Finance Xpress

Posted by: John S Kiernan

Tax Day can be a painful reminder of how much we have to invest in federal, state and local governments, though many of us are unaware of exactly what they give us in return. As a result, this creates a disconnect in the minds of taxpayers between the amount of money we should fork over every April and how much we deserve in return.

Perhaps that’s why, according to WalletHub’s Taxpayer Survey, 55% of U.S. adults feel they pay too much in taxes and why 90% don’t think that the government uses tax revenue wisely. We do know, however, that taxpayer return on investment, or ROI, varies based where one lives. Federal income-tax rates are uniform across the nation, yet some states receive far more federal funding than others. But federal taxes and support are only part of the story.

Different states have dramatically different tax burdens. This begs the question of whether people in high-tax states receive superior government services. Likewise, are low-tax states more efficient or do they receive low-quality services? In short, where do taxpayers get the most and least bang for their buck?

WalletHub aimed to answer that question by contrasting state and local tax collections with the quality of the services residents receive in each of the 50 states within five categories: Education, Health, Safety, Economy, and Infrastructure & Pollution. Our data set includes a total of 25 key metrics. Read on for our findings, methodology and commentary from a panel of experts.

1. Main Findings
2. Red States vs. Blue States
3. Detailed Breakdown by State
4. Ask the Experts: Taxes as an Investment
5. Methodology

Main Findings

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/3283/taxpayerROI2.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2H21swV>  

Federal Taxes Paid vs. Spending Received by State

‘Taxpayer ROI’ Rank (1=Best)	State	‘Total Taxes Paid per Capita’ Rank*	‘Overall Government Services’ Rank
1	New Hampshire	3	2
2	Florida	2	31
3	South Dakota	10	14
4	Colorado	14	13
5	Virginia	17	9
6	Alaska	1	49
7	Missouri	5	35
8	Texas	6	36
9	Utah	21	10
10	Iowa	36	3
11	Nebraska	28	11
12	Georgia	11	39
13	South Carolina	4	42
14	Arizona	12	37
15	Wisconsin	35	6
16	Tennessee	8	41
17	Idaho	23	20
18	Oklahoma	13	40
19	Ohio	15	32
20	Indiana	25	22
21	Kansas	30	16
22	Montana	16	33
23	North Carolina	19	30
24	Alabama	9	47
25	Maine	32	18
26	Illinois	34	15
27	Rhode Island	33	19
28	Michigan	27	29
29	Pennsylvania	31	25
30	Oregon	26	34
31	Kentucky	22	38
32	Wyoming	39	17
33	Washington	37	24
34	Louisiana	7	50
35	New Jersey	41	12
36	Massachusetts	43	7
37	Minnesota	47	1
38	Mississippi	18	45
39	Connecticut	46	8
40	West Virginia	24	44
41	Maryland	40	27
42	Delaware	42	23
43	Nevada	29	43
44	New Mexico	20	48
45	Vermont	48	4
46	New York	44	21
47	North Dakota	50	5
48	California	45	28
49	Arkansas	38	46
50	Hawaii	49	26

*“Per Capita” includes the population aged 18 and older.  

 

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/3283/taxpayerROI1.html" width="700" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:700px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2H21swV>  

Red States vs. Blue States

 

Detailed Breakdown by State

Overall Gov’t. Services Rank (1=Best)	State	Total Score	‘Education’ Rank	‘Health’ Rank	‘Safety’ Rank	‘Economy’ Rank	‘Infrastructure & Pollution’ Rank
1	Minnesota	79.04	5	1	8	2	4
2	New Hampshire	72.22	16	2	3	4	13
3	Iowa	71.88	3	4	13	7	20
4	Vermont	69.61	9	8	1	26	14
5	North Dakota	69.25	23	12	17	6	3
6	Wisconsin	68.99	1	18	11	10	35
7	Massachusetts	68.63	2	3	9	17	44
8	Connecticut	67.78	4	11	6	24	36
9	Virginia	67.67	6	24	7	9	32
10	Utah	66.11	18	14	15	1	31
11	Nebraska	64.74	29	13	19	5	7
12	New Jersey	64.62	8	23	5	12	49
13	Colorado	64.05	24	9	26	3	12
14	South Dakota	62.35	41	5	32	15	1
15	Illinois	62.21	10	17	22	22	30
16	Kansas	61.92	25	10	30	8	11
17	Wyoming	61.75	35	34	16	18	2
18	Maine	61.50	28	19	2	37	24
19	Rhode Island	61.08	22	7	4	45	38
20	Idaho	59.84	40	27	10	11	8
21	New York	59.79	13	21	12	40	39
22	Indiana	59.05	19	31	28	14	25
23	Delaware	58.60	7	44	40	23	6
24	Washington	58.26	15	16	29	20	45
25	Pennsylvania	56.91	21	20	14	31	43
26	Hawaii	56.33	38	6	21	34	26
27	Maryland	55.70	17	22	27	16	50
28	California	55.47	12	15	31	41	48
29	Michigan	55.43	32	28	23	21	37
30	North Carolina	54.81	11	47	33	36	18
31	Florida	54.57	14	37	37	38	27
32	Ohio	54.16	30	25	18	29	46
33	Montana	54.07	36	26	38	30	5
34	Oregon	52.26	44	30	25	43	9
35	Missouri	51.85	26	35	41	19	34
36	Texas	51.27	27	33	36	13	47
37	Arizona	50.74	34	32	42	35	21
38	Kentucky	50.48	37	36	20	42	40
39	Georgia	50.20	33	45	35	27	19
40	Oklahoma	49.39	20	41	39	25	42
41	Tennessee	45.94	39	42	44	28	15
42	South Carolina	45.10	31	43	48	39	22
43	Nevada	44.85	45	39	45	32	16
44	West Virginia	43.36	50	38	24	48	41
45	Mississippi	42.62	47	50	34	49	29
46	Arkansas	42.53	46	40	46	33	23
47	Alabama	42.49	43	48	43	44	28
48	New Mexico	40.79	48	29	49	50	10
49	Alaska	38.54	42	49	50	46	17
50	Louisiana	37.31	49	46	47	47	33

 

Ask the Experts: Turning Taxes Into an Investment

For more insight into how taxpayer funds are turned into government services as well as how taxpayers can measure the efficiency with which their money is used, we turned to a panel of economics and public-policy experts. You can check out their bios and responses to the following questions below.

1. Do states with high tax burdens provide better government services?
2. How can state and local governments use tax revenue more efficiently?
3. How can average citizens assess the ROI of their local tax dollars?
4. What's the most common way local governments waste taxpayer dollars?

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• Stacey Jurhree Coordinator of the Political Science/Government Department and Coordinator of the Eastfield College Scholarship Institute at Eastfield College
• David Schleicher Professor of Law at Yale Law School
• Joel Newman Professor of Law at Wake Forest University School of Law
• Gil Manzon Associate Professor of Accounting at Boston College

Stacey Jurhree Coordinator of the Political Science/Government Department and Coordinator of the Eastfield College Scholarship Institute at Eastfield College

Do states with high tax burdens provide better government services?

States with higher tax burdens do not necessarily provide better government services, because in many cases, the services are not allocated equally. Also, the middle class has to carry most of the heavy tax burdens, as is the case with the state of California. The state of California has heavy tax burdens, but the government services are inadequate. The state is full of tent cities and people are exiting the state by the thousands. We are having a great deal of them coming to the Dallas-Fort Worth area, where I live.

How can state and local governments use tax revenue more efficiently?

States and local governments can use revenue taxes more efficient by using metro government or letting the privatization of some of its revenues to be distributed more accurately.

How can everyday citizens assess the ROI of their local tax dollars?

Citizens can assess their ROI of their everyday local tax dollars by seeing improvements in their neighborhoods in the areas of infrastructures, community programs, and better educational institutions, and ways to have better citizen and police relationships.

What’s the most common way local governments waste taxpayer dollars?

The number one way that local governments waste taxpayers’ money is allowing individuals to be over programs who do not have any expertise in the programs they are implementing. Also, local governments are full with elected officials who lack the political, economic, and social skills to develop and make sound intellectual judgments. This is a major problem I see in Dallas. As a result, the taxpayers’ money is being wasted through trial and error.

David Schleicher Professor of Law at Yale Law School

Do states with high tax burdens provide better government services?

States and localities with more tax revenue generally do have better services. This is not the same thing as having higher tax rates. If state or local residents have high incomes or lots of property wealth, rates can be lower and still generate lots of revenue. Revenue is a necessary, if not sufficient condition for having good public services.

How can state and local governments use tax revenue more efficiently?

There’s not one way to answer this question. Different programs use money more or less effectively and there are many sources of waste. For instance, subway construction and operations in New York City are much, much more expensive than they are in comparable cities, like London and Paris. But there are many reasons for this, not just one. Politicians ask for excessively fancy stations, workers ask for employees to be hired to do things that could be automated, bureaucrats in different organizations refuse to cooperate, and so forth.

If I had to isolate one tool for using revenue more efficiently, it would be to empower individual officials and hold them publicly accountable. Mayors, governors and county executives are prominent enough that they can be monitored by voters and public interest groups in ways that myriad legislators and other officials cannot be. This publicity and potential accountability gives them better incentives. Giving these officials lots of power, asking them to govern directly, and then making cost overruns, their problem should lead to greater efficiency. As Mark Twain’s Pudd’nhead Wilson said, “Put all your eggs in one basket and watch that basket.”

How can everyday citizens assess the ROI of their local tax dollars?

Voters have little capacity to assess ROI on a project by project basis -- the information burden is just too high, and people have lives and things to do. The best thing voters can do to ensure good ROI is to support watchdogs of public finance. That means supporting local newspapers, who can send reporters to cover local budgets and projects; supporting local interest groups and think tanks that study local budgets and can produce reports about how money is being spent; and encouraging governments to set up officials to watch public projects like inspector generals (and state finance officials that monitor local budgets). The key is creating institutions to watch public money.

Voters can also punish political parties who spend money badly at the state level. Voters generally use their votes in state elections to comment on national politics -- voting for state legislators based on whether they are in the same party as Donald Trump or Barack Obama. But this encourages waste. State legislators know they will get re-elected no matter what they do, because voters will vote for them based on national issues, and so have little incentive to be careful with public money. To the extent voters can separate state politics from national politics in their heads, they will get better governance at the state and local level.

One other thing that voters can do is to look at real debt loads. Around the country, pension systems are frequently wildly underfunded, as politicians seek to avoid costs today. But this is just debt that will have to be paid off in the future. Politicians who promise they can provide services without taxing are selling snake oil and are likely larding the state up with lots of debt that some future politician will have to deal with.

Joel Newman Professor of Law at Wake Forest University School of Law

How can state and local governments use tax revenue more efficiently?

User fees. Toll roads are the best-known example. The burden of building and maintaining toll roads is, at least in theory, borne entirely by those who choose to use them. Those who don't use them don't have to pay the toll. If toll revenue is insufficient to maintain the road, then it is inefficient, and should be abandoned. The congestion caused by stopping to pay tolls can be cured by an automatic E-ZPass system.

The problem with user fees is that they are sometimes used to block access to government services which must be available to all in a democracy. All citizens, for example, should have access to the courts to enforce their rights. If courts charge user fees which some citizens cannot afford, then democracy is impaired. If, however, we are careful to keep user fees low enough to ensure access to government services for all, then they would increase efficiency.

Gil Manzon Associate Professor of Accounting at Boston College

I would note that the general proposition that you get what you pay for seems to be borne out; the often heard canard of "waste and abuse" of taxpayer dollars is usually just that, e.g., people elect leaders who more or less deliver what they want. While the stakes are far higher -- and the dollars, too -- at the federal level, low-tax states generally have poor state-provided social services to go along with them.

It’s also worth noting that the big dog in the room for many states is unfunded pension benefits. Here, the value has been received through work effort of covered employees but not paid for by their employers. Net result: paying today for services you may or may not have benefited from yesterday. To the extent that a state has large unfunded pensions, say as a proportion of tax base, the taxpayers are going to get a depressed ROI -- unless they leave or renege on past promises.

Methodology

In order to determine which states yield the best and worst return on investment (ROI) for taxpayers, WalletHub compared the quality of government services received by residents to the total state and local taxes they pay in each of the 50 states.

First, we analyzed each state across five key government-service categories: 1) Education, 2) Health, 3) Safety, 4) Economy and 5) Infrastructure & Pollution. The categories were further broken down into 25 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the best quality of government service.

We then determined each state’s weighted average across all 25 metrics to calculate its “Overall Government Services Score.” Finally, we constructed the Taxpayer ROI ranking by comparing each state’s “Overall Government Services Score” to its “Total Taxes Paid per Capita.” “Per Capita” includes the population aged 18 and older.

Education – Total Points: 20

• Quality of Public University System: Double Weight (~7.27 Points)Note: Based on data from WalletHub’s College & University Rankings.
• Quality of School System: Double Weight (~7.27 Points)Note: Based on data from WalletHub’s States with the Best & Worst School Systems ranking.
• Public High-School Graduation Rate: Half Weight (~1.82 Points)
• Projected Public High School Graduation Rate Increase Between 2016-2017 and 2031-2032: Half Weight (~1.82 Points)
• Share of Idle Youth: Half Weight (~1.82 Points)Note: This metric refers to people ages 18-24 not attending school, not working, and with no degree beyond high school.

Health – Total Points: 20

• Hospital Beds per 1,000 Residents: Full Weight (~2.50 Points)
• Quality of Public Hospitals: Double Weight (~5.00 Points)Note: Based on data from Centers for Medicare & Medicaid Services
• Average Life Expectancy at Birth (in years): Full Weight (~2.50 Points)
• Infant-Mortality Rate per 1,000 Live Births: Full Weight (~2.50 Points)
• Average Health-Insurance Premium: Full Weight (~2.50 Points)
• Quality of Health Care: Double Weight (~5.00 Points)Note: Based on data from WalletHub’s States with the Best & Worst Health Care ranking

Safety – Total Points: 20

• Violent-Crime Rate per Capita: Double Weight (~10.00 Points)
• Property-Crime Rate per Capita: Full Weight (~5.00 Points)
• Fatalities per 100 Million Vehicle Miles Traveled: Full Weight (~5.00 Points)

Economy – Total Points: 20

• Median Annual Household Income: Double Weight (~5.00 Points)Note: Adjusted for cost of living
• Annual Job-Growth Rate: Full Weight (~2.50 Points)Note: Adjusted for population growth
• Share of Residents Living Below Poverty Line: Full Weight (~2.50 Points)
• Economic Mobility: Full Weight (~2.50 Points)
• Unemployment Rate: Double Weight (~5.00 Points)
• Underemployment Rate: Full Weight (~2.50 Points)

Infrastructure & Pollution – Total Points: 20

• Quality of Roads & Bridges: Double Weight (~6.66 Points)
• Average Commute Time (in minutes): Full Weight (~3.33 Points)
• Parks & Recreation Expenses per Capita: Full Weight (~3.33 Points)
• Water Quality: Full Weight (~3.33 Points)
• Air Pollution: Full Weight (~3.33 Points)

 

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, National Center for Education Statistics, Western Interstate Commission for Higher Education, The Annie E. Casey Foundation, Kaiser Family Foundation, Institute for Health Metrics and Evaluation, National Highway Traffic Safety Administration, Centers for Medicare & Medicaid Services, Natural Resources Defense Council, Centers for Disease Control and Prevention, United Health Foundation, Council for Community and Economic Research, Road Information Program, The Equality of Opportunity Project, Federal Bureau of Investigation and WalletHub research.

from Wallet HubWallet Hub


via Finance Xpress

Small homes are all the rage. But just how much does a tiny house cost? We have the answers, along with an analysis of how much money you can save living in a tiny home.

While shows like Tiny House, Big Living have made the tiny-house movement en vogue, it’s really not new at all. In fact, Henry David Thoreau lived in a 150-square-foot house back in the 1840s, as a personal experiment on the concept of simplification.

This idea seems to have gained new traction in recent years, though, making “tiny living” a popular consideration for many people. Not only is a small home part of a minimalist lifestyle, it can also offer you the opportunity to travel more. Some people even use tiny living as a way to save money on monthly expenses, get out of debt, and retire early.

So, how much does living small cost, and can you really save money by jumping onto the tiny home bandwagon?

Buying or Building Your (Tiny) Home

Cost: average $23,000

The second-biggest expense that most of us will ever incur is the purchase of a home. (The first biggest? Taxes.) If you’re considering a jump to the tiny home movement, you can also expect that the structure itself will be your biggest expense.

This is the case whether you buy a tiny home or build it yourself, though the former is often  much more expensive than the latter. In fact, the average cost to build your own tiny home is a mere $23,000.

If you’re uncomfortable tackling the DIY-build challenge, there’s always the option to have a company build the shell of the structure for you. This is a bit more expensive than building it entirely on your own, but gives you a good mix of professionally-built and DIY.

While you can find affordable pre-built homes, you could also veer to the luxurious end of the spectrum. There are even some tiny homes running just shy of half a million dollars (this one is just up the road from me in Bethesda, Maryland).

Let’s compare that to the typical cost for “normal” home ownership in the United States. According to Zillow, the median home price for a currently-listed home in the US is $257,990, while the median sold price is $228,200. Of course, this varies wildly from state-to-state, with California seeing a median value of $469,300 and Ohio resting at only $122,400.

Even in the lower-value states, the cost of buying or building a tiny home is still a fraction of the cost for buying a normal home. And, the structure isn’t the only place you’ll save money, either.

Utilities

Monthly cost: $10-30+, depending on needs

If you want basic conveniences in your tiny home, it’s going to cost you each month. Utilities such as water, sewer, electricity, gas, and even cable are available, but can range quite a bit in price.

Some tiny homes are set up with solar panels, to harness and store electricity from the sun and make powering appliances cheaper. Furthermore, tiny houses can be made to be more energy-efficient, by using certain appliances, LED light bulbs, and the like.

Sewer is often provided as a hookup option, depending on where you park your tiny home. If you decide to make it a permanent structure on your property, you can usually run or splice an existing sewer line in, as well, and just pay for monthly public service. Another option is to use a composting toilet or container toilet, which can entirely eliminate the need for public sewer services.

Water also comes in many forms. Some tiny home owners choose to collect rainwater in collection tanks, using this free water for bathing, cooking, and even drinking (with the right measures to protect against contamination). However, you can also hook up to water lines when parked at an RV park, campsite, or residential property.

Many tiny home dwellers utilize propane tanks for heating their stoves and even running their refrigerators. This is a cost-effective option, and you can even buy appliances that will run off of electricity when you’re near a source or off of propane when you’re on-the-go.

Another option for tiny living is cable. If your home is a permanent dwelling or even parked at a campsite with hookups, you can utilize cable and internet services. If you’re on the go or at a less permanent location, WiFi services may be available. Another option is to use existing data plans through your phone or tablet servicer, to either access internet on those devices or even use them as a mobile hotspot. Your monthly internet needs and preferences will determine how much you need to pay, but it could be anywhere from free to $150 a month and up.

There isn’t enough data available to make a precise determination–and there are too many options for tiny home living to give a broad generalization. However, there are some tiny home dwellers documenting their expenses across the web, which you can use to gauge your own potential bills.

The average spend on utilities each month seems to be somewhere around $30. When compared to the average American, who pays about $172 a month for utilities, this is a huge savings.

Of course, this number can vary wildly for both tiny home owners and typical homeowners – for instance, my electric bill was over $400 last month alone (ouch). Either way, tiny home dwellers are all-but-sure to save quite a bit each month on utilities.

Cost to Park

Monthly cost: Free to $600+

Aside from the structure itself, you’ll also incur costs based on exactly where you put your tiny home. There are many different approaches to this, just based on your individual goals and your area’s regulations.

Some people will pour a slab and create a permanent foundation for their tiny home, complete with sewer hookups and electrical lines. You could even get fiber optic cable this way! If you chose to buy your own land, you would of course need to worry about the cost of the property itself. You may even be able to piggyback your tiny home on an existing property of yours or a friend’s, saving a bit of money on land expenses.

Others may choose to put their tiny home in a community, whether that means a tiny home park or even an RV park. These typically offer hookups for utilities, as well as amenities like gyms, hot tubs, and community centers, all for one monthly rent payment.

Since tiny house villages are a fairly newer concept, they’re a little harder to find. However, you can start by calling RV parks in your area and asking whether they allow parking of tiny homes. Some of these communities may even have pre-built homes that you can buy or rent. Here’s a list of some communities across the U.S., which may be a great to start. There’s also Try It Tiny, which is an AirBnb-type website for those who want to try staying in a tiny home, as well as helps connect tiny home owners with places to park across the country.

There’s also the option of keeping your tiny home on wheels, traveling with it just like a mobile home. This allows you to utilize campsites, parks, RV communities, or even hookups from friends or family while you move around.

Depending on your plans for your tiny home, your added parking expenses may vary. To set up shop at an RV park, you can expect to pay a few hundred dollars a month. For example, the Mesa Campground in Colorado charges $615 a month for a 30-amp powered spot with water, sewer, and electric. If you want to park in Wisconsin, the Birnamwood park only charges $250 to park your tiny home (but doesn’t offer quite as many amenities).

To see a list of some advertised tiny home parks, you can check out the Tiny House Community.

Insurance

Monthly cost: approximately $50

Insurance is yet another expense for tiny home living that can vary wildly, but is still necessary. Whether you choose to put your home on a permanent foundation or travel around the country, you’ll need some form of coverage.

If you choose to trailer your tiny home around, you can find a policy that covers your home either as a covered trailer or as an RV. For the latter, you’ll need to ensure that your home is built to code and then classified as an RV (this typically excludes those who DIY-build).

While the data is sparse on the cost of insurance, the folks at Policy Genius venture to guess that insuring a tiny home is approximately $600 a year, or $50 a month. If you’re traveling around the country, be sure to also factor in the cost of auto insurance (which can typically be bundled with your tiny home/RV/trailer policy).

There’s also insurance that’s required if you want to rent out your tiny home when you’re not using it or when you’re out of town. There are no cut and dry calculations for that type of policy, so be sure to ask your insurer about all of the coverage they provide, to ensure that it meets all of your specific needs.

Income Opportunities (Rent it out)

The great thing about building a tiny home is that it’s not just a way to cut your expenses… it can also be a source of income!

There is a growing market for tiny home rentals. People see these as an exciting way to try something new (sort of like staying in a treehouse or bubble).

Sites like Try It Tiny, mentioned above, allow you to rent out tiny houses for a period of time. This means that if you don’t live in your tiny home full-time, or need to travel out of town, you can rent it out for income. Similar to renting out your home on Airbnb, this can be a great source of regular income.

Living in a tiny home also allows you to live small while renting out your larger home. Some people see this as an opportunity to pay off their mortgage through full-time tenants or Airbnb visitors, while living small or even traveling the world.

Other Reasons to Go Tiny

There are a few other, excellent reasons to go small. A tiny home offers opportunities for convenience and saving money other than just minimizing your abode.

For instance, you can use a tiny home as a guest house on your property. This is subject to your local zoning laws, but could be a great way to add an extra living space for visitors – such as friends or your in-laws – without building onto your home or buying a larger house.

You could also use a tiny home on your property for loved ones. If you have an aging parent who doesn’t need round-the-clock care but needs to be close by, a tiny home might be the perfect option for them. It could also be used for a college kid or even a special needs child who needs a sense of independence but isn’t quite ready for their own, separate home. (As the mom of a child with autism, this is something I may even consider in the future!)

If you’ve decided to go green and eliminate toxins from your life, building a full-size home (or changing out your existing home) can cost a fortune. A tiny home allows you to build exactly what you want – with as small of a footprint as desired – for a fraction of the cost.

How Much Can You Save Living in a Tiny House?

Tiny living has the potential to cost a lot… if you want it to, at least. As in the example above, there are small houses that cost half a million dollars. You can certainly “go big” when you decide to go small!

Overall, though, living in a tiny home is an incredible way to save on expenses, both monthly and over your lifetime. If you want to eliminate the cost of a home (for hundreds of thousands of dollars), cut down your monthly utilities, reduce clutter, and live simpler, a tiny home may be the perfect option. This lifestyle can get you out from under a big mortgage to help you save money, pay off debt, and even retire early.

It can even be a source of income, giving you a flexible option for a fun side hustle. Plus, whenever you want to use your tiny home for traveling the country, you can.

Have you made the switch to tiny living, or considered it? Let us know in the comments below!

Topics: Money and Life

The post How Much Does a Tiny House Cost appeared first on The Dough Roller.

via Finance Xpress

It's crazy to think about how much my life and my relationship with money has changed in just a short amount of time.

I still remember, quite vividly, struggling with money and living paycheck to paycheck. I remember thinking about how $25 could completely break me, crying over dropping food because I was so stressed out and every dollar mattered, and more.

And, it wasn't just that I didn't properly manage my money, I also had an unhealthy relationship with money.

I still have a lot more room to grow, but I do think that my relationship with money has greatly improved over the years. And, it can only get better from here.

It's not just because I’m earning more now than I used to. I've learned a lot about myself over the years, and I've also learned more about money, which has helped empower me.

Other content you should check out:

• I’m a Female Breadwinner! I Earn Much More Than My Husband – So What?
• Why would you make $100,000+ a month and live in an RV?
• How I Successfully Built A $1,000,000+ Blog
• How I Paid Off $40,000 In Student Loans in 7 Months
• The Less You Own, The Less That Owns You

Here's how my relationship with money has improved over the years:

 

1. I stopped caring about others' opinions of me.

I spent a lot of money when I was younger because I cared about what others thought of me. I don’t even think I realized how much I let what other people might think of me control the way I spent money. It’s possibly what led me to spend so much money on clothes, on a new car, going to an expensive private university (when I should have just started with community college), and more.

Now, I don't care what people think of me.

I don't care if I have holes in my clothes, if I wear the same outfit over and over again, that 50% of the population thinks I'm crazy for living in an RV, and so on.

This has not only saved me money, but I've also saved a lot of time and energy.

 

2. I don't go emotional shopping.

People take part in emotional spending for many different reasons. You may have had a bad day at work, a fight with your loved one, and so on. You might even be spending because you are so stressed out about the amount of credit card debt you have racked up. And while that’s an illogical reason to spend more money, a lot of us still do it.

While a certain level of emotional spending may be acceptable in some cases, it can quickly get out of hand and turn into a problem.

And, I know this, because I used to go emotional shopping all the time!

I would think that I deserved it for working hard, because I was having a bad day at work, because I thought I was doing “good”, and more. Seriously, there were so many reasons, and it didn't matter if it was a good day or a bad day because I would use either as an excuse to shop.

It's funny how I used to be with money because as you'll see below in #3, I either spent waaaaaay too much, or I didn't spend anything at all. I really had such a unhealthy relationship with money.

 

3. I don't sweat the small stuff.

Knowing where your money is going is great, and more people should start doing this.

However, I used to take it to the extreme. I would think about every last dollar I would spend, and it was hard for me to enjoy spending any money, no matter how much money I made or if I had the money set aside for a specific purpose.

I believe this is due to the fact that I lived paycheck to paycheck and lived in fear of that happening again. Often, our past influences our current relationship with money. So, if you are finding yourself making financial missteps, it’s important to get to the root of the problem so you can change your relationship with money.

And, yes, money can make or break you, but it is also there to be enjoyed and to use to your advantage.

Once you are on a good financial path and have budgeted money for fun, you should be able to enjoy the money you are spending instead of feeling guilty or upset.

 

4. I won't spend one year's pay on a new car.

When I was 18, I bought a brand new car. It was over $20,000, and I thought I looked so cool. The reality is that I probably looked really dumb!

Really, really dumb.

My monthly car payment was around $400, and I was also spending a lot of money on car insurance, gas, tinting the windows (ugh!), and more.

And, I had a job that only paid a few dollars over minimum wage.

What was I thinking?!

 

5. I no longer think debt should be normal.

Many people compare their amount of debt to what others have so that they will feel their debt is “normal.”

I was guilty of this too. I thought that since almost everyone seemed to have student loans, that it would be fine if I did too.

So, I took out a lot in student loans instead of using the full-time job I had to help pay for tuition, which probably would have been a much better use than that car.

However, who cares how much debt another person has? How exactly does knowing what the average amount of debt a random person has affect you?

Is that person you?

NO!

So, why would another person’s amount of debt even matter to you? That makes no sense!

Just because someone else has $10,000 worth of credit card debt from buying too many clothes does not mean that you should too. You never know, this amount may be breaking them on the inside even if they aren’t showing it.

 

6. I don't let money control me.

I'm still not entirely perfect in this area, as I still save like crazy in fear of a rainy day.

However, I don't let money control me as much as it used to.

Before, money controlled my life to the point that I would think about it before even thinking about my health.

If I would have just learned how to manage my money better, I wouldn't have let money control my life as much as it did.

I would calculate our finances every day, stress out about little purchases, ignore learning about money, I would worry about keeping up with my income reports (they are super motivational, but I also felt like I had to “beat” them every month), I had a super large emergency fund (my money could have been better invested that whole time!), I would always worry about repairs to the house, car, or RV instead of just living a normal life, and more.

I would obsess about money to the point that I didn't actually enjoy life. I kept thinking about what bad things could happen, comparing myself to others, and more, instead of just enjoying life.

 

7. I've learned that life is about much more than just money.

One thing that goes along with everything else above, is that I have learned that life isn't all about money. When I was younger, I had dreams of making lots of money, living in a big house, and having nice cars.

Now, I really don't care about any of that. As long as I am financially independent, I am happy, but there is more to life than just money.

For me, I am happy traveling to new places, being able to spend time with family and friends, personally growing, trying new things, and so on.

Now, I am much more interested in experiencing life.

This doesn't mean you should throw everything I've taught you about money here on Making Sense of Cents out the door. It's all about having a healthy balance.

And that's what I'm always working towards.

How has your relationship with money changed over the years? Have you gotten better or worse with money?

The post 7 Ways My Relationship With Money Has Changed appeared first on Making Sense Of Cents.

from Making Sense Of Cents


via Finance Xpress

What follows is Stephen Dubner‘s conversation with Facebook founder and C.E.O. Mark Zuckerberg, recorded for the Freakonomics Radio series “The Secret Life of a C.E.O.” It was recorded last summer, long before we learned that 50 million Facebook users’ data had been weaponized by political operatives. Facebook has been the subject of intense scrutiny for years now; that’s what happens when you’ve gone from a college dorm startup to a social network with some 2 billion global users. We spoke with Zuckerberg in Chicago in a trailer, outside an event space where he’d just addressed a few hundred very enthusiastic people who serve as group administrators for Facebook user groups. He introduced new software tools that would help them manage their groups.

You may have heard recently that Facebook has been seriously questioning its mission — that it’s trying, or at least it’s saying that it’s trying, to encourage more meaningful social bonds and less partisanship and discord. That movement was essentially launched on this day, at this talk Zuckerberg gave, in Chicago

Mark ZUCKERBERG: You know, every day I wake up and I just think to myself, “I don’t have much time here on Earth” or “how can I make the greatest positive impact that I can,” and I know that this is a question that a lot of you ask yourselves too — and it’s not always an easy question to answer. Now, the thing that I think we all need to do right now is work to bring people closer together. And I think that this is actually so important that we’re going to change Facebook’s whole mission, as a company, in order to focus on this.

And now here is our conversation, afterward, in that trailer. A trailer whose air conditioning we had to cut for a quiet audio recording. So picture yourself there: an un-air-conditioned trailer, in Chicago, in the summer, with Mark Zuckerberg. You there with us? Great… here we go:

Stephen DUBNER: Hey! Hey, how’s it going? Really nice to meet you.

ZUCKERBERG: You, too. Good to meet you.

DUBNER: That was really good. You like it? Because it’s a whole set of things that you didn’t used to ever do.

ZUCKERBERG: Yeah, I think it’s important for me to get better at communicating.

DUBNER: Oh my God, the people were so excited when you talked about the tools. Did you expect that level of excitement from them?

ZUCKERBERG: Probably not that level. But I think people are always most excited about the really concrete things that you’re doing. You can talk about the lofty vision and mission and strategy. I actually find you’re lucky if you can get people very excited about that, even if they agree with what direction you are going, because it’s just more abstract. But when you get into a very concrete work that you’re doing, then that’s what I think really energizes people.

DUBNER: I have to say — I’ll be honest with you: I don’t really use Facebook.

ZUCKERBERG: That’s okay.

DUBNER: I mean we use it — Freakonomics, we use it. But I’ll be brutally honest: I don’t want more friends. Or, that sounds bad, too —

ZUCKERBERG: But do you want to stay connected with the friends you already have?

DUBNER: No — well yes, but —

ZUCKERBERG: You don’t?!

DUBNER: Well, honestly, it’s tricky. Because when you’re trying to get a lot of stuff done — I mean, I don’t mean to sound like a total misanthrope. All I’m saying is, I don’t use it a lot. But that made me want to join every group in there, and then I realized that I’d have to quit my job and do nothing but find rare birds and go fishing and support these military families.

ZUCKERBERG: Well, the point isn’t to join every group, but I think it’s really important that people have one or two or three communities in their lives that they really care about. And I think when you have the absence of that, that can lead to real social issues — individually and then for society overall. So, of course these groups, in order to be meaningful, need to span online and offline. There are certain things that you just can’t do online. But the thing that I think is so meaningful and interesting and what we’ve seen is that they do! The people do plan events to come together in person, and the support really does expand out into the physical world.

And a lot of these groups are just things that wouldn’t have been possible physically. I mean we talked about groups for people suffering from rare diseases and almost by definition if you have a rare disease, there probably isn’t someone in your area who has that. So this might be possible for the first time in human history to be able to come together and share your experience of having that condition. I think that’s very powerful. But I think everyone needs to be a part of a few communities that are meaningful to them in order to have that support structure.

DUBNER: So I don’t mean to rain on that parade. I’d love to talk for just a minute about the net effect of Facebook, or social media, or social networking on, let’s say, happiness, to pick a word, or satisfaction. I think there’s a lot of good conversation going on that G.D.P. is a ridiculously bad measure of well-being — it’s way too narrow, it favors all kinds of silly stuff — and that people are talking about either gross national happiness, or some slightly more sophisticated version of that. But it’s really hard to measure it, one; and two, know what causes what. So with Facebook, per se, the upsides that you especially talk about in there, today, are potentially massive, right? Helping communities that wouldn’t be able to find each other, or even identify each other. But I also do worry about the potential downside, which is that, I have teenagers, and there’s always the notion that what people show of themselves online is often them at their best, most buoyant, happy selves. And if I see that and it’s a Friday night, and I’m not with them, I’m thinking, “Man, what’s wrong with me?” And I’m curious if you think about the net effect, costs and benefits on humankind, which is a big, impossible question, but I’m guessing you thought about it.

ZUCKERBERG: That’s very important to us. So the way that I think about this is that technology amplifies human capacity, right. So there are good parts of people, and there are bad parts of people. I believe that on balance people are good, and that therefore amplifying that has positive effects. There’s content portrays people at their happiest, and then there’s content — like a lot of sensational news in some cases — that portrays things as much worse than they are. And I just think that the reality is that both have positives and negatives. There are people who like to point to the negatives of either, because they’re trying to make a point. I don’t think that that’s right, right? There’s a lot of research that shows that the more connected we are overall, the happier we are, and the healthier we are because of that. So it can’t be that talking to your friends when they’re happy is bumming you out, and then reading news that’s down is bumming you out even more, right?

But being an engaged citizen also is not always fun. And a lot of the part of the mission that we’ve been working on is making the world more open and connected. So the connected part is about being connected to more people, and there is generally a lot of research that shows that that is positive for people. But I think that being open is also very important for society. But it can be challenging. Confronting truths or perspectives that don’t fit with ours don’t necessarily make our lives easier in the near term. But I think it’s a healthy thing and an important thing for us to do both as individuals and as society in order to move forward.

DUBNER: So following on that, how do you bring those two notions together which is the fact that we love to connect with people that we either have something in common with or maybe a shared mission, with, as you noted, it’s really important to at least think about or understand a little bit about what people who don’t think like you, why they think like that, and how you can get along. So this is the silo issue, and it exists everywhere and it probably always has and always will. I’m just really curious, it’s interesting: a lot of the groups in there are tribes, and it’s a word that people use kind of positively, and also a lot of them, let’s be honest, they’re kind of — you want a water?

ZUCKERBERG: No, it’s cool.

DUBNER: You sure?

ZUCKERBERG: It’s just very warm in here. And now that you’ve turned the air conditioning off…

DUBNER: Well, yeah, that’s our fault…

ZUCKERBERG: Let’s go with it.

DUBNER: All right. And a lot of the groups in there were about activities. So of course everybody’s allowed to have hobbies that are totally orthogonal to everybody else. But, when it comes to political or social or gender or other affiliations, how do you think about weakening the silos?

ZUCKERBERG: So we’ve both read and just tried to understand as best we can a lot of research around how to promote positive discourse. So there are a few things that I think are pretty interesting that most people may not know. So the first is that if you want to have a debate where people engage productively, the first and most important thing is to first connect with that person over something that you have in common. Right, so if you just go into an internet comment thread and you start debating gun control, that’s probably not going to be super productive. I mean, it can be in some cases. But it’s easy to dehumanize the other people, think about them as not human, not empathize with them. So a lot of what I think social networks can do well, and these communities, are first you connect over something that you have in common. So you recognize that the other person is a person. And I think communities in that way act as a jumping off point.

DUBNER: Do you try to orchestrate that? I’ve read about your efforts to do that and the research that that’s based on.

ZUCKERBERG: Yeah, so we’re trying to work on this, but I think building communities is one of the ways that you can. So a group might come together because they like fishing. But then they go connect over other things, and they debate other things, and they find that, “Hey, we agree on other things; we disagree on them; but now we can have productive and empathetic discussions, because we’re all people, and we recognize our common humanity.”

In terms of just encouraging good positive discourse overall, there are some best practices. For example, one of the ideas that people suggest all the time is, “Well, why don’t you just show people the opposite perspective?” Right, so you have an article that comes up in your news feed about, take gun control, the topic we were just talking about. And a lot people are like, “Well, why don’t you just show an article from the other perspective?” Well, it turns out if you don’t do this well, if you just show the other perspective, it actually just entrenches people’s belief in their original opinion. There’s a lot of confirmation bias that labels the other opinion as “other.” So you start to tune it out.

What you really want to do is not just present another viewpoint, but you want to give people a range of viewpoints. Because people are smart. And when they have the full picture of what is going on, they can make a good rational assessment for themselves about where they want to be on the spectrum, and what they believe. But it’s really important to not just tell people, “Hey, here’s the other viewpoint, you should look at this.” What people need is the whole picture. So I think that good journalism does that; it doesn’t just try to show one side of a story, but it tries to give the full picture. And when that doesn’t happen, then we can help play a role of at least trying to show a number of different pieces of media that might in sum give the whole picture.

DUBNER: So how much do you care about, or maybe love, social science research, the kind of insights that give rise to these kind of possibilities. So I’ve tried to figure it out, and I’ve read a bit. I know you studied psych for a while, and I know that you hire a lot of—

ZUCKERBERG: I wasn’t at Harvard for very long time, but I was technically a psychology major.

DUBNER: And I don’t know if you know Sudhir Venkatesh, a sociologist you hired? He’s a good buddy of mine.

ZUCKERBERG: Yeah! He wrote Gang Leader for a Day. It’s a great book, I read it.

DUBNER: Anyway, because Sudhir was in … Yeah, anyway. So Sudhir’s amazing, and I love the notion that someone who thinks the way he thought as an academic and as a writer and a scholar — his insights are being applied to something like this, which is accessible to everybody. So talk about how you seek out those kind of things, whether it’s the people, per se, or the research, and how you make it actionable. Because I think I’d like to argue that social science research is having its golden era; I hope it lasts forever. But people didn’t really apply this kind of thinking very much in firms and governments 20 or 30 years ago. It’s really happening, so I want to hear about how you make that happen.

ZUCKERBERG: Well understanding how people are using our services — both in terms of what they want, so we can provide services that meet people’s needs, and understanding what’s good — are really important domains that we want to work on. So we take data analytics and data science very seriously as a company; I think it’s one of the core strategic things that we’ve done well that other companies are seeking to emulate now. But especially because of the context of what we do as a social system, it’s especially important I think to understand.

DUBNER: Who are some heroes of yours from that realm — like Bowling Alone and Bob Putnam? I’m just curious like what you’ve read or thought over the years.

ZUCKERBERG: Putnam’s work shares a lot of the themes that I was just talking about today. He wrote some of the seminal work on community membership and did some of the the longest ranging studies on that. It’s an interesting question of where you draw the line between what is social science and what is economics. But I think recently Raj Chetty‘s work is incredibly interesting opportunity and mobility. We’re doing some interesting work together, and we try to team up with folks who are doing interesting work.

There’s interesting research now that shows that the average American has fewer than three close friends who they would turn to in a crisis. So one of the questions that I asked inside our company, and I started a team to work on this is, “Well, can we build some products or services that make it so that the average person has one more close friend?” So not just helping them connect to more people who they know, but, if you could do that, then that seems like a very meaningful change that you could make in the world — one thing that I’m doing this year is traveling around and trying to just see how people are thinking about communities and their work, and —

DUBNER: You’re going to all 50 states, I understand?

ZUCKERBERG: I’m going to 30; I’m going to the ones I haven’t been to yet. I’s interesting so far. But one of the things that I’ve found is that there’s this myth that I think a lot of people have; that if other people in other places just had better information, then they’d make better decisions. And I’ve generally found that that is not true. You know we all lack some information. Of course we can all make better decisions if we had perfect information. But for the most part, a bigger influence is actually who you know, who your friends are, who your family are, and how they help you filter the information that you have.

I can give a few examples of just how … this is a really poignant example. When I was in Ohio, I sat down with a group of heroin addicts, and one of the things that was really interesting is when you’re going through recovery, the first thing you have to do is detox, of course. But then after that, the next thing you have to do is basically get new friends. And it turns out if you remain friends with anyone who you were using with before, then you are very likely to end up back using heroin and endangering your life. So it turns out it’s not that these people don’t know that it’s bad. Or that they don’t want to end up addicted to it. But it just is that the people who you’re friends with — having those close friends, the three or four folks in your life are just so important.

Another example that has really stuck with me is when I visited a juvenile detention center. And one of the facts there that’s just mind-blowing is if you go to a juvenile detention center … and some of the kids are there because they committed what you’d call a crime,, they stole something or hurt someone. But some of them were there just because they misbehaved in class a little bit. And going to a juvenile detention center dramatically increases your chance of becoming a criminal once you get out, because what you’re essentially doing in that center is building a social network that reinforces itself negatively. All the examples that you’re getting are other people who either have criminal behavior or are misbehaving, so kids who who might have just been okay, a little not behaving as well as they should have in class, are getting all the wrong lessons and friends.

So, making it so that we can have a positive social network I think is actually one of the most important things that we can do for growing opportunity in society. That’s certainly what Raj Chetty’s work is. So that’s definitely a big thing that we study and think about how we can improve.

DUBNER: Let me ask you something in his work that he found that was surprising and interesting: do you know about the moving to opportunity research that was done years ago? And all the first round of scholars that looked at it, they said it didn’t work, and he came back with a colleague and found out that actually it did work if the kids were younger when they moved, because by the time you’re 15 or 16, your patterns are pretty set. You think school sucks or you don’t. But if kids were 9 and under, I think. it really worked. So to that end—

ZUCKERBERG: Actually he found a linear correlation. So if you moved when you were 9 you got half the impact of moving when you’re born, and if you moved when you’re 18 that’s kind of the end of the impact.

DUBNER: Right. So given that and given that the communities you’re building are presumably mostly for adults, I gather, what do you think about that?

ZUCKERBERG: Well, people over the age of 13 can use Facebook.

DUBNER: Okay, this is a corollary to a question I often think: people talk about early education — and I’m really interested in the project you’re interested in, because I’ve known people who’ve done that. I just think that’s a smart way to think about it: use technology to customize because people learn differently. People have different abilities and so on. But even when you talk about good early education, the kids who end up doing worst in this country and most other countries are already doing bad by the time they’re 1 or 2; they’re born into circumstances that are just really, really hard to surmount. So, without putting all the world’s problems on you and Facebook —

ZUCKERBERG: This is what Priscilla, my wife, focuses on. She’s running a school which is focused on the intersection between health and early childhood education. She’s a doctor and she wanted to help kids. And then through her pediatrics program realized that education and health are so intertwined, and that you need to start educating the parents, from the time that they’re pregnant, about what the right behaviors are, and then you basically want the kids in the school or in a program, or are at least to have good habits being built from birth, and have them involved in that as quickly as possible.

When we think about education, we often think about concepts like math or reading. But very early on, when you’re learning how to walk, health is completely intertwined with education, and then of course as you as you go up through your education — it’s hard to learn math if you can’t sleep at home, or there are different issues. So there are all these interesting trade-offs — you could do a whole podcast with her talking about — she has students who come in and who are in an environment at home where they can’t sleep as well. So she has to make this trade-off — they have a nap time during the day, and if a kid is sleeping and just sleeps for four hours instead of the hour and a half, does she wake them up to do math, or does she let them sleep? And I think a lot of the time what ends up being the case is that the health is the precursor to education, so you let them sleep. But they’re totally intertwined in the way that you’re talking about.

DUBNER: So Facebook is obviously not a government. You don’t have an army as far as I know. Do you? Right?

ZUCKERBERG: No, we do not.

DUBNER: But in some ways, it’s become a nation-state in the way that we used to think about nation-states. Except that it doesn’t provide those services, and it doesn’t use monopoly of force and so on. But what I mean is you probably have —

ZUCKERBERG: Well, it’s a community.

DUBNER: Okay. But it’s a global community, organized by interests, activities, and it’s voluntary. So to me it’s — right, nation state is an exaggeration. But what I’m getting at is this: governments throughout history and especially now, try their best, I would argue, to help their people. And they often don’t do a very good job, because the structure of government turns out to be pretty suboptimal and the incentives kind of weird. In a way, Facebook, it strikes me, has more leverage over how people actually organize and live their lives, right? The choices they’re able to make, the information they’re able to get hold of.

And so I’m curious how you think about that. I know you were an accidental C.E.O. and an accidental social entrepreneur, but it strikes me that you’re working really hard to take this massive accidental enterprise really seriously and optimize it for the most number of people. So I guess my question is big and lumpy and impossible, but I really just want to know what that feels like, because, look, I don’t know how to read what you’re trying to accomplish here. You’re this incredibly smart and accomplished young guy with this incredibly big and impressive company. And maybe you’re just trying to make it bigger and better and that’s it. But it doesn’t read that way to me. When I read your letter to the global community —

ZUCKERBERG: Yeah, well, I never started this to build a company.

DUBNER: Yeah. But I wouldn’t have — knowing what I know about you, if I looked at you 10 years ago — I also wouldn’t have thought that you were necessarily in it to help fix society or help make society better. Maybe I’m just wrong.

ZUCKERBERG: Well, I think at each point you try to do the best you can with the position that you’re in. So 10 years ago, I was just trying to help connect people at colleges and a few schools. And that was a basic need, where I looked around at the internet, and there were services for a lot of things that you wanted. You could find music; you could find news; you could find information, but you couldn’t find and connect with the people that you cared about, which, as people, is actually the most important thing. So that seemed like a pretty big hole that needed to get filled, and maybe it’s more functional and more basic, but that was the thing that needed to happen.

Now you know we look out at the world and we say, “Okay, we’ve been focused on making the world more open and connected.” And I always thought that that would be enough to solve a lot of problems by itself. And for some it has, but the world is today more divided than I would have expected for the level of openness and connection that we have today. So now I just believe that we have a responsibility to also work on that. So you can paraphrase what we’re working on now is, “open, connected, and together.” So that is basically the idea that we’re talking about, when we say bringing the world closer together.

Here’s another way to think about it. There are lots of different issues and things that help bind people together and make us stronger as a whole than the sum of our parts. A huge part of that is the economy and our jobs and all that. And Facebook is a big player there, but we’re a relatively small part of the overall world economy. But when it comes to helping people build communities, I’m actually not sure that there are many other institutions in the world that stand for building communities and have the tools to be able to empower people at as large scale to do that. So that just strikes me as something that’s, “Okay, if that’s a unique opportunity that we have, then we also have a responsibility to go do that.” And that’s a little different than where we were 10 years ago, when there were many social networks that were bigger than us. We were just at schools and all that.

DUBNER: The tools that you talked about today; obviously you’re giving some user data to the users. What does that represent in the path of Facebook sharing its data generally. And I realize that what you’re giving to the users is useful. I love that when you announced them one lady actually said, “Statistics. Woo!” I’d never actually heard people cheer for that.

ZUCKERBERG: I missed that. But that makes me smile.

DUBNER: Yeah it was awesome. And obviously you’re not sharing, you know, income—

ZUCKERBERG: It’s aggregated. It’s insights into how people are using groups, right, so basic demographics —

DUBNER: And who wouldn’t want that right? If you’re the admin.

ZUCKERBERG: Well you need to present it in a way that’s actually useful.

DUBNER: Yeah, but I’m sure there are people who want you to share much more data about your users. Yes?

ZUCKERBERG: Well I think one of the interesting challenges that you find running a company or a community at scale is there are people who want things that are completely conflicting. So there are certain people who want us to share more information, and then there are a lot of people who really don’t. For some of these social decisions that we have to make, I find that the right place to be is when you’re getting yelled at from both sides equally. And you try to just make the best decision that you can on this.

But, both parts have good arguments. Of course, privacy is extremely important, and people engage and share their context and feel free to connect because they know that their privacy is going to be protected. On the other hand, if you’re trying to enable people to build communities, giving them some insights into how people engage in their communities in a anonymised way that that isn’t sharing anything about the individuals and the communities, can help them do their job, and help bring more people together, and help people’s lives as well.

So you try to just do the best that you can and know that there’s not always a simple and optimal solution. And another dynamic that’s interesting is that sometimes the balance of what people want shifts over time and that enables opportunities to do more in one direction or the other, that wouldn’t have made sense before.

DUBNER: There’s also, as you’ve pointed out, people don’t know what they want. We’re really bad at predicting or —

ZUCKERBERG: Oh, I don’t know; I don’t believe that!

DUBNER: Well in the revealed preferences, in what people actually do, you can see what they want. But if you ask people what they would like, the social science research at least says that declared preferences, there turns out to usually be a really big gap between that and revealed. No?

ZUCKERBERG: Well, I would say that in a lot of these discussions that I have, people focus on what we as Facebook are doing. The real secret to why this works well is because we focus on giving everyone else as much power as possible.

DUBNER: What do you mean by that. Meaning just give users power to use it as they wish?

ZUCKERBERG: Yeah, give people the freedom to share as much as as you can; give people the ability to get access to as much opportunity as possible. And there’s a whole spectrum on this. First, in order to be able to use a tool like this, you need to have access to the internet. Which is something that we take for granted here in the U.S., but more than half of the world doesn’t have access to the internet. So we work on basic things like improving the business model of telecom operators. Or we’re designing solar powered planes to beam down access to the Internet, because that’s a basic thing.

Then once you have the internet, there’s the whole legal framework. We are very active in advocating in many countries to give people the freedom to share more, and express more of what they want. The U.S. is somewhat of an outlier on having constitutionally protected freedom of speech in a way that very few other countries do. Every other country has many more restrictions on what you can say than you can in the U.S. So that gets in the way of people’s freedom, and we are active on pushing on that.

And then only when you get through these basic foundational and legal frameworks, do you get into the tool. Which is, in the U.S. people can have the freedom to say what they want to anyone who they want, but that may not help you so much if you don’t have a tool that actually enables you to reach other people with your opinion. So that’s a thing that Facebook and the internet have really worked to change over the last 15 years. Now we really are in a world where anyone for the most part can write something and share it, and if it resonates, it’ll get shared widely, and it can start to change opinion broadly. But in many ways, that ability is the practical arm of free speech. That just didn’t exist before.

But there’s this whole spectrum of things that you need to do, and that, that’s the thing that we’re hugely committed to. That’s why when we rolled out the mission today, the basic idea behind it and the vision, is to bring the world closer together. But the reason why that isn’t the whole mission is because it was really important to me that the mission focused on empowering other people. So the mission actually is to give people the power to build community and bring the world closer together, because there’s no way that we’re going to do this, no matter what we do — you can ask me all the questions you want about what we’re going to do, but it’s actually going to be other people doing this, and we succeed when we empower other people.

DUBNER: Now a cynic would say, “Well, sure it’s in Facebook’s interest. The bigger they build a global community, the bigger and better the company is.” Which is not untrue, but it’s the prerogative of every company to grow as big and as profitable as they can. So let’s say that someone puts on their “I doubt the do-gooder part of you” hat. How do you respond to that?

ZUCKERBERG: I think a lot of people just can’t get out of their own way. So I think for a lot of companies and governments, they would do better by giving people more freedom, and they don’t for whatever reason. So you may be right that it is strategically the right thing to do, but that doesn’t mean that everyone is doing what they should do. So I just want to make sure from the mission of the company on down to how we execute and think about our strategy that that’s always front and center.

And a lot of times people like to think about, “Well what is the impact that we can have by improving this product?” I really want to train our organization always to think about what is the impact that we can have by giving these people more power and freedom to go do what they want. So this just goes back to your original question before around, “Do you believe that people can make good decisions for themselves?” And I deeply do. I really think that things end up better when you give—

DUBNER: I don’t mean to imply that people can’t make good decisions for themselves, although on some dimensions I would argue they can’t. Like with diet, with health particularly. I think you’ve written a little bit about this, that the leading causes of death in the rich world are all essentially self-inflicted. Or at least a lack of optimizing how you take care of yourself. And you could say that people think the tradeoff is worth it.

ZUCKERBERG: I’m not sure I’d say that.

DUBNER: That the tradeoff is worth it?

ZUCKERBERG: No, that the largest causes are self-inflicted. I mean, cancer…

DUBNER: Cancer truly T.B.D., because we really don’t know yet, about most cancers, what causes them. That’s the problem. The environmental causes and behavioral causes, I wish we knew, because then we wouldn’t have as much cancer. But cardiovascular — just take the biggest one —

ZUCKERBERG: It’s also largely a function of age.

DUBNER: It’s true. It’s true. And look —

ZUCKERBERG: I’ll debate you on this one point.

DUBNER: All right. And one reason why we have more cancer now than we should is because people are living longer, not dying as early from cardiovascular deaths, which is great. There’s always a silver lining. But the economist Gary Becker from the University of Chicago, years ago, he was the guy that started all of this in terms of turning economics into a more interesting social science. And he argued once that all deaths are suicides to some degree. Because none of us actually really optimize staying alive long, because life’s too fun and interesting and challenging for that. So I think we all make trade-offs all the time, and I think that that’s what being human is about, and it’s maybe fun. No? You’re shaking your head.

ZUCKERBERG: I disagree with that, too.

DUBNER: Yeah? Tell me why.

ZUCKERBERG: Well, I think that having a sense of purpose is the thing that brings us both happiness and health. So if you’re framing it as “doing stuff that’s fun leads you to your demise,” I think there is a lot of research that would suggest the opposite.

DUBNER: Yeah, I agree with that. Fun meaning cheeseburgers and French fries and not taking care of oneself. That’s what I mean by fun. That’s a shallow version of fun. All right. So let me just ask you: I loved the Reid Hoffman conversation in that piece.

ZUCKERBERG: Yeah, that was fun.

DUBNER: It was really interesting, and I loved how he framed it. And you were obviously really good talking with him. You said something on there that I wanted to ask you about. How many versions — or whatever the proper noun would be — of Facebook are running at any given time? And just explain that to people who use it, and what that idea represents.

ZUCKERBERG: Sure. So one of the basic strategies of our company is to learn as quickly as we can. That is more important to us than any specific strategy of, “Okay, here’s how we’re going to build the best messaging app, or here’s how we’re going to build the best news feed,” is building a company that is just agile and learns as quickly as possible from what people are telling us.

So the best way to learn is to basically try things out and get feedback. So if you just have one version of Facebook running, then that constrains how much people can react to. So we build this whole framework that allows people within the company, any engineer, to change some code, create a new branch of what Facebook is, and ship that to some number of people. Maybe 10,000, some small portion of the community in order to get good feedback from that. And there are a bunch of rules around a bunch of things that you can’t ship.

DUBNER: And how is it related? I assume that if I’m the engineer and I want to do that, I do it with someone, with conversation and approval.

ZUCKERBERG: Some, there are definitely guidelines. There are things that, if what you’re doing is sensitive to people’s information at all, then of course there are a bunch of checkpoints that you need to do before doing that. But people try out different ideas for how to suggest you better friends, or suggest you better communities, and that doesn’t need to go through a lot of process of the company; people can just try those out, and we’re trying out hundreds of different versions of things like that. And the idea is that cuts through red tape at the company. So now a given engineer, instead of having to get their manager and then their manager’s manager and then me on board with changing the app, they can just do it.

And then at the end of that test, they get all this feedback back that is both quantitative — so how their version of Facebook performed on everything that we care about: how connected do people feel; how much do they feel informed; how happier; all these different things — and then we get qualitative feedback back as well. And if their version is an improvement, then we roll that in, and then that becomes part of the trunk version of Facebook that now everyone else is measured against. So now every day, we’re running lots of different versions to see what’s best and what people respond to. But again it gets back to this strategy, which is the real company strategy is to learn as quickly as possible what we need to do in order to bring the world closer together.

DUBNER: How about a couple lightning-round fast questions. What’s one story that your family always tells about you?

ZUCKERBERG: That’s a good question. You’d have to ask them.

DUBNER: But you probably know it too. It’s like, “Oh yeah there was a time that Mark did—,” because I love you know I love the stories you talk about with Reid. ZuckNet was awesome. I also love that the snowball fight game, where you could have a real snowball fight but it’s a lot more—

ZUCKERBERG: Yeah. I think my sisters were happy enough to play the games that I programmed growing up, because it was better than what we would do physically. So they prefer playing a snowball fight game, or some strategy game that I made, even if the graphics were terrible, and the game wasn’t that good, because I was still learning how to program; I was like 12 or 13 or 14. They’d prefer that to getting chased around the house with a Super Soaker or something like that. So there’s that.

I think my dad has a lot of fun stories about how he got me into technology. And he’s a dentist, but he was always very focused. He took a lot of pride in being the first dentist in the area who did digital X-rays instead of physically. He was just such a geek, and he loves this stuff. And he didn’t really know how to program, but he was just like, “Mark, don’t you think this is cool?” So that stuff I thought was pretty good.

DUBNER: You obviously have to make a lot of decisions all the time and there are a lot of different ways to make decisions, and deciding to not do something is often much more important in retrospect than deciding to do it. So other than deciding not to sell Facebook early on — which I’m guessing was at least a little tempting — what’s the best decision you ever made to not do something, or not pursue something?

ZUCKERBERG: So you’re asking about a discrete, big decision, but I actually think the most important thing is what decisions and what process, on a day to day basis, you choose to let people have the freedom to do, and just not get involved with. So a huge part of how Facebook works is giving a large amount of freedom to our engineers, the company, and to people who use the product to make with it what they will, and trusting people to do that. So there’s this balance of how much is it going to be my ideas and my will, versus the people around us and the company. And I think having some restraint there ends up being very important.

DUBNER: Was that hard for you to get to, or?

ZUCKERBERG: I think it’s hard every day. When you’re running something, you of course have the ability to make as many of the decisions as you would like. So the real art I think is not when you know that you have someone who is a superstar, who is going to make great decisions, but deciding to let people do things that you disagree with, because on principle you know it’s just going to free up more creativity and people will feel like there’s more potential to try different things in the future that may be better, if you let them go do those things, even if you disagree with them.

DUBNER: That’s really admirable. I would think it’s hard. I think most people would have a really hard time doing that.

ZUCKERBERG: I believe a lot in giving people freedom.

DUBNER: I believe; I do. I mean I believe in the belief, but I just think that’s a hard thing to do. All right. Last question quickly: if you weren’t doing this, if this hadn’t worked out, if MySpace had become Facebook, what do you think you’d be doing?

ZUCKERBERG: That is a really interesting question. I’ve always really cared about the idea of connecting people and bringing people together. And the way that you do that is different at different points in history. Another way that I think about it is: if Facebook didn’t happen, you’d just drop me in a desert now what would I do? I believe that technology is a huge lever for improving people’s lives. It’s a great thing that an individual can sit down and construct something and share it with millions of people around the world; almost nothing else other than code and technology gives you that ability to do that. Maybe producing media on top of that technology, but the technology is the platform for that.

But today a lot more people message each other than just use social networks, which is why we’re very focused on Facebook Messenger and WhatsApp as well. So if you if you got started 13 years ago in a dorm, the right thing to do is to build a website for social networking. Ten years ago, or seven years ago, maybe the right thing to do is build a mobile app for social networking. Now I think one of the most important things that you do is build tools for more private communication, because people have the power to do that.

I think that line will always be shifting, and I would bet that you know at any moment that you would want to get started, you probably could. And there are always going to be new ways that people want to share and connect and feel supported, and there are always things to build. I’m just a big believer in technology, and bringing people together is two of the most important levers that we have to make progress as humanity.

DUBNER: All right. No offense — and I know it’s hot in here and you’ve got to go — but you really didn’t answer my question, which is just literally what you think, if this had gone very differently, like you couldn’t do it differently —

ZUCKERBERG: So differently that I wouldn’t want to be an engineer any more? My answer is that I would build whatever the next thing is. I still think you can care about the mission, but Facebook is not a one product company at this point. And you know there are new social network companies that get started all the time. I’m not sure exactly how I would think about it.

DUBNER: So there was no impulse to become a dentist, for instance?

ZUCKERBERG: No, that stuff makes me queasy. So I never had the whole doctor thing. And Priscilla’s got that covered for the family. But no, I believe a lot in technology. I think that there are lots of different ways to get started. Our path as Facebook I think is good proof that the line is not clear. I started it as a website for Harvard students to build a community there. There was no news feed, none of the stuff that you think of as the most important parts of what Facebook are today. So you start with something; you find a niche; and then you can grow it to serve more people in that way. That’s what I care about.

DUBNER: All right.

ZUCKERBERG: Thank you. It was really fun.

DUBNER: Yeah. Thank you very much.

ZUCKERBERG: Alright, we gotta get some A.C. in here.

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Our staff includes Alison Hockenberry, Merritt Jacob, Greg Rosalsky, Stephanie Tam, Max Miller, Harry Huggins, and Brian Gutierrez. For this series, the sound design is by David Herman, with help from Dan Dzula. The music throughout the episode was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, or wherever you get your podcasts. You can also find us on Twitter, Facebook, or via email at radio@freakonomics.com.

The post Extra: Mark Zuckerberg Full Interview appeared first on Freakonomics.

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A buddy of mine who so happens to be a very successful frugal blogger gave me some incredible advice recently. He said,

“Sam, you’re doing it all wrong focusing on the mass affluent / aspirational niche. Instead of writing about investing, entrepreneurship, and real estate, you should focus on frugal living. I teach people how to save money on groceries, encourage people to walk or ride a bike to work, tell people to never turn on the heat, and of course never buy anything new. As a result, people love me for it! Teaching people how to be more frugal is possible for 100% of the population, which is why my site is so popular.

Whereas you, you talk about how earning $300,000 is middle class, establish tough net worth targets by age, and write super long posts on investment strategies in retirement while most of your readers are still working with less. Of course people are going to end up hating your guts because you’re excluding the vast majority of the population!

Showing tough love should only be reserved for the people you care about the most, not your readers who pay you nothing. If they end up getting crushed by inflation 20 years from now because they didn’t invest or thought they could cruise through life, it’s not your problem. 

Another thing. I hate to say it but you are at a structural disadvantage as a minority. Most people like to connect with people who look and talk like them. Even if you get a 100% following of the Asian American population, you’ve only got a 6% marketshare. Conversely, if you get only a 10% marketshare of the Caucasian American population, you get a 7.7% market share! Thing wisely about the demographic you want to reach. 

Carefully analyze the backgrounds of your greatest detractors. Look at owners of the sites that have been sold for multiple millions of dollars or have developed a cult-like following. Finally, look at the profiles of the people in the mass media and the people the mass media repeatedly highlight. You will find a clear trend if you’re honest. 

You can’t change your race or the name of your site, but at least you must make your readers feel better about themselves by telling them how little you spend and how little you need to make. I tell my readers I spend less than $30,000 a year for a family of four despite earning well over $1,000,000 on my website each year. This way, most of my readers can relate to me or even feel sorry for me because the median household income is double that. Of course I spend way more than $30,000 a year, but my readers will never know. I’ve carefully crafted a frugal image that is now unshakeable!

At the end of the day, people just want to read what they want to read to validate the decisions they’ve made in their lives. Stop putting so much opinion in your posts. Every successful site in the PF space focuses on frugal living with uncontroversial topics. Focus on easy and watch your site rocket straight to the top!”

Digesting The Truth

Initially, I thought my friend’s advice was full of shitake mushroom. Why wouldn’t people want to focus on making more money, since making more money has unlimited upside compared to saving money. Further, I love to challenge myself to discover new ways to earn more. Being frugal is boring!

But then I realized much of what he said was true. There’s a reason why I no longer have four-pack abs. Eating healthy and working out every day is hard. Every personal finance site that sold for millions or that has grown to cult-like status focuses on personal finance basics. Finally, the disdain for my work is consistent, which is a bummer because my wife and I can’t stop being silly everyday.

Below is one example of an unpleasant reaction when I used satire to promote my pro-public school post. Even though the post is clearly pro-public school with detailed charts, and even though there’s a friendly dialogue in a podcast at the end of the post with my wife sharing our thoughts on education, there’s still so much outrage.

If I want our business to survive for the next 22 years to give my son the option to work for his old man after college and to have something fun to do as an unemployed person, I’ve got to find a way to at least sustain traffic. The only way I can do so is to broaden the topics in order to broaden the audience. Using controversial words that may hurt people’s feelings is probably not a good long term strategy.

With so much hate in this world, I worry about my son’s future. I know he’ll face bullies and lose opportunities because of who he is and how he looks. Surely, he will make the same mistakes as his father and write or say something that gets misconstrued. But these are all teachable moments that can help prepare him for the real world.

Other teachable moments from the tweet include:

* Realizing not everybody has the same sense of humor, so tread carefully.

* Realizing social media can be a big waste of time, so get off social media if you want to increase happiness.

* Realizing some people only read headlines and not the content, so spend less time writing and podcasting and more time crafting generic SEO friendly headlines.

* Realizing some people will hate you no matter what you say or do because of your background, so learn to accept and let go.

* Thinking differently will jolt people, so figure out when is the most appropriate time to be different and when is the most appropriate time to assimilate.

* Learning how to keep going no matter how difficult the path.

For our son, I will keep working hard for as long as possible just in case he needs help. Failure is not an option. It doesn’t matter whether folks think it’s ridiculous for me to keep our business going to provide for my family or contemplate important decisions like education to plan for the future. I will always do what’s best for my loved ones and so should you. Contemplation is free and worth doing.

A New Beginning On Financial Samurai

Starting on June 15, 2018, Financial Samurai will seek to become the best frugal blog on the planet with a new URL: FrugalWonderful.com! It cost me $20 to register. Oh, how I love having an internet based business.

I’ve been focused on maximizing wealth since 2009 and now its time to boost my Budgeting & Savings category on my new site. By dropping the Asian theme, I hope I can appeal to a broader audience who otherwise might be put off by Asian culture. With a name like Frugal Wonderful, how can the site not be filled with awesomeness!

Here are sample titles of upcoming posts I’d like to work on:

* The 10 Finest Cat Foods That Taste Like Chicken To Use In Your Stew

* Aggressive Snuggling: The Best Way To Save On Heat And Build A Loving Relationship

* If You Spend No Money You Can Retire Yesterday: How One Man Retired By 18

* 10 Date Ideas That Cost No Money If You Don’t Want To Get Laid

* If You’ve Never Pooped In The Woods You Don’t Know What You’re Missing

* Biking Is Life: Don’t You Dare Talk To Me If You Drive To Work

* How To Make Your Parents Pay For Everything As An Adult Child (oops, I already wrote about that)

* How To Get Girls If You Live In Your Mom’s Basement (darn, wrote about that too)

I really hope everybody can support me in my new endeavor. It’s going to be tough at first given my inexperience as a frugal blogger, but with your support, I believe we can make frugal sexy again!

May we continue to love and accept people from all different types of backgrounds – even those of us who choose to pinch our pennies. Happy Easter and Happy April 1!

Related:

Ranking The Best Passive Income Streams

Here’s How Much Can You Make Blogging For A Living

The post Creating The Next Best Frugal Site: Introducing Frugal Wonderful appeared first on Financial Samurai.

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