Archive for September, 2012

How Much Sleep Do You Need When Working Like an Animal?

Personal finance

How much should a young person sleep? What do you do about sleep when you’re trying to get lots of work done?

“Scientists know embarrassingly little about why we spend roughly one-third of our lives asleep.” — Tim Ferriss

I’ve struggled with sleep over the years. I have a very difficult time falling asleep. There have been times during college where I barely slept. Then there were also times where I slept way too much and it affected my productivity.

How much should you sleep every night?

I didn’t just want to share anecdotal advice here so I looked for something a little more scientific. I found this little tidbit on the Time website:

“Studies show that people who sleep between 6.5 hr. and 7.5 hr. a night, as they report, live the longest. And people who sleep 8 hr. or more, or less than 6.5 hr., they don’t live quite as long. There is just as much risk associated with sleeping too long as with sleeping too short.”

I wanted to throw out some random thoughts on sleep that have worked for me while I was getting lots of work done:

It’s always critical to have a “sleep-in” day.

If you work long hours during the week because you have a full-time job and are building a side business, I highly recommend a sleep-in day where you sleep in as long as you want and catch up on your rest. This gives you something to look forward to in your sleep-deprived state during the week,

Cut out the distractions.

If you focus more on your work, you can get more done. Ultimately, leading to more sleep! I found that I didn’t need to stay up late so often. I was doing so because I was foolish and wasting time on distractions that were cutting into my sleep.

Take power naps.

If you didn’t get much sleep at night, I strongly suggest that you take a power nap during the day. This beats that 7th cup of coffee or walking around like a zombie. A quick 30-minute snooze can do wonders for you.

Work with your body.

I can get by on 6 hours of sleep just fine. I do realize that when I’m older, I’m likely going to need more rest. It always makes sense to work with your body. If you can survive n 4 hours of sleep, then all the power to you. If you need more rest, go for it.

That’s what I think about getting sleep in when you’re working hard.

Looking Into NPV And NPV With Probability Based Cash Flows In Excel

Excel spreadsheets (.xls)

Today, I decided to do a deeper look into how corporate projects can be evaluated in excel quite easily. The reality is that there are probably 1 million different ways to do it but I will start with a few simple examples and provide the link to the excel file at the end of this post to help you play around with the data and hopefully be able to build your own spreadsheet or build on top of mine.

Net Present Value – NPV In Excel

NPV is a rather simple function that can be used in excel. Before getting started though if you’d like a quick refresher about what a net present value is, you can see an older post about it here. In short, the NPV should help you determine if a project will be profitable given a certain cost of capital. For example, imagine that company XYZ can spend $5000 now to launch a new product that will be sold for 5 years.

-The revenues in year 1 will be $7500 and will increase by $500 every year
-Costs will be of $5000 to start and then $5000 per year
-The company needs to pay 40% taxes on the profits from this product

In short, the new product’s financial impact can be seen here:

By using the NPV function as follows, I can get the expected value:

=NPV (rate, value1,value2,value3,etc)
=NPV(B3,C10,D10,E10,F10,G10)+B10

I am adding B10 at the end because the initial cost should not have any rate applied to it, it will be spent on the first day. As you can see, the NPV of this project is $2745 so it does look like a promising project.

NPV With Cash Flow Probabilities

What is more probable though is to have some uncertainty regarding the financial impact of a new activity. I will simplify the previous example by only using the cash flows as you can see here:

Then, let’s simply add a few more scenarios and odds that those will happen:

Then, I will simply use the sumproduct function to calculate the “expected cash flow” so for example:

=SUMPRODUCT(D6:D9,E6:E9)

You can now see the new NPV:

And of course, you can download my spreadsheet here!!

This example could be made much more complex but it gives you an idea! Let me know if you have any issues!

Thanks!

Are You Stuck in a Low Paying Job?

Career

Do you feel like you work too hard for far too little money?

Back in the day when you ran into a buddy post-college working at Starbucks, you wondered what was wrong with this person. Had they not been networking? Now it’s far too common to walk into a fast food joint to see a buddy from college working and hustling to meet end’s meet.

I just read on CNN Money that low-paying jobs are here to stay. The portion of this article that stuck out to me the most was the following line:

“Some 28% of workers are expected to hold low-wage jobs in 2020, roughly the same percentage as in 2010, according to a study by the Economic Policy Institute.”

What’s the deal with so many folks holding low-paying gigs?

I don’t have the answers here. I’m not an Economist. I’ve done my best compile answers on why so many young folks are stuck working jobs that just don’t pay well.

  • Times have changed.
  • There was a recession.
  • People lost jobs.
  • More folks have an education these days than ever before.
  • Student loans are such a burden that young people are forced to work any job that they can find.
I’m sure we could add more to this list. Those were the most frequent responses that I found for why young people were stuck making minimum wage and simply not making enough money.

Is education the solution?

Not always. Many folks with degrees are mopping floors and cleaning dishes.

While an education is recommended, there are other ways to land a better paying job. For example: you can start your own business or pick up a skilled trade.

You don’t have to pick up massive amounts of debt to attend college. That model is long gone and obsolete.

How can you get out of a low-paying gig?

The solution is pretty simple. Pursue an education with ample high-paying job opportunities. While doing this it also makes sense to find a way to save money on college tuition.

CNN Money also wrote about the degrees with the highest paying jobs post-college. Pick one of these, try to do work terms, and work your butt off when you’re young.

I’m just curious to hear from you — do you know someone stuck in a low-paying job? What advice would you give them?