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Wednesday, 23 February 2011

Revisiting the Value of Elite Colleges

DAVID LEONHARDT

A decade ago, two economists -- Stacy Dale and Alan Krueger -- published a research paper arguing that elite colleges did not seem to give most graduates an earnings boost. As you might expect, the paper received a ton of attention. Ms. Dale and Mr. Krueger have just finished a new version of the study -- with vastly more and better data, covering people into their 40s and 50s, as well as looking at a set of more recent college graduates -- and the new version comes to the same conclusion.

Given how counterintuitive that conclusion is and, that some other economists have been skeptical of it, I want to devote a post to the new paper.

The starting point is the obvious fact that graduates of elite colleges make more money than graduates of less elite colleges. This pattern holds even when you control for the SAT scores and grades of graduates. By themselves, these patterns seem to suggest that the college is a major reason for the earnings difference.

But Ms. Dale -- an economist at Mathematica, a research firm -- and Mr. Krueger -- a Princeton economist and former contributor to this blog -- added a new variable in their research. They also controlled for the colleges that students applied to and were accepted by.

Doing so allowed them to capture much more information about the students than SAT scores and grades do. Someone who applies to Duke, Williams or Yale may be signaling that he or she is more confident and ambitious than someone with similar scores and grades who does not apply. Someone who is accepted by a highly selective school may have other skills that their scores didn't pick up, but that the admissions officers noticed.Once the two economists added these new variables, the earnings difference disappeared. In fact, it went away merely by including the colleges that students had applied to -- and not taking into account whether they were accepted. A student with a 1,400 SAT score who went to Penn State but applied to Penn earned as much, on average, as a student with a 1,400 who went to Penn.

"Even applying to a school, even if you get rejected, says a lot about you," Mr. Krueger told me. He points out that the average SAT score at the most selective college students apply to turns out to be a better predictor of their earnings than the average SAT score at the college they attended. (The study measured a college's selectivity by the average SAT score of admitted students as well as by a selectivity score that the publisher Barron's gives to colleges.)

It's important to note, though, that a few major groups did not fit the pattern: black students, Latino students, low-income students and students whose parents did not graduate from college. "For them, attending a more selective school increased earnings significantly," Mr. Krueger has written. Why? Perhaps they benefit from professional connections they would not otherwise have. Perhaps they acquire habits or skills that middle-class and affluent students have already acquired in high school or at home.

This finding is especially noteworthy because the new study included several historically black colleges, like Howard, Morehouse and Spelman, which are not as selective as Penn, Williams or other elite colleges. Students who choose a historically black college over an elite college may be hurting their future earnings potential.

The original paper looked at a fairly narrow slice of data: the 1995 self-reported earnings of students who had been freshmen in 1976. The new version uses Social Security records, which offer a more reliable look at earnings over a longer period of time. The new paper also looks at students who had been freshmen in 1989 and follows their earnings through the middle part of the last decade. In all, the paper covers about 19,000 college graduates.

From my perspective, the main limitation of the paper is that even its less elite colleges, like Penn State, are relatively elite. (A full list of the colleges whose graduates were part of the study appears below.) That doesn't call into question the findings of the paper. It's still deeply surprising that choosing to go to, say, Xavier instead of Columbia may not affect your future earnings.

But it would be nice if future research looked in detail at other parts of the college market. Another large study, for instance, has found that students who attend colleges with lower graduation rates are less likely to graduate -- which does indeed have a huge effect on their earnings. I'd also be curious to know what happens to students who try to save money by first attending community college, with plans to transfer later, even though they were admitted to a four-year college.

Of course, it would also be nice if researchers could one day analyze careers by a metric other than income. The recent spread of happiness surveys could eventually allow economists to study the connection between education and career satisfaction.

Mr. Krueger gets the last word:My advice to students: Don't believe that the only school worth attending is one that would not admit you. That you go to college is more important than where you go. Find a school whose academic strengths match your interests and that devotes resources to instruction in those fields. Recognize that your own motivation, ambition and talents will determine your success more than the college name on your diploma.

My advice to elite colleges: Recognize that the most disadvantaged students benefit most from your instruction. Set financial aid and admission policies accordingly.And as promised, here are the lists of colleges taking part in the new study:1976 surveyBarnard College, Bryn Mawr College, Columbia University, Duke University, Emory University, Georgetown University, Miami University, Morehouse College, Northwestern University, Oberlin College, Penn State University, Princeton University, Smith College, Stanford University, Swarthmore College, Tufts University, Tulane University, University of Michigan, University of Notre Dame, University of Pennsylvania, Vanderbilt University, Washington University, Wellesley College, Wesleyan University, Williams College, Xavier University, Yale University,

How to protect your career during a merger

By Anne Fisher

Okay, so you probably don't work for Genzyme, which was snapped up by French pharmaceutical giant Sanofi-Aventis yesterday, or for NYSE Euronext, which is set to merge with its German counterpart Deutsche Börse. Still, with the pace of global mergers and acquisitions accelerating, chances are your company could be next -- and that the people calling the shots in the new combined organization will hail from a culture you know nothing about. Can you survive?

Probably, if you take a few essential steps quickly. "Americans in general are horrible at adapting to other countries' cultures," notes Lois Frankel, CEO of Pasadena-based Corporate Coaching International, who has counseled executives at Fortune 500 companies around the globe. "In a merger, it's survival of the fittest. Step forward right away and ask what you can do to help ensure the merger's success. Your first question should be, 'How can we make this work?'"

Frankel observes that "often people see this as 'kissing up' and resist it. But it's just practical, because you get the information you need. Even if higher-ups tell you, 'Just keep doing what you're doing', you'll get points for having asked. The perception will be that you're going to be an asset, rather than an obstacle."

Another way to shine, says Jason Levin: Be curious about the acquiring company's culture. Levin is a district manager at career site Vault.com in Washington, D.C., but he has worked for a couple of French companies in Paris, for PepsiCo (PEP) in Viet Nam, and for Unilever (UL) in Sri Lanka.

He points out that every major U.S. city has embassies or consulates from many countries, as well as chambers of commerce that are dedicated to foreign companies. They all host cultural events, seminars, and networking parties.

"Get on their email lists and go," Levin advises. "It's a great way to get to know people and learn their social customs. Getting involved will mark you out as someone who has not only professional skills, but cultural savvy too. Besides, it's fun."

Note to NYSE Euronext (NYX) staffers: New York has a German-American Chamber of Commerce with 750 member companies. Upcoming get-togethers include a social media seminar on March 23 and, on May 26, an asparagus festival.

A simple web search using a phrase like "cultural differences in business" can yield a wealth of information about how your new bosses might operate. One example: worldbusinessculture.com, which offers insights on meeting protocol, teamwork, communication styles, dress codes, and many other workplace topics for 39 countries.

"If you show an interest in how your new colleagues do things, they will return the favor," says Levin, who, when someone sneezes, can say Gesundheit in six languages. "Always find out how to say 'please,' 'thank you,' and 'excuse me' in their native language. It's a small thing, but it shows a willingness to connect."

Of course, some mergers come with culture clashes that are unrelated to differing nationalities, and it pays to keep a sharp eye on those, too. About a decade ago, when BP (BP) acquired Arco, Lois Frankel coached managers from both companies.

"The two corporate cultures were vastly different," she recalls. "Arco was very paternalistic and philanthropic, while BP's focus was strictly on the bottom line."

It's a cautionary tale for anyone whose company is now in the throes of a merger. "The people from the Arco side who paid attention and got it, and who adapted, are still there," says Frankel. "The people who didn't…aren't."

Enough said.

5 rules on cultivating power

By Jeffrey Pfeffer

Here are some commonsense, yet often violated, rules about power that can help make you more successful—and, even better, equip you to cope with today's organizational realities.

1. You need to take care of yourself. Companies have been telling employees this for decades. The implication: don't worry about the company, because it isn't worrying about you. You are responsible for attracting the support that will make you successful and building your personal brand.

2. Companies (and many people) worry more about what you can do for them in the future than what you have done for them in the past. VC partners who have made their colleagues billions are thrown out unceremoniously. The same goes for law partners, management consulting partners, and public accounting firm leaders.

Don't expect thanks for all you have done for your company or your colleagues in the past. Your job is to ensure that you are useful -- through your role, the resources you control, your contacts and network, your reputation -- to those around you as they contemplate their future. The minute you aren't, your influence will be either gone or substantially diminished.

3. Perception is reality -- so get a public relations strategy and get help where you need it. I have seen junior people build their reputations and visibility by writing articles, reaching out to journalists, cultivating media, and generally becoming known. It is never too early to start building your image.

4. Don't worry about what comes "naturally." I have people tell me they aren't natural networkers, they find self-promotion distasteful, and they have difficulty asking for help. My answer: Skiing isn't natural; neither is speaking a foreign language or playing a musical instrument. Studies of genius show that individual talent matters but that practice and getting good coaching matters even more. Don't find excuses for not doing what you know you should because it doesn't feel "natural." Once you practice and get good at something like networking, it will become natural!

5. Stop worrying about what others think about you -- worry about building your power base, and you will have more friends that you will ever need. Yes, likeability can build power, but once you have power, lots of people will like you. The late George Steinbrenner of the New York Yankees was clearly not a "good boss," but his success brought fame, praise, and no shortage of people willing to work for him and curry his favor.

The biggest barrier to having power is our inhibitions about what we are willing to do -- and how hard we are willing to work -- to become successful. Get out of your own way, and watch what happens.

Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University where he has taught since 1979. He is the author or co-author of 13 books and a contributor to The MIX.

Friday, 18 February 2011

How the middle class became the underclass

Annalyn Censky

Are you better off than your parents?

Probably not if you're in the middle class.

Incomes for 90% of Americans have been stuck in neutral, and it's not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.

In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.

Meanwhile, the richest 1% of Americans -- those making $380,000 or more -- have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust. Experts point to some of the usual suspects -- like technology and globalization -- to explain the widening gap between the haves and have-nots.

But there's more to the story.

A real drag on the middle class

One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University.

Because of deals struck through collective bargaining, union workers have traditionally earned 15% to 20% more than their non-union counterparts, Rodgers said.

But union membership has declined rapidly over the past 30 years. In 1983, union workers made up about 20% of the workforce. In 2010, they represented less than 12%.

"The erosion of collective bargaining is a key factor to explain why low-wage workers and middle income workers have seen their wages not stay up with inflation," Rodgers said.

Without collective bargaining pushing up wages, especially for blue-collar work -- average incomes have stagnated.

International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn't exactly been a win for middle class workers in the U.S.

Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages.

"As we became more connected to China, that poses the question of whether our wages are being set in Beijing," Rodgers said.

Finding it harder to compete with cheaper manufacturing costs abroad, the U.S. has emerged as primarily a services-producing economy. That trend has created a cultural shift in the job skills American employers are looking for.

Whereas 50 years earlier, there were plenty of blue collar opportunities for workers who had only high school diploma, now employers seek "soft skills" that are typically honed in college, Rodgers said.

A boon for the rich

While average folks were losing ground in the economy, the wealthiest were capitalizing on some of those same factors, and driving an even bigger wedge between themselves and the rest of America.

For example, though globalization has been a drag on labor, it's been a major win for corporations who've used new global channels to reduce costs and boost profits. In addition, new markets around the world have created even greater demand for their products.

"With a global economy, people who have extraordinary skills... whether they be in financial services, technology, entertainment or media, have a bigger place to play and be rewarded from," said Alan Johnson, a Wall Street compensation consultant.

As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s.

In 1980, workers with a high school diploma earned about 71% of what college-educated workers made. In 2010, that number fell to 55%.

Another driver of the rich: The stock market.

The S&P 500 has gained more than 1,300% since 1970. While that's helped the American economy grow, the benefits have been disproportionately reaped by the wealthy.

And public policy of the past few decades has only encouraged the trend.

The 1980s was a period of anti-regulation, presided over by President Reagan, who loosened rules governing banks and thrifts.

A major game changer came during the Clinton era, when barriers between commercial and investment banks, enacted during the post-Depression era, were removed.

In 2000, the Commodity Futures Modernization Act also weakened the government's oversight of complex securities, allowing financial innovations to take off, creating unprecedented amounts of wealth both for the overall economy, and for those directly involved in the financial sector.

Tax cuts enacted during the Bush administration and extended under Obama were also a major windfall for the nation's richest.

And as then-Federal Reserve chairman Alan Greenspan brought interest rates down to new lows during the decade, the housing market experienced explosive growth.

"We were all drinking the Kool-aid, Greenspan was tending bar, Bernanke and the academic establishment were supplying the liquor," Deutsche Bank managing director Ajay Kapur wrote in a research report in 2009.

But the story didn't end well. Eventually, it all came crashing down, resulting in the worst economic slump since the Great Depression.

With the unemployment rate still excessively high and the real estate market showing few signs of rebounding, the American middle class is still reeling from the effects of the Great Recession.

Meanwhile, as corporate profits come roaring back and the stock market charges ahead, the wealthiest people continue to eclipse their middle-class counterparts.

"I think it's a terrible dilemma, because what we're obviously heading toward is some kind of class warfare," Johnson said.

Wednesday, 16 February 2011

Four Traditional Money Rules to Break

AnnaMaria Andriotis

Never borrow against a 401(k). Avoid credit cards. Make a bigger down payment on your home or apartment to avoid paying extra mortgage interest. These are among the tried-and-true financial rules consumers have been told to live by for years. But now -- with interest rates still low and credit staging a comeback -- might be a good time to break them.

This solid financial advice isn't suddenly all wrong, but many of these axioms no longer result in higher savings or less debt. That's because the economic recovery has opened up more exceptions and loopholes to standard advice, says David Peterson, president of Peak Capital Investment Services, a financial planning firm. Advisers, for example, typically discouraged clients from taking a loan from their 401(k) -- but this is now the cheapest way to borrow money, with the average rate at 4.25%, lower than most personal loans, to pay back debt they racked up during the recession. But as some parts of the economy have improved -- equities are once again outperforming fixed income, banks are slowly returning to lending, and consumers are spending more -- the rules for making and saving money are changing, at least temporarily.

Here are four traditional money rules you can break -- at least for now.

401(k) Loans

Old school advice: Avoid taking one at all costs.
Now: The most affordable loan available.

For decades, borrowing from a 401(k) plan was synonymous to derailing retirement savings. But right now, the cheapest bank for many borrowers -- especially those who feel secure in their job -- is their own 401(k). Average interest rates on credit cards are 14% and on home equity lines of credit 5.22%. But a 401(k) loan charges a fixed average of prime (currently 3.25%) plus 1%, according to the Profit Sharing/401(k) Council of America. Approximately 90% of employers offering 401(k)s permit employees to borrow from them, according to the PSCA, and the loans can last for up to 15 years. These loans make most sense for consumers stuck with high-interest credit card debt. In a year, a borrower can save around $800 in interest with a loan that eliminates a $5,000 balance on a card with a 20% interest rate.

And the money the borrower pays back goes into their 401(k) -- not to a bank. Repaying can also be easier than it is with a regular loan, says Olivia Mitchell, professor at the University of Pennsylvania Wharton School, who recently coauthored a study on 401(k) loans. About 60 million people contribute to a 401(k), according to the PSCA; once a loan is taken out, any contributions made via automatic payroll deductions first go toward paying down the loan. But, there are still some pitfalls: If you lose your job or leave it voluntarily and can't pay the loan back within 90 days you'll be hit with federal income tax on the outstanding amount, plus a 10% penalty if less than age 59 1/2. And you'll need to reallocate some of what remains into higher-yielding equities until the account is made whole, to avoid missing out on potential gains, says David Wray, president of the PSCA.

Roth IRAs

Old school advice: Convert a traditional IRA into a Roth to save on taxes.
Now: Stick with the IRA.

The Roth IRA's appeal has always been that contributions, rather than withdrawals, are taxed, shifting the tax burden to pre-retirement instead of years down the road when taxes could be higher. Roth IRAs became even more user-friendly last year when taxpayers were allowed to convert from a traditional IRA regardless of income (the limit for conversions had been $100,000 modified adjusted-growth income). But in many cases, staying put in a traditional IRA will lead to bigger savings -- especially for people five to 10 years away from when they plan to withdraw their money, says Peterson. Here's why: It can take years of tax-free growth to make up the taxes incurred during the conversion. For example, someone who converts $100,000 from a traditional to a Roth IRA and pays $30,000 in taxes will need at least five years to make that money back -- assuming a 7% rate of return. And that doesn't address the loss of compounding that would have occurred if that money didn't go toward paying taxes, says Sheryl Garrett, a fee-only certified financial planner.

There's also less time to pay taxes on this conversion now. Savers who converted from a traditional IRA to a Roth IRA last year were able to spread the income from that conversion over 2011 and 2012. But now, all of the income from a conversion made in 2011 (and after) is taxable at once. Also, this conversion comes with the risk of getting bumped to a higher tax bracket during that year because the money counts as income -- so converting might not make sense for someone whose budget is currently stretched thin. Instead, savers might now want to convert a smaller amount gradually once a year that won't put them into different bracket, says Garrett.

Mortgages

Old school advice: Choose the mortgage with the smallest interest payments.
Now: Go with more interest.

Paying the least interest on a mortgage requires two steps: a down payment of at least 20% and paying down the loan quickly. But both strategies can create a setback for a borrower -- especially in still-uncertain housing and employment markets, says Chip Cummings, president of Northwind Financial, a training and consulting company for mortgage firms. With interest rates still low, instead of throwing most of their money into the home -- where some of it could be lost if home values decline -- consumers might want to make a down payment of 10%. Keep the extra cash in an emergency fund in case of sudden job loss or unexpected renovations and take on the added cost of private mortgage insurance.

PMI varies, but on average is 60 basis points. On a $300,000 30-year mortgage, a borrower keeps an extra $30,000 in cash and pays $1,800 a year just in PMI until he or she hits the 22% equity threshold. What's more, a 30-year mortgage, rather than a 15-year one, is one good way to build a savings safety net, says Keith Gumbinger, vice president at HSH Associates, which tracks the mortgage market. On average, monthly payments are 20% to 30% smaller with a 30-year mortgage, he says. That extra money could be stashed in savings for a rainy day or to pay the mortgage if you lose your job.

Credit Cards

Old school advice: Refrain from using them.
Now: Swipe -- with caution.

Stashing credit cards in a bank safe deposit box or freezing them in a block of ice were commonplace for many consumers during the recession in an attempt to lower spending and take time to pay down cards. But now, it seems that in order to hold onto a good credit score and access to credit cards in case of an emergency, borrowers need to make more purchases using them. Prime borrowers who stop using their credit cards will find their credit lines slashed or closed -- largely because their accounts are unprofitable since there's no balance to charge interest on, says John Ulzheimer, president of consumer education for SmartCredit.com, a credit-monitoring web site.

The median FICO score of borrowers with no trigger event, like a missed payment, who've been affected, is 770, according to a 2010 study by Fair Isaac. The result is a higher amount of credit card debt compared to total credit limits available, a ratio that can contribute to about 30% of their credit score. Use your credit cards at least once every three months -- and pay the balance off in full each time -- to avoid this, says Ulzheimer.

Saturday, 5 February 2011

4 of the Biggest Risks Investors Are Facing

Ben Baden

You'd be hard-pressed to find a market forecaster who included Egyptian riots in his or her predictions for 2011. But now that story is dominating the news, and as many investors found out last Friday when the Dow Jones Industrial Average plummeted 166 points, it's also affecting their portfolios. That market jolt, triggered by events in Egypt, may have many investors reevaluating their portfolios and the way they look at risk.

With that in mind, here are four of the biggest issues investors face in today's market:

Unrest in the Middle East. Egypt ranks 27th in the world in total oil production and it only makes up a small part of the global stock market, but the effects of the country's continuing riots have been felt in the U.S. stock market and oil prices. The reason is two-fold. "About 1.3 million barrels of oil go through the [Suez] canal every day," says Brett Gallagher, deputy chief investment officer for Artio Global Investors. "That's about 2.5 percent of the world's supply."

Also, Egypt shares a border with Israel and isn't far from other oil-rich nations like Saudi Arabia and Iran. The concern is that violence in Egypt could spread to nearby countries or a more radical regime could take over power in Egypt. "It's not so much Egypt," says Bob Gelfond, CEO of MQS Asset Management. "It's what could happen to the region in general."

Lingering debt problems in Europe. For the most part, the problems of debt-ridden European countries like Ireland and Greece, which have both been forced to take bailouts from other members of the European community and the International Monetary Fund, have escaped headlines recently. Many experts say this lull will probably be short-lived because long-term solutions haven't been put into place in these European countries. "All the so-called solutions have really just addressed the immediate problems symptoms of the problem, not the problem itself," Gallagher says. "Mathematically, it's very hard to see how they will be able to extricate themselves from this without some sort of default or debt haircut being taken."

Late last month, the Irish Central Bank lowered its growth forecast for 2011 from 2.4 percent to 1 percent, after the government instituted stringent austerity measures. In addition, on Wednesday, Standard & Poor's downgraded Irish sovereign debt for the third time in six months. Eventually, Gallagher says Greece and Ireland will either be forced to default on their debt or take what is called a "debt haircut"--meaning investors in the countries' bonds would be forced to take some loss on their principal. That could have far-reaching affects across Europe's banking system, Gallagher says, because many nations in Europe have exposure to these countries' debt.

Soaring inflation rates throughout the world. Federal Reserve Chair Ben Bernanke is one of the few global leaders who has said recently that deflation is a larger problem in his country than inflation is. That's why the Fed initiated a second round of quantitative easing--commonly referred to as QE2--in November, in which it's buying up $600 billion in long-term treasuries in hopes of pushing interest rates lower, spurring lending, and jumpstarting the economy. Other nations including China, India, and Brazil have complained that surging food prices and inflation are becoming a major problem. Part of the reason, they say, is that the Fed's quantitative easing program is eroding the value of the dollar. Many commodities like oil, wheat, gold, and corn are all priced in dollars because the dollar is known as the world's reserve currency. "If you're weakening the dollar, the dollar price of commodities is going to rise," Gallagher says.

Inflation remains low in the United States for a number of reasons, including the weak state of the housing market. Housing makes up 42 percent of the total Consumer Price Index (NYSEArca: CPI - News), and it's currently inflating at a rate of virtually zero. Food only makes up about 15 percent of the CPI in the United States, but in emerging countries like China and India, it makes up a much larger amount--33 percent and 47 percent, respectively. That's because generally, in poorer countries, people spend a greater percentage of their income on food. That has central banks in nations like China, Brazil, and India raising interest rates in hopes of taming inflation. Gallagher's concern is that higher interest rates will lead to lower levels of growth in emerging markets. If growth slows in those countries, a selloff could occur, he says.

Massive redemptions in the bond market. Redemption risk--the risk that a large number of investors in a particular sector will decide to sell--is something investors should be aware of. Over the past few months, municipal bond funds have seen massive outflows over growing concerns that many state and local governments are overstretched and won't be able to fulfill their obligations. Since the start of 2007, muni bond funds have seen inflows of about $120 billion, according to TrimTabs Investment Research. "A lot of money has gone into municipal bond funds up until really November," says Vincent Deluard, executive vice president at TrimTabs. Since November, investors have pulled about $34 billion from these funds. The past three months have seen steady outflows.

How to Get the Job You Want

After 15 years in the hospice industry, Philip Kittle lost his job.

The first thing he and his wife, Lynette, did was to make a list of hospices in their area and send a resume and cover letter to each one - regardless of whether the company was hiring.

Sound ridiculous to send resumes to companies not hiring?

Not for Philip Kittle. After six months, one of the first places he had sent a resume to called him in for an interview and offered him a job.

The only reason it took that long, Lynette recalls, is because the company was going through a leadership transition. She said the new CEO saw his resume and said, ""Why haven't we interviewed this person?"

What's more - two months after they hired him, they promoted him! "So it really does pay to submit resumes and cover letters - even if there are no jobs listed," Lynette said.

Lynette said two things were crucial in their search: They never lowered their standards and applied for lesser jobs - they always believed he was going to get a better job. And, they approached it as a team.

"We believe in staying positive. And I say 'we' because as a spouse, it's important how I view his abilities and the situation. My attitude and words can make or break him - especially during the challenges of unemployment," she said.

It's important to focus on what you want - especially when you are unemployed.

"The biggest mistake people make when looking for a job is the trial and error method," said Bill Dueease, president of the Coach Connection, a network of career coaches.

"People apply for jobs that appear in front of them," Dueease explained. "Eventually they get lucky enough to have a choice," he said.

That leads to a false sense of power: I have choices! People want to hire me!

Friends and family will even congratulate you on getting a job offer - no matter what the job is.

Then, once you choose one of those jobs, you soon find out it isn't exactly what you want, so you adjust, slowly sliding down that slope until one day you declare, "I'm miserable! I hate my job."

And the cycle starts all over again.

I believe it was Susan Jane Gilman, author of "Kiss My Tiara," who said, if you're waiting around for someone to pick you, and garbage picks you, then you're with garbage.

This applies to your job search as well as your social life.

"Find out what gets you fired up - then go after it," Dueease said.

That's not only going to help you find a job you love, but it's going to help you get hired.

Dueease recalls having all of his ducks in a row when he got out of college with two engineering degrees and then bombing his first 10 interviews spectacularly.

A mentor told him it was because he was projecting "I don't really want this job" without actually saying it. Once he figured out what he was passionate about, he nailed the interview.

Conveying your passion is more important today, when there are multiple job seekers for every open job, than ever before.

"People today are even more careful about who they hire," Dueease said. "They're only going to pick someone who really wants the job!"

And with 14.5 million people still unemployed, you can't just respond to help-wanted ads and wait for someone to call you.

Job Monkey says just 10 percent of jobs you see in print or online classified ads are actually filled through people responding to those ads. Dueease said it's more like 1.2 percent.

When it comes to sending out your resume, it's a numbers game.

"People send out one or two resumes and expect their phone to ring off the hook," said Barry Cohen, the employment coordinator for the City University of New York and the author of "Power Interviewing: How to Get the Job You Really Want."

"You have to chop wood!" Cohen exclaimed. He suggests sending out 40 to 50 resumes per week - and considering yourself successful if you get one to two responses. "If you job hunt like everyone else, you'll wind up like everyone else."

One way to set yourself apart is to be diligent about networking with people at the companies you want to work for - even if they rejected you the first time.

When Carmen Velasquez was in graduate school, she discovered the Honest Kitchen, a small, natural pet food company that impressed her so much, she knew she wanted to work there. To get a foot in the door, she offered to work on a marketing case study for them while she was in grad school and spent four months getting to know their brand, values and mission.

She thought she had it all lined up but when she graduated, she was disappointed to learn that they were too small of a company to hire a full-time marketing person. So, she took a job with a large, more established company.

But here's where she set herself apart: While she was working at that large company, she stayed in touch with her contacts at the Honest Kitchen by email. And whenever she was in San Diego, she would pop in to say hello - to make sure they remembered her. It took two years but it paid off: They were finally big enough to hire a full-time marketing specialist, and her name was at the top of the list. They offered her the job.

"It's important to small companies, that act more like families, to know that a new hire is a good culture fit," Velasquez said. "That takes time. It's more than a resume, more than an interview - it's making sure that you have a relationship with the company that you want to work for."

After those 10 disastrous interviews and devastating blow to his ego, Dueease finally connected with a company he wanted to work for, but they had already filled all the positions in their training program. He recalls a recruiter at the company, who said, "If you're ever in the area, give me a call."

Dueease seized on the opportunity and called the guy up and said, "I'll be there next Thursday, can you see me?" The recruiter lined up five interviews for him and agreed to show him around town the night before. The result? They made room for one more in the training program.

It's also important to stick to your guns about what you want.

Dueease recalls one client, a 25-year-old recent college graduate who was working as a receptionist. Her dream was to work behind the scenes in live television. She narrowed it down a few companies that did live TV at that time, including HBO and Court TV, and learned that the entry-level point was working as a "grip," the people who help set up camera and light equipment.

Her focus helped her land an interview at HBO, and they liked her so much, they offered her a job. The problem is, that job was in the sales department.

Some people might be tempted to take that offer just to get a foot in the door, but the woman stuck to her guns and politely declined the offer.

At her interview with Court TV, she said, "I want you to know I've already talked to HBO. They wanted to put me in sales. If you're thinking of moving me to another job, forget it! This what I want to do and I'll work my butt off because I love it."

She got the job and guess what? Three days before she was starting at Court TV, HBO called her back.

"Every job is available," Dueease said. "Just because someone else is in that job right now doesn't mean it's not available!"

It's important to know what you want and stick to it but that doesn't mean you should turn down job interviews.

"You should go on every interview that is offered to you," Cohen said. And make sure you prepare for every single one. Too many people think they can wing it Cohen added, and when they get to the interview - they're all tongue-tied. You've got to know ahead of time what you're going to say.

And remember: It's not about you. It's important to say what you want, but it's even more important to say what you're going to do for the company. How are you going to improve the business? How are going to boost sales?:

Your biggest enemy in all of this, Cohen says, could be yourself. "Get over your fear of success," he said.

That means, don't psyche yourself out thinking you can't do this job. Just learn to transfer whatever skills you have to this current company and make sure you convey that in the interview. Neither you, nor the recruiter, should have any doubts that you can do this job.

And whatever you do, Cohen says, be nice to the receptionist!

"Statistically, 92 percent of a manager's impression of candidates comes from their receptionist," said Cohen. "She or he can either walk into the boss's office and say, 'Mr. Jones is here - Oh, you're going to like him' or 'Oh boy! This one's a doozie,'" Cohen said. "They can plant the seed in the manager's mind."

6 Costs You Should Always Negotiate

by Jodi Helmer

Most consumers think haggling is only appropriate when buying tchotkes at a street fair or facing off against a used-car dealer. But why not negotiate the cost of medical procedures? Or a new Sub-Zero refrigerator? If you're not paying less than sticker price for these and other goods and services, you're leaving money -- and often lots of it -- on the table. "Everything is negotiable," says Stuart Diamond, adjunct professor of law at the University of Pennsylvania's Wharton School of Business and author of "Getting More: How to Negotiate to Achieve Your Goals in the Real World." "All you have to do is ask."

With that philosophy in mind, follow these tips to negotiate the best possible deal on 6 common fees and expenses:

1. Credit Card Rates

• Why they are negotiable: Now that most of the dust has settled following the big credit card reform act, card companies are competing fiercely again for new customers. Issuers sent out 1.2 billion credit card offers in the third quarter of 2010 -- more than three times the number sent during the same period in 2009. "Use the competition to your advantage," says Ira Rheingold, executive director for the National Association of Consumer Advocates. "Don't jump at the first offer. You should argue for the best rate."

• Who to talk to: Call the 800 number associated with a new card offer (or the number on the back of a current card) and talk to the customer service rep. If the rep can't -- or won't -- adjust the rate, ask to speak with a manager.

• What to say: "I've gotten several credit card offers with lower rates. Tell me what you can do to beat those offers."

• Possible savings: How much you're able to lower your interest rate will depend on your credit and payment history, as well as your credit score. In a study conducted by the U.S. Public Interest Research Group several years ago, more than half of consumers who asked for lower rates got them, with their average APR dropping from 16 percent to 10.47 percent.

2. Mortgage and Refinancing Rates and Fees

• Why they are negotiable: "Mortgage lending has gotten difficult, which means that a lender will work hard to make a deal," says Rheingold. And that's particularly true for consumers with credit scores of at least 750.

• Who to talk to: Mortgage brokers or lenders at banks and credit unions.

• What to say: Get several estimates in writing and ask, "Here's the best deal I can get. Can you beat it?"

• Possible savings: In addition to offering better rates, lenders might reduce certain fees or even waive them altogether. To negotiate the lowest out-of-pocket costs, ask for discounts on all upfront fees, including application and origination fees. According to the Federal Trade Commission's website, comparing and negotiating mortgage fees can result in thousands of dollars of savings.

3. Home Improvements

• Why they are negotiable: "Business is slow and that means contractors are willing to haggle over their prices," says Greg Daugherty, executive editor of Consumer Reports. Plus, the prices of many common home building materials are down as much as 35 percent from their peak in the mid-2000s.

• Who to talk to: The contractor.

• What to say: "What are the options for less expensive materials? And what discounts can you offer me on labor?"

• Possible savings: Up to 20 percent of the cost of the project, according to a new survey by Angie's List, a website that publishes surveys and consumer reviews of service businesses. Of the home improvement contractors who were surveyed in 2010, 80 percent were willing to drop their prices to get a job (compared with 43 percent in 2008). And more than half of the contractors surveyed said they were willing to lower prices by 10 percent, with nearly 25 percent willing to drop their fees up to 20 percent.

4. Home Appliances and Electronics

• Why they are negotiable: Store managers understand that a discounted deal done today is often better than a potential deal in the future (and definitely better than no deal at all). One trick is to go first thing in the morning or just before the store closes when there are fewer customers. "A manager will hesitate to offer a discount if he thinks he'll have to make the same deal with all of the customers who overhear the negotiation," says Consumer Reports' Daugherty.

• Who to talk to: A store's manager or assistant manager.

• What to say: "I like this model. If you can give me a discount and free delivery, I'll buy it today."

• Possible savings: Profit margins are generally fairly thin on appliances and electronics, so getting 10 percent off is a reasonable goal, particularly if you can also get them to throw in free delivery and installation. Consumer Reports found that three-quarters of shoppers were able to negotiate a better deal on major appliances, with an average savings of $100 per appliance.

5. Cars

• Why it's negotiable: Car dealerships are one of the few places where price negotiations are not only acceptable, they're expected, notes Philip Reed, senior consumer advice editor for car-buying site Edmunds.com. But instead of trying to negotiate your purchase price down from the MSRP (the sticker price), as you might for other items, ask to see the invoice price (the price the dealer paid for the car) and work your way up from there. You can look up dealer invoice prices for free on Web sites like IntelliChoice.com, Edmunds.com, and KBB.com.

• Who to talk to: Sales staff.

• What to say: "Another dealership has given me a better price on the same model. Tell me how you can beat their offer."

• Possible savings: It's possible to save more than $1,000 on a new car by negotiating smartly, according to Reed. And you'll net even higher savings by also negotiating the value of your trade-in, as well as financing terms and the cost of extended warranties.

6. Medical Bills

• Why they're negotiable: Patients usually assume that the cost for various medical procedures and tests are set in stone, but often they're not. And with health care companies shifting more out-of-pocket costs onto consumers, asking for potential discounts is essential, particularly since there's often a huge variance in costs among providers, says Angie's List spokeswoman Cheryl Reed. In Washington D.C., for example, the price for an MRI of the right knee ranges from $400 to $1,501, according to a recent report. You can look up average prices in your area for various procedures at Healthcare Blue Book.

• Who to talk to: The billing administrator.

• What to say: "This is a significant expense for me. Is there a discount for paying upfront or in cash? What other kinds of discounts might be available?"

• Possible savings: Fifty percent or more. An Angie's List poll found that 74 percent of respondents who negotiated their medical bills were successful, often paying less than half of the original cost.

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