until next season.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-81678125482641783262012-02-07T17:49:00.000-08:002012-07-13T19:01:15.846-07:00Financial Literacy Program Wins “Business Gives Back” AwardLast weekend I attended an event organized by George Washington School of Business (GWSB) called “Business Gives Back.” Funds raised from these events are given to student-selected organizations and initiatives. At this particular event, a student who led a high impact initiative in the DC or global community was going to be given an award.<br /><br />I am very happy to report that Amir Abdallah, who founded the Financial Literacy Program at GWSB, won the award. Amir founded the GWSB Financial Literacy Program (FLP) last spring in response to the growing need for increased engagement in the community around the issue of financial literacy. The FLP is a student-run volunteer placement program that sources financial literacy volunteering opportunities in the DC area. It is open to all GW graduate students, faculty, and alumni, regardless of program or professional background, and equips volunteers with the training and support-base to learn and spread financial literacy throughout our community. The mission is to provide opportunities that are mutually beneficial, meaningful, and challenging and that utilize the talents of the GW community to spread financial empowerment on and off campus. As their website, which is listed at the end of this post, says: “As responsible professionals and recipients of higher education, we are particularly well positioned to serve as ambassadors of financial education.” <br /><br />Amir emailed me last year asking if we could meet to discuss financial literacy. I hadn’t met him and was curious to hear about his interest in financial literacy. The person who came to my office that day was a very soft-spoken Global MBA student, who sat down with a notebook and took many notes while we talked. He told me about his program, the way it is organized, and what it aims to achieve. He spoke with simplicity but with the pragmatism of a person who understands that things need to get done and implemented. There was passion in his voice and in his words for this topic—something I am always paying attention to. <br /><br />Perhaps because he is slim and so articulate, that day Amir reminded me of a young President Obama; a young person who has thought to use his knowledge and skills to lead initiatives that can benefit society. And on Saturday, we celebrated the Financial Literacy Program that, from its inception, has reached 340 individuals (many of whom are students in poor schools). Amir was there on center stage. He described the program yet again using the combination of passion and pragmatism he had displayed when we first talked. He was irresistible and won by a wide margin. This blog is to celebrate a young leader.<br /><br />http://gwsb.campusgroups.com/flp/home/<br />You can see Amir’s big smile in the Washington Post article about the event: (http://www.washingtonpost.com/business/capitalbusiness/gwu-honors-grads-social-responsibility/2012/02/03/gIQAmc39rQ_story.html).Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-80436260238932727292012-01-25T08:42:00.000-08:002012-07-13T19:01:15.868-07:00An America built to last needs to invest in educationIn his State of the Union address President Obama spoke of an America “built to last.” I am glad that the focus of policy is turning to the long run. One essential component of such a built-to-last idea must deal with education. In an increasingly global and complex economy, citizens need to have the skills to successfully participate in labor markets, not to earn low and stagnating wages but wages that allow them to be part of a solid middle class, to send their children to college, and to save for retirement.<br /><br />The President did talk of education and the important role of education. But it is going to take more than education reform that allows schools to be creative in their curriculum and to reward good teachers. America needs to invest in education if it wants an economy built to last. While it is good to invite state and local governments to devote more of their budgets to higher education rather than slushing education expenses, it is important to recognize that the federal government has an important role to play to foster education. More funds to research and technology can contribute not only to support higher education but also to fuel innovation and ideas that form the basis of growth (and the growth of well-paying jobs). Good education and solid training are also at the base of innovative entrepreneurship. Access to finance has been mentioned, by the President, too, as one of the major impediments to entrepreneurship, but in my view (and according to my research), education is far more important, in particular if the entrepreneurs we aim to cultivate are innovators rather than self-employed individuals who are trying to make a living. It is also important to recognize that a good education is not built on good colleges or community colleges alone but on a strong educational system, from kindergarten to college and beyond.<br /><br />President Obama mentioned that college education cannot be a luxury. But with the cost of college rising faster than inflation and faster than the growth in wages, in particular in the lower part of the wage distribution, we are headed in that direction as the purchasing power of workers is not keeping up with the cost of a college education. If we are planning for the future, it is important to find ways to make college affordable and within reach of the many families that aspire to send their children to college. As I have mentioned in many of my previous posts, a college education is often the most important investment that a person can make.<br /><br />I want to end this post with a statement that President Obama made during his address and that can be summarized as follows: teachers matter. This does not require much comment as it speaks for itself. All of us can name a teacher who has been influential in our life and who has made a difference. For me, it was my high school literature teacher. Her name is Ada Pucci. Even after more than 30 years, I think often of her and of the encouragement she gave me; we have talked on the phone over the years and when I am in Italy, and I go and visit her. Teachers matter, and they matter to what students can do in the long run. They too should be part of the policy for an America built to last.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-65558087867694873462012-01-05T07:51:00.000-08:002012-07-13T19:01:15.970-07:00Wishes for the new yearAs the new year starts, I have many wishes for financial literacy. I list the top three below:<br /><br />Wish #1. I hope a leader to champion the cause of financial literacy will emerge and help give this topic the national and international attention it deserves. Michelle Obama has been the celebrity behind obesity and has helped not just raise attention around this important topic but also push for relevant programs in schools. There is a striking similarity between obesity and financial illiteracy. According to statistics, one third of the population is obese. Well, the same (and even worse) figures can be cited for financial illiteracy; about half of the population does not know the abc’s of finance and economics. There are severe costs associated with obesity, and there are equally severe costs of financial illiteracy (if in doubt, check the figures resulting from the financial crisis). A lot of initiatives have been undertaken at the national level to address obesity, from a revised food pyramid to limiting the amount of junk food available in cafeterias and vending machines. I may be one of five people in the country to know about the official web site offering financial information (do you want to guess which one it is?). Other celebrities have helped raise awareness of a variety of national and global problems. For example, Al Gore increased the attention on the environment and global warming. While I do not think the Artic will melt in the next few years (if I am wrong, please let me know), we are discussing or taking a lot of measures to address this long-term problem. On the other hand, the problem of financial illiteracy is urgent and pressing.<br /><br />I do not have a strong preference about who this leader will be, but it would be good if he/she had a face (institutions are great, but it is hard to compete with Happy Feet). He/she should also be substantially liked by the public—a difficult objective in these days of falling financial geniuses, but there are many celebrities that people love. A sports celebrity would be great (Who does not like sports? Raise your hand!), in light of the similarity between success in sports and success with financial matters: it takes dedication, practice, and discipline! <br /><br />Wish #2. I hope some BIG initiatives will emerge for financial literacy. As I have lamented in previous posts, a lot of the discussion about financial literacy has focused on its cost (as if we should or could offer it for free), and many initiatives to promote financial literacy are limited in scope and objectives. But this is a global problem that is becoming more and more pressing by the day (most of the political leaders in Europe have been ousted as a result of the sweeping financial crisis). This situation needs some big initiatives. How about a national campaign, or even a global initiative on financial literacy? How about a museum for financial literacy? We have declared April financial literacy month, so how about doing something concrete and big during that month (March or October are good for me too; I am not fussy about which month it occurs) that has lasting effects?<br /><br />Wish #3. I hope the new year will see financial literacy in the schools; if not in the United States, then at least in a sizeable number of countries. Financial literacy is an essential tool for anyone who wants to be able to succeed in today’s society, make sound financial decisions, and—ultimately—be a good citizen. The financial crisis has put economic news on the front pages of newspapers almost daily, requiring individuals not just to be abreast of concepts such as deficit, national debt, and interest rate spread but also to evaluate the economic reforms that political leaders are proposing. Moreover, the cost of college education has been increasing at a rate faster than inflation, requiring students and their families to start planning for college as soon as possible, to be savvy about financial aid, and to manage student loans effectively. And young people are required to make one of the most important decisions of their lifetime—whether to invest in higher education—during high school, and they should make it in conjunction with a good understanding of the costs and benefits of that decision.<br /><br />Perhaps I am only dreaming, but dreams are good. And my fourth wish is that all of you have a happy new year. Be in good financial health!Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-18333247464876835082011-12-27T09:40:00.000-08:002012-07-13T19:01:16.078-07:00The new financial literacy seminar seriesAs December comes to an end, I am thinking of some initiatives undertaken this year. One stands out, as it is rather recent and it is in the process of being evaluated to make it even better: our Financial Literacy Seminar Series. Started last October, this is a joint project between the George Washington University School of Business and the Federal Reserve Board (FRB) with the goal of hosting cutting edge research on financial literacy. We invited all individuals and institutions interested in financial literacy in the Washington, DC, area, and because presentations have been taped and posted on the web, everybody who is interested in financial literacy can watch the presentations or read the papers. They are posted on the seminar’s web page: http://business.gwu.edu/flss/.<br /><br />We had a distinguished group of speakers in the fall term. Our inaugural seminar was given by Olivia Mitchell from the Wharton School, whose talk examined the link between financial literacy and wealth accumulation. Her talk was followed by a panel of policy experts, including Gail Hillebrand from the Consumer Financial Protection Bureau, Karen Dynan from Brookings, and Jason Fichtner from George Mason University (formerly the Deputy Commissioner of SSA). In subsequent seminars, Robert Clark from North Carolina State University presented his work on workplace financial education, a very important topic when looking at financial education for the adult population; Stephan Meier from Columbia Business School examined the link between financial literacy and subprime mortgages, showing that numerical ability is strongly associated with mortgage delinquency and default; Bilal Zia from the World Bank presented an evaluation of financial literacy programs in India; and Jonathan Zinman from Dartmouth College examined household debt and, in particular, credit card debt and the way it could be managed better. Our last speaker was Brigitte Madrian from Harvard University. She reported on some important features of default options, i.e., the fact that when employees are automatically enrolled into pensions, many of them stay enrolled at the default rate, even when that rate is a “bad” one and unlikely to correspond to a rate that the individual would have chosen had he/she made an active choice. Most importantly, the employees who tend to stick to the default are disproportionately those with low income, which is often a proxy for low financial literacy.<br /><br />Different seminars in the series had different formats. While the majority of talks were given by academics, at times we had a discussant or, as mentioned above, a panel of policy experts. Even without a discussant, our audience had so many experts in this field that there always was a very lively discussion with many questions asked of the speaker. To continue the discussion in a less formal setting, we held a reception after the seminar so that participants could continue the discussion with either the presenter or other attendees (sometimes with the help of a glass of Italian wine). The Dean of the Business School would also stop by the reception to greet the speaker or meet the attendees and to hear how the School could continue to promote financial literacy.<br /><br />One of the privileges of organizing the seminar series is that I get to meet with the seminar speakers, discuss their paper in depth, hear in more detail their views and their insights as well as learn about their future projects. Another equally important privilege was getting to know and work with a group of researchers from the Federal Reserve Board. They have been a great group to work with: they combine an interest in theoretical and empirical research with a focus on policy; they ask important questions and have very high standards for research. Together, we were unstoppable; we started to work on the series in August and in October we were ready to start.<br /><br />And speaking of privileges, last June, I had the opportunity to meet with Chairman Bernanke. Sitting in his elegant office at the FRB, I told him about the projects that our teams at the Financial Literacy Center (FLC) were working on and what we were doing to promote financial literacy. He proposed more interaction between the researchers working on financial literacy and the researchers from the Federal Reserve Board and suggested organizing some joint activities. As a result, the Financial Literacy Seminar Series was born, and it benefits from the financial support of the Federal Reserve Board. Because the end of the year is a time for evaluation, I have to say I am very proud of our new Financial Literacy Seminar Series. And I am especially proud of being a student of Ben Bernanke.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-33927440618968024172011-12-08T19:03:00.000-08:002012-07-13T19:01:16.189-07:00Learning from Elsa ForneroThe front page of the Wall Street Journal last Monday, December 5, had three pictures of a woman in tears. That woman is Elsa Fornero, the Welfare Minister in the new “technocratic” government of Italy. The fact that she was in tears was truly remarkable and it deserved to be on the front page of a major business newspaper. This is something new, and there is a lesson to be learned from it.<br /><br />Elsa Fornero, a professor of Economics at the University of Turin, is an international expert on pensions. In charge of one of the most difficult reforms, i.e., changing the pension system in Italy, she has set out to implement a set of new and severe measures that nobody before her has been able to do, even though the current system is unsustainable. <br /><br />Reforms might be right, but they are painful, and the fact that they are necessary does not alleviate any of the pain they inflict. Technocrats normally describe necessary reforms as the inevitable medicine that a country has to swallow to get better; the numbers are on their side, and no one had ever shed a tear when reform might mean that someone wouldn’t be able to pay their bills at the end of the month. But not Elsa Fornero. The woman who, for more than forty years, has done the calculations about the pension system in Italy; has shown in many scholarly papers that the Italian pension system is unfair, inefficient, and too expensive; has set up a center to study this topic in the most rigorous way, looking at data both in Italy and in other countries, was there at center stage to announce her reforms. The new Minister, who was appointed for her unique expertise, stopped speaking at the very moment she had to pronounce the word “sacrifice”—and cried.<br /><br />This is not only a sign of humanity, a recognition that reforms often equal pain, but also an act of humility and of immense courage. It took a woman to attack reform of one of the most difficult and stubborn pension systems. She had one week to do it. She knew what to do and what was necessary. And when she described it, she told it as it is, and she cried. <br /><br />I hope this is the start of a new phase both for politics and for women. Politicians need to have the skills and good judgment to set countries on sustainable paths and (financially literate) citizens should hold them accountable. And I hope we are done with the “iron lady” and similar clichés about women in command. I highly recommend that other Italian politicians be so bold in their actions as the Fornero reforms, as well as show that they care about the well-being of their fellow citizens. We all can learn from Elsa Fornero to be ourselves; in her case, a woman who cares. When I grow up, I want to be Elsa Fornero.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-74565947067817132502011-11-21T09:53:00.000-08:002012-07-13T19:01:16.297-07:00Getting ready with PISA’s new module on financial literacyI am turning in this blog post to the new financial literacy module that will be added to the Programme for International Student Assessment (PISA) in 2012. PISA’s group of financial literacy experts met in Melbourne at the end of September and finalized the questions that will be asked of 15-year-old high school students in 18 countries. I wrote about this module in a previous post (see link below) and it is time for an update.<br /><br />I have the honor of chairing the financial literacy experts group, and an honor it is because the group is composed of some of the most accomplished and knowledgeable people in the field of financial literacy from a number of countries. Because the importance of financial literacy was first acknowledged outside the school system and was first dealt with by policy makers and regulators, many of these experts come from Treasury departments or hold jobs in central banks, regulatory authorities, or are involved with other government agencies. Nonetheless, the work has been academic in nature, meaning we went through a very rigorous process of designing a set of questions that can measure financial literacy in many different countries.<br /><br />Our first task was to design a financial literacy framework to help us define the objectives of the module and the areas to cover when designing questions (The framework can be accessed on the OECD web site—the link is below). The development of the framework followed a sequence of six steps:<br />• Development of a working definition for the domain and description of the assumptions that underlie that definition;<br />• Identification of a set of key characteristics that should be taken into account when constructing assessment tasks for international use;<br />• Operationalization of the set of key characteristics that will be used in test construction, with definitions based on existing literature and experience in conducting other large scale assessments;<br />• Evaluation of how to organise the set of tasks constructed in order to report to policy makers and researchers on achievement in each assessment domain among 15-year-old students in participating countries;<br />• Validation of the variables and assessment of the contribution each makes to understanding task difficulty across the various participating countries; and <br />• Preparation of an interpretative reporting scheme for the results.<br /><br />It was a long journey for all of us. We started this work in June 2010 with a meeting in Boston and we worked steadily for a year and a half. We met at regular intervals, each time in a different country, which also reminded us that our focus was to design questions that could be answered in different economic settings and different educational systems.<br /><br />The OECD has been a pioneer in financial literacy and adding a new module on financial literacy in 2012 in PISA in countries that have not even formally introduced financial education in school speaks of their long-term vision and their capacity to lead and draw the attention of countries toward important topics such as financial literacy. I particularly like the statement that the OECD displays on the top of their PISA webpage:<br /><br />“Are students well prepared for future challenges? Can they analyse, reason and communicate effectively? Do they have the capacity to continue learning throughout life? The OECD Programme for International Student Assessment (PISA) answers these questions and more, through its surveys of 15-year-olds in the principal industrialised countries. Every three years, it assesses how far students near the end of compulsory education have acquired some of the knowledge and skills essential for full participation in society.”<br /><br />This statement serves to remind us that financial education is as important as the traditional subjects taught in school: As I have mentioned often, just as it was not possible to live in an industrialized society without print literacy—the ability to read and write, so it is not possible to live in today’s world without being financially literate. The financial crisis has put economic news on the front pages of newspapers almost daily, requiring individuals not just to be abreast of concepts such as deficit, national debt, and interest rate spread but also to evaluate the economic reforms that political leaders are proposing. Not only are young people required to make one of the most important decisions of their lifetime— whether to invest in higher education—during high school, but they are also confronted with numerous decisions of economic consequence: having a car, a cell phone contract, a bank account, and a debit or credit card. Financial literacy is an essential tool for anyone who wants to be able to succeed in today’s society, make sound financial decisions, and—ultimately—be a good citizen. <br /><br />We, on the PISA committee, are only at the beginning of our journey. Our next meeting has been scheduled for Heidelberg, Germany, next September, so we fly to yet another country. I have collected little items from those trips to remind me of our meetings. From our trip in Australia, I brought home a little yellow road sign that hangs in my study. It says: “Kangaroos, next 15 km.”<br /><br />To read the financial literacy framework, please see below: <br />http://www.pisa.oecd.org/dataoecd/8/43/46962580.pdf<br />My previous blog on PISA: <br />http://annalusardi.blogspot.com/2010/09/comparing-financial-literacy-of-young.htmlAnonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-71635655730944685802011-10-24T14:42:00.000-07:002012-07-13T19:01:16.404-07:00We are All Blacks!This has been a busy fall so far with a lot of travelling (I am on my way to Sweden), starting a new financial literacy seminar series (more in future blogs), and keeping up with my newly acquired interests: football and rugby! It has been a season full of exciting games, including the Rugby World Cup, which was held in New Zealand. I am extremely happy to announce that the New Zealand All Blacks are the World Cup champions! I am ecstatic and wish I were in New Zealand to celebrate their victory. What could be sweeter than winning the World Cup when your country is the host and your fans are in the stadium? I can only imagine the explosion of joy in Eden Park in Auckland at the end of the match with France (and the sense of relief as well since the score was so close, I could hardly breath...). <br /><br />I will celebrate this great victory by writing about New Zealand and the role they have played in the field of financial literacy. Under the leadership of feisty Diana Crossan, the Retirement Commission has done a lot of innovative work on financial literacy. I mentioned in a previous post that they have one of the best national web sites dedicated to improving the financial literacy of the population. They were also one of the first countries to conduct a second national financial literacy survey in order to measure financial knowledge over time and therefore assess their progress in improving financial literacy. They have many programs targeted to specific groups of the population, recognizing that different people have different needs and different economic circumstances. One group of great interest is the Maori, and specific programs have been designed for them as well. While small and without a big budget, the Commission is a mighty group. And to better communicate the focus of their work, they have recently changed their name from Retirement Commission to the Commission for Financial Literacy and Retirement Income. The main lesson here is not to underestimate the power and ingenuity of what one institution—however small—can do for financial literacy. And while New Zealand is a small country, it has been a model to look to for financial literacy.<br /><br />I have one recommendation for Diana Crossan: go to that talented captain of the All Blacks, Richie McCaw, show him your muscles (figuratively, I mean), and ask the team to support financial literacy. I am sure a lot of New Zealanders would pay attention. In my view, sport and financial literacy go very well together (wink)!<br /><br />But for now, congratulations to the All Blacks and to New Zealand for being World Champions and hosting the World Cup. Bravi!Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-29038954339620683522011-10-04T18:21:00.000-07:002012-07-13T19:01:16.511-07:00Financial literacy, the Maori, and … rugbyI am just back from Australia and New Zealand and will write first about my trip to New Zealand. I was invited to attend a meeting at the University of Otago with representatives of the Maori population, who have become interested in financial literacy. If you do not know the Maori, they are the indigenous people of New Zealand and represent about 15% of the population today. Their name is derived from “Ma-Uri,” which means “children of Heaven.” Maori comprise many “iwi” (tribes), “hapu” (subtribes), and “whānau” (extended family units). Having originated in Polynesia, they brought with them the rich culture of the region, where song, dance, art, and oratorical skills were significant, especially as there was no written language at that time. On my visit to New Zealand a couple of years ago, I went to Rotorua, a town settled by the Maori on the North Island. This time, I was in Dunedin, on the South Island of New Zealand, home of the Ngāi Tahu. See below a picture of the formal greeting among the Maori.<br /><br />In one of the papers that is part of an international comparison of financial literacy across countries, which I have edited for a special volume of the Journal of Pension Economics and Finance, a research group in New Zealand headed by Pension Commissioner Diana Crossan documented differences in financial literacy among the new Zealanders of European descent and the Maori population; the Maori tend to know less. However, this is not the case for the Ngāi Tahu, and one explanation offered for this finding is the fact that Ngāi Tahu have promoted a series of programs aimed to increase financial literacy and saving. A description of Whai Rawa, their matched saving initiative, is provided on the web page noted at the end of this post. The meeting at the University of Otago was about trying to measure the effectiveness of the new initiatives and changes in the well-being of this population over time.<br /><br />It felt special to sit among this group. The meeting opened with the traditional Maori greetings, and much of the discussion and questions were led by one of the Ngāi Tahu representatives. He was just as one would expect a chief to be: charismatic, wise, and pragmatic. His questions to me were remarkably similar to the ones I often hear when I travel around the world: What is the business case for financial education? What works? and How do we know that it works? But there were major differences, too. The Ngāi Tahu’s planning horizon is very long. Their vision is “For us and our children after us” (Mō tātou,ā, mō kā uri ā muri ake nei). They feel strongly about their community and about sustainability of resources over time. I came away with not only a deeply felt respect for such foresight but also admiration for this capacity to lead and look ahead.<br /><br />You may know about the Maori from the “haka,” or war dance, that the New Zealand rugby team performs before each game (if you have not seen it, you have got to watch the video posted below). I like the haka for many reasons. First, it shows how much the Maori traditions have been embraced by the population in general. Maori or not, every player in the rugby team plays the haka very seriously. Second, one wants to build up energy at the beginning of an important event. Third, it scares the hell out of the opposing team. And this brings me to my next topic: rugby! New Zealand is currently hosting the Rugby World Cup. Their national team is the All Blacks, and I spent a good part of my time in New Zealand watching rugby. The All Blacks are amazing players and I was glued to the TV for hours. On Sunday, I went to the stadium in Dunedin to watch Italy against Ireland. We (Italy) did not win, but we put up a good fight against the Irish; it was a good game. On the first leg of my trip back to the U.S. on Air New Zealand from Dunedin to Auckland, the flight safety video was done by the captain and the coach of the All Blacks and everything on the plane was about the All Blacks, including pictures of the players on the coffee cups. Believe me, they are irresistible! One advertisement said: “we are crazy about rugby.” Well, for a week I was too.<br /><br />Kia ora.<br /><br />http://www.facebook.com/pages/Financial-Literacy-Center/119369231450239 <br />http://www.ngaitahu.iwi.nz/News/2011/Whai-Rawa-Five-Years-of-Saving-Success.php<br />http://www.youtube.com/watch?v=6f3fvUvOiLQ&feature=relatedAnonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-52131007819191435152011-09-27T22:06:00.000-07:002012-07-13T18:59:05.865-07:00Geocoding And Its Importance to Businesses<div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://cm-redmine01-data.s3.amazonaws.com/files/091015114742_Picture_4.png"><img style="margin: 0px 0px 10px 10px; width: 404px; height: 285px; float: right; cursor: pointer;" alt="" src="http://cm-redmine01-data.s3.amazonaws.com/files/091015114742_Picture_4.png" border="0" /></a><div><div>The value of geo-location and <a href="http://en.wikipedia.org/wiki/Geocoding">geo-targeting technology</a> is manifold. It has done wonders for businesses in any sector in driving up customer awareness and increasing its sales. With location intelligence technology, businesses can better identify business solutions and make better business strategies. </div><div><br />In the marketing sector, GIS data has helped advertisers better target their products and services to the right audience. By appending demographic data to latitude and longtitude data, marketers are able to identify where specific consumers are located. They can therefore create marketing ads that caters to the interests of a specific target group and hence, boost profit. </div><div><br />Furthermore, insurance companies can better set premiums and make accurate underwritings that are based on a client’s specific location. If they are for instance, located in hurricane or flood prone areas, insurance companies can account for such factors in their insurance rate estimates, as well as make other offers that would help customers better cope with the financial responsibility in case their property gets hit with an occurrence.</div><div><br /><a href="http://www.dmtispatial.com/en/Products/LocationHub.aspx">Geocoder</a> technology are also being used by the average consumer. Think about. How many times have used Google Maps or GPS mobile app to look for a specific restaurant or to find directions to a specific venue? </div><div><br />Many businesses have also incorporated geospatial technology into their online presence as well. Nowadays, if you were to visit a store’s website and inquire about their weekly flyer, the site would usually ask for your postal code which will then provide customers’ specific sale offerings that are available in their area. Through integrating GIS data into their website, businesses are able to provide a more enhanced and personalized experience for online visitors and even drive traffic into their retail store. </div><div><br /><a href="http://dmtispatial.com/en/Products/DataManagement/CanMapProductSuite.aspx">Geospatial</a> technology is as important to consumers as it is to businesses. This blog post hopefully has helped you better understand the workings of geospatial technology and its value. </div></div></div></div>Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-52249774084112213652011-09-27T18:12:00.000-07:002012-07-13T18:59:05.978-07:00Mortgage Broker Role In Home Shopping<a href="http://mortgagesforless.ca/wp-content/uploads/2010/12/mortgage_and_money_6.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 300px; height: 300px;" src="http://mortgagesforless.ca/wp-content/uploads/2010/12/mortgage_and_money_6.jpg" border="0" alt="" /></a><br /><p class="MsoNormal">In business, there are many activities that are to be done. Investing is one of this main activities people do. Investment can be stocks, savings accounts or even real estate. Real estate examples can be a house, apartment, condos and even land. <o:p></o:p></p> <p class="MsoNormal">Purchasing real estate is really a big kind of investment. It is not like shopping at the mall for a pair of boots. It is a bit more serious and it entails a large sum of money. People should get help before they make this important decision. The assistance comes from <a href="http://www.mrmortgage.ca/">mortgage brokers Toronto</a>. The broker is not necessarily the person that gets you a house. They are the person in charge of realizing the financial situation with the price of the home. They need to make sure the people can afford the dream house chosen. The first thing to they do is study the buyer’s financial situation. The persons will need a down payment for the first instalment of the house. The remaining price is almost improbable to pay in cash. This is why they need a loan. The broker revises the financial situation and they decide on what kind of loan the person we can get. Secondly, they are to revise the rates the person will borrow in. The rate and the info will determine how long the person will need to finish the loan. <o:p></o:p></p> <p class="MsoNormal">The <a href="http://www.mrmortgage.ca/">Toronto mortgage</a> broker is extremely important in this exchange. They are the ones that ensure that the dream of getting a job is realistic depending on the financial standing. People should get help because it is extremely important. <o:p></o:p></p>Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-36487060100452780612011-09-27T18:01:00.000-07:002012-07-13T18:59:06.008-07:00Sensors, Tech and Life Applications<a href="http://www.ierg.net/lessonplans/tables/unit_plans/large_image/technology.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 200px; height: 300px;" src="http://www.ierg.net/lessonplans/tables/unit_plans/large_image/technology.jpg" border="0" alt="" /></a><p class="MsoNormal">The technology that is developed by both science and engineering are constantly being used in daily life applications. The amazing thing about these developments is how they can make life easier for you. Understanding how these work sounds quite complicated in theoretical terms but when thinking of applications it is a whole other story. <o:p></o:p></p> <p class="MsoNormal">First of all are the <a href="http://www.disensors.com/products.aspx?id=29">Load cells</a> that transform force into an electrical signal.<span> </span>Load cells are quite popular when people want to measure. They can be found in multiple kinds of scales such as in platform and portable weigh scales. Then, the <a href="http://www.disensors.com/products.aspx?id=16">accelerometer</a> is a device that measures all kinds of acceleration. They look at the weight and the frame of reference in order to measure. Some accelerometers can even measure an object that is not in movement by only using the force of gravity, otherwise known as the G-force as the reference. In the electronic applications you can find this development in smartphones or game stations such as Play Stations. In the next case are pressure sensors which measure the pressure of usually gases and liquids. It is the pressure that stops a fluid from expanding. The types can be absolute, gauge, vacuum and differential. They have a few applications as well. The measurement can be pressure sensing, altitude sensing, flow, or depth sensing.<o:p></o:p></p> <p class="MsoNormal">Utilizing the applications are great manners to make daily tasks easier than what they can be. Scientists all over the world are working towards the improvement of societal development as a form of solution for daily life. <o:p></o:p></p>Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-70503107780666057972011-09-27T08:29:00.000-07:002012-07-13T18:59:06.126-07:00Internet Banking - Just A Click Away<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVoafxLmgxyP8vTLEnwiZampTQNw-LdF11d6mbxRkIyOjA2K5-PasWf1Aihu-pg0VqeAETGLpf7_puGMI1izl12HgXiOW5ZQGPHFHo2yAtbVjZoGIKzKuZh-rJXUGA5puIpTUEkcEO5OU/s1600/internet_banking_385x261.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 217px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVoafxLmgxyP8vTLEnwiZampTQNw-LdF11d6mbxRkIyOjA2K5-PasWf1Aihu-pg0VqeAETGLpf7_puGMI1izl12HgXiOW5ZQGPHFHo2yAtbVjZoGIKzKuZh-rJXUGA5puIpTUEkcEO5OU/s320/internet_banking_385x261.jpg" alt="" id="BLOGGER_PHOTO_ID_5657062573920973138" border="0" /></a><br /><br />Many people usually go to a bank branch to run financial errands such as depositing, paying bills, making investment transactions, etc. During rush hour after work, you end up being part of a long, never ending line which makes banking process into a hassle. With internet banking, these financial errands can be done instantly without a wait.<br /><br />Online banking can be done anywhere as long as there is an internet access. This allows you to do banking whenever it is convenient for you, not limited to branch's operating hours. Also, internet banking offers as much as traditional banking does; both financial and non financial banking can be done online.<br /><a href="http://en.wikipedia.org/wiki/Online_banking"><br />Online banking</a> lets users to view and track their transactions anytime, helping them with managing money. Instead of waiting for a monthly bank statement, which is already outdated for few days during the delivery, users can see updated bank statement instantly. Loan and credit card applications can be made online as well.<br /><br />Financial transactions can be done online as well. Instead of sending monthly cheques or travelling to a branch to pay, you can pay all your bills at convenience of your own house, or anywhere. This means you can pay for your bills even when you are on a trip. With one click, you are on time for your bill payments: no more forgetting the deadline and paying for late penalty. Setting up recurring payments of transfer is available as well. With this process, you don’t even have to log on to make monthly transactions. Everything will be done for you automatically at the same time of the month. You can make investment purchases and sales through internet banking as well.<br /><br />With <a href="http://www.scotiabank.com/vi/cda/index/0,,LIDen,00.html">internet banking</a>, there is no need to travel to a brand to run errands after work. Almost all financial errands can be ran at your convenient time, anywhere. You can finally rest after work without having to rush to a branch and get trapped in that miserable line - banking is only a click away.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-53141994415963311982011-09-20T09:09:00.000-07:002012-07-13T18:59:06.256-07:00You Could Be Richer Than You Think: Tax Free Saving AccountIn general, tax free is the most fascinating appeal to the public. Though there are limits on this banking account, we still can see benefits more than limits. The followings are the dos and dons about TFSA: <br />You can carry everything into , such as cash, GIC, stock, mutual funds and bonds. Basically TFSA can carry in possibly every type in RRSP (registered retirement savings plan) but with tax free. More than that, money in deposit won’t get tax deduction when doing TFSA. Without the disturbance from interest dividends, money and other things you are worrying about all can http://www.blogger.com/img/blank.gif<a href="http://www.youtube.com/watch?v=a3Flb9lGUMM"></a>be saved with tax free.<br />But everything has two sides, same to the TFSA Scotiabank. There is contribution limit in tax free saving account policy. It is important to keep in mind that you can only contribute 5000 thousand in every tax free saving account. Once you exceed the contribution limit, bank will penalize you 1% for every month over contribution amount remaining in the account. And if you withdraw off the account, you can’t redeposit any portions of these funds until one year after withdraw. So, it will be much better to consult your personal income notice of assessment when planning to take unused terms withdraw from TFSA. <br />When facing high tax rate, people always keep complaining about government. Though we all know tax is the resources for government to pay the society services, new roads and hospitals for the public. Basically, we can’t live without tax, and tax can’t exist without the public. There is tax in work, goods, drinks and everywhere. How to save from tax and to invest for the future becomes an issue people start caring about. Under the situation like this, bankers are launching a new banking product called: TFSA, tax free saving account, which is different from genetic saving account. It may be easier to think about TFSA more like investment vehicle or a basket can carry everything in it. In short, TFSA is a good way to save.<br /><br /><iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='320' height='266' src='https://www.blogger.com/video.g?token=AD6v5dwzJCEQAXWdXpJtIGH7jSpo5gZQ71OnZWdMigC5hg2NADYfrXTkSfo64T9nbgde-7AOlzAhbamCgra40kWnEw' class='b-hbp-video b-uploaded' frameborder='0'></iframe>Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-45690138253690452022011-09-11T20:51:00.000-07:002012-07-13T19:01:16.620-07:00Advice to rookiesIf you’re a regular reader of my blog, you’ll know that I have become a football fan. People change over the course of their life and pick up new hobbies and interests. For me, it’s football. So this Sunday, I watched the Ravens score a crushing victory against the Steelers. It was a beautiful game! I also watched the kickoff last Thursday. Two games in a week; that is pretty good for a rookie fan, no?<br /><br />In this new season, with rookie players on their field for their first games, there is an abundance of discussions and articles about these newcomers. In the New York Times yesterday, there was an article about finance and financial advice to the rookies. The link to the article “Financial Lessons from Sports Stars’ Mistakes” is at the end of this post.<br /><br />As I have mentioned in previous posts, the statistics about football players mismanaging their money are pretty staggering. The article mentioned several star athletes who have had brushes with bankruptcy: Michael Vick (recently acquired by the Philadelphia Eagles); Bernie Kosar, formerly of the Cleveland Browns; and Mark Brunell of the New York Jets.<br /><br />Some have argued that the behavior of football players is similar to those who win the lottery. Flushed with large sums of money that come to them suddenly, players squander it and are left with little or nothing a few years out. I do not think that this is a good analogy. One difference between football players and lottery players is that we know the former are very talented people: Who else could do the things they do when they are out in the field? Moreover, these people know discipline; they show up to practice every day. They also know the correlation between efforts and outcome; if one works steadily at something, he will get better. These are great skills that can be applied not only to playing football but also to managing money.<br /><br />So, why do we see players going bankrupt? One of the reasons why people (including football players) make mistakes is because they lack financial knowledge. This problem can be particularly acute for young, inexperienced people whose highest earnings are concentrated at the beginning of their career. But this is not an impossible problem to fix, and the New York Times article outlined a set of lessons that could be learned from some players’ mistakes.<br /><br />I have three pieces of advice for rookies. (There is more advice to give, but let me start with this simple list; I will follow up in future posts.)<br /><br />1) Do not spend it all. The career of football players is short and risky; you want and need to have provisions for the future and for uncertain events. An example? The recent lockout. What would have happened if the lockout had continued? Another example? Even superstars have injuries and/or cannot play for health reasons. Peyton Manning, for example, just had neck surgery.<br /><br />2) Take it in your hands. Money management is too important and too personal to be delegated entirely to someone else. You are the one who knows your needs, your aversion to or love of risk, your objectives for the future. If you leave it to others to manage your money, chances are they will not make the decisions you had wished for. Even if you seek financial advice, rely on reputable experts and stay involved in the process. After all, it is your future that is at stake here.<br /><br />3) Be humble about finance. My research repeatedly shows that the majority of people are overconfident about what they know of finance. Four out of five Americans gave themselves high financial knowledge ratings but, when asked questions about basic concepts, they answered incorrectly. And ignorance hurts. Study after study documents that it is those with low financial knowledge who pay more for financial services and who are more likely to end up in financial distress. Do not be afraid to speak up about what you do not know; it is not a weakness, it is a strength, and you will intimidate anyone around you when you admit it. Most people do not have that kind of courage. Do not jump into projects or investments you do not understand well. Tell people around you, “I want to be smart about my money.” Over time, you will be.<br /><br />When I got my first job as an assistant professor at Dartmouth College about twenty years ago, I showed up in the Human Resources office and was given all of these forms to fill out, requiring me to indicate which of the three pension providers I wanted and how I would allocate my pension money. I remember feeling puzzled that such an important decision would be asked of me without inquiring about my knowledge and whether I needed any help. Throughout the years, I have worked to change that process and, with the collaboration of some great people at Dartmouth’s HR office, there are now programs in place to help new hires. I take a little pride in that.<br /><br />The NYT article is posted here:<br />http://www.nytimes.com/2011/09/10/your-money/financial-lessons-from-sports-stars-mistakes-your-money.html?pagewanted=allAnonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-77959124305149224982011-09-06T11:15:00.000-07:002012-07-13T19:01:16.948-07:00Think big, in a practical wayI left for Italy in mid-August feeling pretty discouraged. Most of the recent discussions I had heard about financial literacy were focused on cost. This is clearly an important concern, but, in practice, when people talk mostly about costs, it often means they are not interested in “buying” it. And while the cost of improving financial literacy is a very legitimate concern, how about the cost of this financial mess we’re in. How about that?<br /><br />The discussion around some financial education programs was also not a mood booster. Some of the papers I saw presented this summer covered programs in which individuals—often impoverished and with little education—were brought to a classroom and given a few hours of “financial education.” The expectation was that those few hours would transform people into savvy entrepreneurs or investors. And what was the main discussion around this? How much these programs cost! <br /> <br />This dominant concern about cost obscures the fact that we face a very important and challenging problem in need of a solution. But we need to think big; we need creative ideas that can help overcome big barriers. Lack of financial knowledge is not something that can be tackled by bringing the adult population back to a classroom for a lecture or two on financial education. We need to be practical, too, regarding what can be implemented. As my college friend—a successful entrepreneur I get together with every time I return to Italy—put it: "think big, in a practical way."<br /><br />Being in Italy, with a break from my daily routine, allowed me to focus on big ideas, and I have some recommendations, that are also practical, to at least start the discussion, and I would like to hear from others. <br /><br />Big Idea #1: TEACH THE YOUNG. Financial literacy needs to be implemented in schools. It is too difficult to reach the adult population and it is hard to do any teaching if there is little or no base to start from. Also, we need people to be financially literate before rather than after they engage in financial transactions. There will and should be costs of educating the young. It is meaningless to mandate financial education without, for example, training the teachers to teach those courses. Mandates do not make people any smarter, but having a well-developed curriculum that is followed by trained teachers might. <br /><br />Big Idea #2: FOCUS ON WOMEN. Women have low levels of financial literacy (lower than men), but they also know that they lack knowledge. Moreover, they want to be “treated”; in most financial programs I have been involved with or read about, the majority of participants have been women. It is going to be much easier to reach and deliver to a population who is interested in financial literacy. This is a simple truth that has been mostly ignored. There are costs of only thinking about costs!<br /><br />Big Idea #3: MAKE IT SIMPLE. Some financial decisions are truly complex, but there are universal concepts that are at the basis of most financial decisions and that can and should be explained in very simple ways. I am talking about the power of interest compounding, the effects of inflation, and the benefits of risk diversification. In fact, even this is economic jargon we can get away from. Let’s use plain English and explain these ideas in very simple ways. We can even come up with ways to tell stories to teach the concepts so that even a five-year-old could learn them.<br /><br />Speaking of five-year-olds and of being practical, I was given the following test to see whether one can think practically. Here it is: How do you put a giraffe into a refrigerator? The answer is at the end of the post, but please do not look before you come up with your own solution. I thought about it for five minutes and came up with a method about as simple as putting a man on the moon. That evening, I saw my little niece Giorgia drawing a picture of the family dog, depicting him with 9 legs and 2 enormous eyes. I thought she would be an ideal person for the giraffe test, so I asked her very innocently: “Giorgia, how do you put a giraffe into a fridge?” She looked up, gave me a big smile, jumped from her chair, and ran to the fridge. Moral: you can never beat the creativity of a five-year old! <br /><br />Question: How do you put a giraffe into a refrigerator? Answer: You open the door and put the giraffe in.Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-85020178602086189112011-08-31T10:40:00.000-07:002012-07-13T18:59:06.309-07:00What Are Document Shredding Services?<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://tampabaytoner.com/cycloneZoomImage.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 413px; height: 337px;" src="http://tampabaytoner.com/cycloneZoomImage.jpg" border="0" alt="" /></a><br /><br /><br /><br /><a href="http://en.wikipedia.org/wiki/Paper_shredder">Paper shredding</a> service is a service used by businesses to destroys sensitive information that can otherwise lead to identity theft and fraud. Many businesses today are using shredding services to protect the personal integrity of their company. <br /><br /><br /><br />Banks, financial institutions, as well as medical facilities collect thousands of consumer information on a daily basis. To safeguard the identity of consumers, several laws have taken place that prevents these institutions from sharing information to the public. Aside for the financial loss, businesses can also be subjected to corporate espionage that can severely reduce their competitive edge if corporate information where to land on the hands of their rivals. <br /><br /><br /><br />To keep information private, businesses are choosing to purchase shredders for their companies. However, for businesses that work with high volumes of documents on a regular basis, purchasing a shredder may be cost inefficient since they tend to break down more often and would require a replacement. For such businesses, paper shredding services are their best solution. <br /><br /><br /><br />Additionally, document <a href="http://www.shredit.com/Cincinnati/home.aspx">shredding services Dayton</a> also provide companies several options when it comes to the use of their services. For one, these shredding companies can come directly to the company and do the disposal of the documents themselves. Another alternative is for the company to box and ship all the documents that needs to be shredded to the shredding company who will then shred it and dispose of it accordingly. Which option a business will choose depends on a number of factors. If a company for instance works closely with highly sensitive documents then the first option would be their best solution.<br /><br /><br /><br />Some shredding companies such as <a href="http://www.shredit.com/new-york/home.aspx ">New York shredding services</a> give customers the option to rent their shredding equipments. For document-sensitive businesses, this is a great option since it would prevent outsiders from getting their hands on corporate information. <br /><br /><br /><br />Investing on shredding services can be the difference between information confidentiality and identity theft or fraud. Make sure you consider shredding services for you company and know your business is secure. Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.comtag:blogger.com,1999:blog-6301240770914633528.post-83666008912072920302011-08-31T10:19:00.000-07:002012-07-13T18:59:06.370-07:00The Different Types of Paper Shredding<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://www.homepapershredders.net/wp-content/uploads/2010/08/rent-a-paper-shredder.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 480px; height: 343px;" src="http://www.homepapershredders.net/wp-content/uploads/2010/08/rent-a-paper-shredder.jpg" border="0" alt="" /></a><br /><br /><br /><br />There are many different types of shredders available in the market. There are those that are capable of shredding down DVDs and others than can reduce the size of a tree trunk. Paper shredders were once considered as an office tool but today, many people use them in their homes as well. What are the different types of <a href="http://en.wikipedia.org/wiki/Paper_shredder">paper shredders</a>?<br /><br /><br /><br />One of the least expensive shredders available in the market is the strip-cut shredders. These shredders contain a series of rotational blades that shreds paper into long narrow strips. Because they produce strips of paper, they can be easily reassembled by a determined individual. As so, strip-cut shredders are the least secure form of paper shredder and are not considered a good option for businesses wanting to destroy sensitive information.<br /><br /><br /><br />Another type is the cross-cut paper shredder. They shred documents into tiny rectangle or diamond shaped pieces that are almost impossible to be reconstructed. The smaller models of cross-cut document shredder can process up to six sheets at a time, making them not only secure but very efficient as well for home use. <br /><br /><br /><br />Granulator document shredders works in the same vein as cross-cut shredders. In that they produce tiny shreds of paper. However, unlike cross-cut shredders, shreds of paper are constantly processed until they are small enough to fall through a filter. <a href="http://shredit.co.uk">Document shredding</a> through Granulators will produce <a href="http://www.shredit.co.uk/Manchester/Home.aspx">Manchester confidential waste</a> made up of particle size pieces of shredded material. They are therefore the most secure paper shredding option that businesses and government offices use. <br /><br /><br /><br />Document shredders are available in any office supply stores. If you are thinking of buying one for personal use then smaller models will be just right for you. Businesses on the other hand, who shred hundreds of documents everyday may want to opt into purchasing heavy duty shredders. Anonymoushttp://www.blogger.com/profile/12835564325169024118noreply@blogger.com