Paranoid on the Internet

This is a case where I’d argue, all cleverness aside, you’re not paranoid if they really are out to get you. Last night we watched The Great Hack on Netflix, which walks you through the Cambridge Analytica debacle. Even if you’re not at all techy, if you’re using the internet and have email you really need to watch this film. Whatever your thoughts on this scandal and the morality, I find it hard to believe the idea that people with unknown agendas have 500+ data points on you personally and the ability to make custom messages directed exclusively to you won’t freak people out. (Ignorance may be bliss, but it never works out in the long haul as a protective measure.) I’m also slowly working my way through Shoshana Zuboff’s The Age of Surveillance Capitalism (too scary to read straight through–and I knocked out Helter Skelter in two days). So other than being somewhat stressed at the level of carelessness I’ve inadvertently displayed all over the internet for nearly three decades, what did I really learn that can help us all?

Two years ago I wrote a post with practical info on what to do if you’ve been part of a serious data breach. I think it’s still a good start post-hack, but that those tips are a bit like treating measles when you hit the hospital to try and stave off encephalitis (absolutely necessary if you’ve been infected) and I’m a big believer in vaccines (easier to never catch the virus).

Let’s start with what we know to be true. Data brokers collect information on each person in the world. They use as many different sources as they can access to aggregate that data. None of us are reading the terms and conditions but they are universally written to favor the business, not the consumer. Understandably, businesses don’t want to be bothered by nuisance lawsuits. Lawyers are expensive and time-consuming, so if they can make it very hard for you to sue up front, they do. And if they are breaking new ground where the laws don’t extend, they’ve got even more room to block. If you have no rights in a new space, like data, then there’s nothing to stop exploitation in future use cases that emerge as a business grows. There’s not a separate set of terms for nice people like us who would never file a nuisance suit. And government information, like who owns your house, has always been public if someone went down to the right office and paid any small fees required. The internet just means that there are now businesses that aggregate that info and make it profitable. See Zillow and put in your childhood address and you’ll see what your parents paid and what the current owner’s property taxes are.

Nothing to Hide?

Why would we care about all this data being public? Well, Google Maps knows where you went and when, Instagram knows what you ate there when you photographed it, Facebook knows who you were with when you were tagged in a friend’s post, anyone with your home address knows what you paid and when, and all the entities involved in your banking chain know how much you spent last month. From that, over a month, it’s not too hard to determine your religion (if any), vegetarian/vegan, country/rock, credit rating, work address, profession, pets, Uber/Lyft/car owner, and basically everything else. A data aggregator or broker scoops up all this information, as well as public info (leases, property taxes, loans, phone numbers, emails), Continue Reading

TEDx Talk

Over my years as a parent (learning on the job), I began to realize the experiences I was trying to provide for my sons weren’t the same things I looked for in prospective employees’ résumés. Those curated experiences that look like my idea of a perfect childhood weren’t the things I knew had built my best staffers’ skill sets. Meanwhile school life was all about planning everything to the tiniest degree, when I knew work life was about making long-range plans, but surfing the chaos as each day unfolded. When I flipped the whole scenario and focused on the great clients, employees, and contractors I’d worked with over the years, I started to formulate a theory.

We film a lot of patient stories in our work at LYON, and inevitably the parents who have dealt with serious or chronic illness in their family, carry the extra weight of feeling they have failed to provide a perfect childhood for their children. And yet, consistently, those families with pre-teens and teens that are around when we film have some of the most engaging, accomplished young adults we meet. So I started to wonder—maybe those kids are great because they’ve had imperfect childhoods. Maybe that extra bit of effort, fending for themselves a little more, thinking about serious things at a younger age, is what is making them a little more skilled with people, projects, and time management. I can’t prove my theory, but I hope it sparks some conversations to hear me talk from the TEDx Solana Beach stage.

How to Be an Overnight Success

Of course, we’re kidding with that title. No one is an overnight success, although it sometimes looks like that from outside. We wanted to make a video that worked for the Launch audience of college students and the newly graduated, but also would help the kind of younger students my collaborator, Yusuf Word, a film editor at Lyon & Associates Creative Services, worked with during his time in AmeriCorps.

Launch Like A Rocket: How to Be an Overnight Success from LYON.


Estimated Taxes and Your Side Hustle

Many of my creative friends have side projects while Jake’s friends have Twitch streams bringing in extra income, and I consistently find that many independent contractors don’t understand estimated tax payments. We all owe the IRS an annual tax return in which we declare all of our income for the year–even if we didn’t receive a 1099 from PayPal or another payor. (We Californians owe the state Franchise Tax Board as well.) Most new businesspeople take the phrase estimated taxes literally. Sounds smart, like budgeting, but isn’t actually required by law. However, for the self-employed, estimated taxes are required by tax law to be submitted every quarter during the taxable year (meaning when you file your annual return for last year, you should have already made four pre-payments towards your federal taxes for the prior year).

When you are paid as an employee your employer withholds taxes on your paycheck, as well as covers the employer share of  some of those taxes, and you receive a W-2 at the end of the year showing all the payments that have been made regularly over the course of your employment. This means as you earned income, the taxes were remitted on a timely basis. When you are paid as an independent contractor—meaning you typically have a contract specifying a payment schedule or submit invoices—your customers do not withhold any taxes for you, and it’s up to you to make timely tax payments as you earn the money. You cannot wait until the following April and send one big check with your tax return or you will incur penalties for the underpayment of estimated taxes. (You can calculate these with your return using Form 2210, but if you don’t, the IRS will, and will send you a bill. It may take some time for them to do this, but they will catch this common error and come calling for the penalties and the increased amount of interest now due to them.)

If you owe less than $1,000, there will not be any penalty. For most people, as long as you pay 90% of what you actually end up owing for the current year (in the actual quarters in which you earned the income), you are safe. Alternatively, you can pay 100% of what you paid last year, unless your income is greater than $150,000, then the IRS requires 110% of what you paid the prior year to ensure you are penalty-proof.

For 2018, but when you get your final 2017 return done, look at your total taxes owed. Subtract from that total the amount any employer can be expected to remit for you over the course of the year. Take your current pay stub and multiply the income taxes withheld and remitted on that single paycheck by the number of paychecks you receive in a year. Assuming you pretty much make your money equally over the course of the year, you can divide the balance by four and download a 1040-ES coupon (page 11) to remit these sums each quarter on the due dates listed to stay clear of penalties and interest. Note that while the payments are typically due the 15th after the calendar quarter ends, they second payment is due a month earlier—on June 15, before the quarter ends. (This is true for the California as well, the 540-ES stubs are here.)

As I used a fictional Overwatch League player, making the minimum guaranteed annual salary of $50,000 before, I’ll stick with that example here. Now we’ll assume that this player has Twitch revenues of $1,000/month coming in as an independent contractor, which probably means he also has some tips coming in via PayPal, which should also be declared, so let’s say tips average $500/month ($1,500 x 12 = $18,000/year). The OWL team will be remitting taxes based on the information provided by the player, and as most of the players are single, childless, and probably not home-owners yet (so they have few of the deductions the tax code favors), if they accurately completed their W-4 the taxes being submitted are pretty high, which, given the $1,000 tax due grace amount, gives the casual side hustle a safer margin. On this salary, the federal income taxes should be about $500/month, of $6,000/year. If on his 2017 return the player owed $9,000 in income taxes, the penalty-proof amount to remit would be the extra $3,000, or $750/quarter on the 1040-ES. Keep in mind that 1040-ES is your estimate of what you owe so there’s no guarantee it ends up being the right amount for the year. This just guarantees you don’t have to give the federal or state tax departments more money than required. The smart rule of budgeting would be to take a set amount of your 1099 income each month and put it in a separate savings account for taxes, so whatever you owe, you can pay promptly with submission of your tax return.

Payroll taxes are calculated based on the income rates for that salary, so while the OWL team is correctly remitting for a person who makes $50,000 a year, the player actually makes $68,000 a year. Not only is $18,000 going untaxed all year, but the player could have bumped into higher tax brackets on some of the salaried $50,000, meaning not enough of it was being remitted as income tax. With the new 2018 laws, this wouldn’t be true for these dollar amounts, but it’s worth being conceptually aware that marginal tax brackets exist and you can shift into a higher one for some of your salaried dollars.

There is an alternative option for anyone with a paycheck. You can ask your employer to let you adjust your W-4, and have additional amounts remitted each paycheck for your state and federal taxes. In this case, if the player is paid monthly, he could  complete his W-4 so that an extra $250/month was being remitted towards federal income tax, thus meeting the $750/quarter amount he expects to be correct for 2018. This makes the paycheck a little heavily taxed, so that he doesn’t have to worry about the Twitch and PayPal income being untaxed in real time. Any way you get there, you want to be sure you are remitting taxes as you owe them, as you earn the income, so you don’t pay more than what you should owe in interest and penalties.

What Do You Want Out of the Next Year?

Before you make a New Year’s resolution, typically narrowly focused on a measurable goal, stop and think bigger picture and longer term. When your future self is sitting here one year later, how will they be different than you? It’s easy to vow to be  closer to graduation, or with a better job and more savings, but you need to play the long game. Whatever the goal, there are skills you need to make that jump happen and stick, so while I support the short term goal, I think it needs to be meaningful in a longer term plan.

Normally, I’m a believer in building on your strengths, but college is the one place where you can build up your weak spots, while there is little consequence to failure. If you’re weak on small group discussions, pick smaller classes where the professor will consistently try and pull you into the discussion. It’s the rare company and manager who will do this, so this is great example of  the last call nature of college. If you’re already in the workforce, rather than set a goal of being promoted or getting a raise this year, if you’re on the quiet side, make a point of finding one relevant thing to say in every meeting. Getting noticed and stepping up your perceived engagement will make it a smaller, quantifiable daily goal. It will build the speaking skills that make the later discussion about a raise or promotion not only easier for you, but also, make it easier for the decision makers to think of you as a  valuable contributor. If you’re weak on writing out your ideas, take a class that demands small, short writing projects. If you can’t find a class like that, look for an extracurricular activity. Recording a meeting with your phone and distilling it into two pages of minutes once a month for the school year will help you master those skills. (There is a formula to these, so you can easily do it correctly.) Construct your daily or weekly goal(s) to build a skill(s) that will build to the larger goal.

Going back to my primary contention with the book version of Launch Like A Rocket, professional success requires strong skills in communicating, organizing, relating to other people, and executing plans. In the book I break those down, giving you examples of each, why they are essential, and how to acquire them. When you don’t have these skills your career stalls out and you have no idea why. If you’re stuck in a job that’s not quite right, reading the book may help you figure out how to use the time wisely so the next spot lets you move forward at a faster pace.

Assuming you’ve got mind-blowing skills, the best way to get a job at any step of your career is through your network, so you need that network to not only know you, but to know you well enough to make accurate recommendations. They need to think of you first when it comes to certain skills, and feel recommending you to someone for a gig or position will reflect well on them. While you build a network, meeting new people, be sure that it’s a meaningful network. (I got a job this way and it led to meeting my spouse and starting my company.) Having hundred of connections on LinkedIn who don’t really know you and have no idea of your strengths and expertise doesn’t do you any good when it comes to getting considered for a job. The very best way to job hunt throughout your entire career is to have jobs come to you when you aren’t even actively looking. If that’s unimaginable with your current network, then you don’t really have a network.

I’m not advocating your goal should be to build your network. In fact, I’m advocating you don’t build that valuable network until you have a clear idea what you want that network to say about you, and make sure the future you 365 days from now clearly represents those strengths and skills. If what you want out of this year is a new job, whether within your company or with a new one, you need to think about what that manager wants in that position, and you need to work on being that qualified person. Whatever you want this year, you can make it happen by thinking strategically about the long term before you make a move.

JAKE’s mom’s Christmas French Toast Casserole

Jake posted a photo of our french toast casserole Christmas morning and we had requests for the recipe, which takes more than Twitter’s 140 characters. We were introduced to this sugar and carb extravaganza courtesy of Jake’s pre-K best friend, Carly, and her mom, Annie, so we give thanks to them for providing us with this family tradition.

The photo @jakeow posted, above, is 2x the recipe below. We like to cook it in our Turkey roasting pan, which also gives me a really good excuse for not cooking Christmas dinner. #WorkingMomHack (I make this the night before, so we just put it in the oven Christmas morning.)

1 loaf sourdough bread (or 1.5 baguettes, if you like it with more crust, like we do)
8 oz cream cheese
2 1/2 cups of half and half
8 eggs
1 cup maple syrup (real syrup)
1 tsp cinnamon
1/2 cup unsalted butter
powdered sugar

Preheat the oven to 350° and use some extra butter to grease a 12″ casserole pan with 4″ sides
  • Place two layers of cubed bread, then a layer of sliced (or chunked) cream cheese, then cover with the remaining bread.
  • Whisk together eggs, half and half, and 1/2 of the maple syrup.
  • Pour the liquid over the bread to saturate the top layer evenly. Sprinkle with cinnamon.
  • Bake for one hour at 350°  or until the mixture puffs and sets.
  • Melt the 1/2 cup of unsalted butter with the remaining 1/2 of the maple syrup. Drizzle the top of the casserole immediately before serving (shortly after it comes out of the oven). Sprinkle the top with sifted powdered sugar.

Not recommended pre-Overwatch game, for players or viewers. Excellent pre-nap meal. #OWL2018

Managing Your Finances in Your 20s (with a focus on the new Overwatch League players)

Managing your finances from the start of your career gives you big advantages as your life moves forward, but you can only do what you know to do. When you get that first job, or the next big job, you’ll be presented with an array of choices. Most people tend to feel doing nothing is the safe choice. When it comes to financial planning, it’s the most foolish choice open to you. Even economics and business grads will have had no personal finance education. There are ton of great books on the subject for more depth, but if you’re already confused, you hardly want to select or read an entire book on the subject. The language of capitalism is money, so you need to be financially literate to get what you need and want in our society.

While we await specific team news of the Blizzard Overwatch League in our house, the basics of the player contracts have been public for a couple of months, so I thought using those would make for an interesting post for everyone, and specifically relevant for readers of Jake’s blog. The common wisdom is that all careers carry this kind of uncertainty, but esports talent has the added burden of knowing they must plan for a second career during the first career. As with any professional sport, the players skew young, injuries can end a career with little notice, but unlike some established professional sports, the pay isn’t so huge that it can be invested in such a way to provide an income for post-career life. Having run a small business whose customers are large businesses for over 20 years, I’ve lived through several business cycles, so I can tell you that almost everyone would be better off if they managed their money wisely right from the get-go. Despite that, there’s really no process in the US educational system to make sure everyone is educated in this critical area.

Here’s what we know about the OWL players’ new jobs for our sample scenario: 
Salary Minimum: $50,000
Bonuses: If they win the season, potentially as much as $83,000
Health Insurance: Provided, no details
Retirement Plan: Provided, no details
Housing: Provided (for the season), no details

As every working adult will tell you, $50,000 a year with no housing expense is a ton of money. As large as that sum seems, any salary can get eaten up fast if you start shopping for Yezzys and Teslas instead of managing your finances wisely. (The first rule of personal finance is that just because a company will make the loan or lease to sell to you doesn’t mean you can afford it. Caveat emptor.) What should the newly employed do? There’s no way to make this really short and still provide the relevant education, so I bolded the topics so you can skip any that don’t apply.

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What to REALLY do about the Equifax hack

If you are starting out in life, no matter what you do, you will need to have good credit. The first step to having good credit, even when you have no credit at all, is to prevent someone else from ruining it for you. I think we can agree if you end up with terrible credit, it should be a result of your own bad decisions.

There are two kinds of major hacks that will be reported as credit hacks in the press. The ones where they get credit card numbers, as with Target and TJ Maxx, don’t really matter to you personally as a consumer. And the ones like Anthem and Equifax, where they get permanent, identifying information should be treated as an emergency. These are deadly to your entire identity and the damage is permanent, which is why the year or two of credit monitoring they provide as a first line of defense is ultimately worthless. I’ll explain both hacks, but if you read nothing else here, know that signing up for the credit monitoring may stop some short-term credit damage, but it does nothing to prevent identity theft. Ultimately my recommendation is that you read this through now and take all the steps as a preventative. If you don’t care why, or don’t want to understand, and trust me completely/just want to cut to the chase, scroll to the end to the numbered steps. Steps one through three need to happen, in that order, immediately. Less than an hour for most people, maybe $40 if anything (depends on your home state), and you will have saved your future self a ton of time and pain.

This post should be the only article you need to read for some time to come, so reading this now will save you reading future hack headlines for a while.

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Understanding Employee/Salary/W2 vs Independent Contractor/Invoice/1099

As some people on the internet know, one of my sons is a pro gamer. Clicking the links in and about Jake’s Twitter account I’ve been fascinated to see the new Overwatch League launch. While both my sons learned a lot about business from growing up in our house, I can see in speaking with Jake that even a high level of exposure doesn’t give you a perfect grasp on the practical vocabulary of working. There’s a whole other book in here, but I’m going to start with some posts as a warm up exercise. I’ll bold words I explain in the larger discussion because these are the working vocabulary you need to have to manage your working financial life, whatever you do.

First off, an employee gets a salary so when the new Overwatch league launches, all players will be salaried. What that means is that an employee gets a paycheck from which their share of taxes have already been subtracted and remitted to the government. There is another share of taxes covered by the employer—basically a matching amount for the employee’s line item deductions for FICA (social security) and Medicare. Together those are about 8%. Salaried employees (vs hourly),  also typically have paid holidays, vacations, and sick pay. In California (and some other states), your paycheck also has you pay into state disability (SDI on your paycheck stub), which covers you when you are disabled for a short period of time (more than a week, less than a year). And your employer also pays taxes that provide unemployment insurance, so if you are laid off, you can collect a small portion of your pay as unemployment compensation while you find a new job. You might have to clock in for some hourly jobs, but in general, you get your paycheck without taking any triggering action other than showing up and doing your job. Being an employee is a nice way to start a career, because you’re dealing with so many other things as you launch professionally that setting up a business might not be the first full-time working experience you want to take on.

I can’t speak to all the current contracts out there, but many gamers under contract are paid as independent contractors. In contrast to an employee, a $1,000 biweekly contract for an independent contractor would result in exactly $1,000. (Likely you need to invoice regularly to trigger the payment.) The IC is responsible for setting aside money to pay taxes, both income and payroll, including the employer’s share of payroll taxes. Here’s a screen shot of an example paycheck in California (run through our Zenefits account, so that’s why the medical insurance says Zenefits).

You can see at the bottom in the orange oval that the employer share of taxes is $144.50. This is a sample from early in the year—the unemployment taxes are calculated on a low base number, so they disappear partway through the year. The blue arrow higher up shows you the $187.96 in taxes that’s being remitted for the employee from their own funds. In this case the employee is saving 3% of their paycheck into a retirement account and getting a 3% ($30) match, as well as having their health insurance premium covered and you see that in Employer Contributions. An independent contractor gets the full $1,000, so they have to have the discipline to set aside the $188 in employee tax deductions and the $145 in employer contributions. And they also need to pay for health insurance and save for retirement. For the employee, saving $30 for retirement results in $60 being put in their retirement account.

BTW: No matter what the stock market does, the employee just doubled their money simply by saving, which is why 100% of the financial advice columns almost no 20-year-old reads say to always max out your retirement contribution to get at least the full employer match.

So why would anyone choose to be an independent contractor? The employee is getting $1200 for the same $1000 worth of labor.

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Apologize 101: When and How to Make a Professional Apology

Everyone makes mistakes. In starting your professional life, it’s important to know how (and when) to apologize. While your college life may let you get by with a quick “My bad!” I promise that your colleagues and bosses will quickly write you off if you glibly utter that response. Don’t mistake silence for approval or acceptance of your error.

It’s sometimes not entirely obvious to new grads that they have even made a mistake so I am starting with a short list of the things you should be doing successfully. Continue Reading