October 2017 – Cognition Sphere

How to Follow Your Passion

“YOLO” advocates will tell you that you should pursue your dream no matter the risk or cost. However, it isn’t that simple. It is important to assess your own tolerance for risk in your career choices before planning your next move. It is crucial to follow your true passion(s) to find happiness and fulfillment in life, but there are many ways to go about this pursuit. The various methods are listed below, in order of decreasing risk.

After graduating high school, following your passion instead of going to college.
1. Pros
  - Gives you more time to accomplish your goals and follow your passion than if you were to spend 4 years at college.
  - No college education expenses.
2. Cons
  - Studies show that people with college degree have higher chance of being successful and gaining more wealth than those without one.
  - It is your responsibility to gain knowledge that you could have gained in college. Your education won’t be institutionalized and fed to you like it is in school.
  - Depending on what your career or passion is, it may take you a lot longer to “climb the ladder” in a company if you don’t have a college degree.
Graduate high school and go to trade school.
1. Pros
  - More stability than option 1.
  - No college education expenses.
  - Some people prefer trade school because you can focus on a skill rather than receive a more broad education at a traditional university.
2. Cons
  - Not as much opportunity to move around within industries after graduation.
  - Can sometimes be as expensive as traditional college.
  - You’re not always guaranteed a job upon graduating.
Go to college and get a bachelor’s degree that you enjoy but doesn’t have good job prospects
1. Pros
  - More happiness since you are interested in what you are studying.
  - There are many jobs out there that simply require a college degree, regardless of the major.
  - College work will feel less arduous since you enjoy it.
2. Cons
  - Difficulty in finding job could result in you being in the same position you were at before college, but with 4 years burned and a diploma that no employers care about.
  - Debt that you can’t pay off
Go to medical school after getting pre-med degree
1. Pros
  - Very fulfilling career helping people with their health
  - Society respects and loves doctors
  - High paying job
2. Cons
  - Massive debt from medical school
  - Poor work life balance
  - Stress and lack of sleep can impact you and your family
  - Takes many years to get to the point where you have your own practice
Go to college and get a bachelor’s degree that you may not enjoy but has good job prospects. Get a job to make money and follow passion during free time.
1. Pros
  - Better chance at being financially stable
  - Money from your job helps you pursue your passion
  - Always have a career to “fall back on” if passion doesn’t work out
2. Cons
  - Don’t get to put as much time towards your passion because your job tires you out and takes up most of your time
  - Left wondering if you should have taken the risk and gone with option 3.
Go to college and get bachelors degree then immediately get graduate degree afterwards then get a job.
1. Pros
  - Studies show that those with advanced degree earn more and are more successful.
2. Cons
  - Employers often seek out candidates with experience and education, not just long years of consecutive education.
Go to college and get bachelor’s degree. Get a job and experience then go back to school for advanced degree after experience helps you decide what you like best.

Best Case Scenarios

Your passion happens to be a career that has good pay and high job prospects (example: engineer, doctor, lawyer).
You have unique skills and determination to make them into a career (example: acting or musical talent)
You are good at multitasking and can implement multiple of these scenarios. For example, you go to school to be an engineer and at the same time work towards being a professional athlete. Also at the same time, you start an online business.

Final thoughts: Most important point here is to find what makes you happy. Then depending on what it is, you may be able to just do that passion as a career, or find a career that can allow you to pursue that passion. This involves creativity and assessing your tolerance for risk.

“Find three hobbies you love: one to make you money, one to keep you in shape, and one to be creative.”

-Unknown

Budgeting: Why do it?

Budget your money. It’s what your parents told you in college. It’s what every financial adviser implores. It’s sage advice that is so often quoted that it’s become cliché.

A 2013 Gallup poll showed that 2/3 of Americans don’t have a budget. Why are so many missing the mark? I used to be one of those that didn’t keep a budget because I’m pretty frugal and I wasn’t buying things that I didn’t need. Or so I thought. Don’t be caught in the trap that being an anemic spender is a good substitute to not having a budget. Governments and corporations keep budgets. Why? Without one how can you track progress? Money should be used to help individuals and families reach goals that they have including: college, home ownership and repairs, vacations and recreation, car purchases, retirement planning, general financial security, and more. A budget is not set in stone, only to be interpreted by judicial constructionism. It is a living document. It should be tweaked and fine tuned month-to-month to ensure you are on track to meet your goals. Think of it as a feedback control system, like cruise control in a car. If you are going up a hill the cruise control senses the speed dropping and it opens up the throttle to maintain constant speed on the hill. Similarly, if you notice one month that you had some unexpected expenses of some kind (medical bills, a speeding ticket, etc) and you’re off track to purchase a new car you can adjust your budget for the next month to allow for more of your money to be diverted to savings.

Money can be spent so easily today. Whether it’s a swipe of a card or a click of button online, it has never been easier to spend money. Budgeting keeps us accountable. It is also nice to track reoccurring bills. Through reviewing my budget and realizing that I was $10 over budget on internet I was able to call and find out why the charge was higher. I ended up getting a promotional rate that reduced my monthly bill. Once you set up your initial budget it should only take minutes to update a whole month’s expenses, especially with access to online credit card statements. If you don’t mind be data mined budgeting apps like mint.com can be great to help you keep track of your spending. Mint will even sent mobile alerts when you go over budget in a particular category.

Suit your budget to your personal needs. But don’t forget the 50-30-20 rule as a basic guideline (not an actual rule). 50% of your money should be going to fixed expenses like rent and food. 20% should go towards savings and investments. The remaining balance, in this case 30%, goes towards variable expenses like vacations and spending on non-essentials.

I have included a generic budget that I credited in excel. If you go over budget for a certain category it highlights the cell red. If you are under budget or exactly within budget it highlights the cell green. It also takes your monthly income and calculates the 50-30-20 rule categories and it highlights the cell above it in red if it is above that percentage. It is a little vanilla but it is a great start and for those looking into building a budget for the first time.

Here is a link to my free excel budget

“When performance is measured, performance improves. When performance is measured and reported, the rate of improvement accelerates”

-Thomas S. Monson

Heat Transfer in Everyday Life

Why do cars heat up so quickly in the summer and get so cold in the winter?

Why does tile feel colder than carpet?

Why do large bodies of water take so long to heat up?

Why do computers have fins embedded in their circuitry?

Let’s learn some concepts first so we can answer these questions. There isn’t a moment when heat transfer is not taking place. A bead of sweat evaporating from a warm brow, a refrigerator extracting heat from various foods and beverages and expelling it out the backside, a pot of water boiling in preparation for a delicious meal, and the sun warming a remote alpine lake to name a few.

First, heat and temperature are NOT the same thing. Heat is the flow of energy due to a temperature difference. It always flows from hot to cold. How amazing would it be if when touching a hot stove, heat transferred out of a hand into the already hot stove? Instead heat predictably dissipates from the hot temperature body to the cooler one it’s in contact with. As humans we crave nothing more than comfortable temperatures. We yearn for warmth to escape the cold of winter and the refreshing coolness from air conditioning on a brutal summer day. Our preferences are so strong that men and women stereo-typically never seem to agree on the optimal temperature. Better understanding the principles of heat transfer can help us better enjoy and understand the world around us.

The three modes of heat transfer are:

Conduction
Convection
Radiation

Conduction

Conduction is the physical contact of two substances at different temperatures. Collisions at the atomic level transfer heat through the length of the material and eventually to the material(s) it is in contact with. The governing equation is:

where Q = the amount of heat transferred, k = the object’s thermal conductivity. A = Surface area, ΔT = the temperature difference, t = the object’s thickness

It is an intuitive equation, if surface area increases the number of molecular interactions increases and therefore the quantity of heat transfer increases. Increasing the thickness of the metal makes it tougher to transfer heat. The most interesting quantity is thermal conductivity, k. Thermal conductivity is a material property. Copper metal pots transfer heat to food much more efficiently than ceramic pots do due to their higher thermal conductivity. Metal, due to their abundance of free electrons, have high thermal conductivity values. This is why cars heat up in the summer and get frigid in the winter. The metal that makes up the car transfers heat very efficiently; it quickly reaches the temperature of its environment. This is why we don’t insulate our homes with metal. The entire purpose of insulation is to pick a material that has low thermal conductivity to minimize the heat flow into or out of a home.

The answer to the above question, “why tile feels colder than carpet?” is also answered by thermal conductivity. Assume that the temperature in a home is at a constant 70 °F. The tile somehow feels colder than carpet or even hardwood though they are all at the same bulk temperature of 70 °F. The Surface area and thickness remain constant between the surfaces. The internal temperature of a human is about 98.6 °F so the temperature difference is 98.6 °F – 70 °F = 28.6 °F. It feels colder to a person touching the tile so the heat transferred, Q must be greater compared to carpet and hardwood. Thermal conductivity is the difference maker not temperature. The Engineering Toolbox has tabulated values of thermal conductivity for a variety of materials. The thermal conductivity of tile is 172 times better than wool carpet at transferring heat. The data for the calculations is found below:

k, tile (W/m*K)	k, hardwood (W/m*K)	k, carpet (W/m*K)	Q, tile (W)	Q, hardwood (W)	Q, carpet (W)
5	0.16	0.029	79.44	2.54	0.461

Water has a thermal conductivity of 0.58 compared to air which has a much lower value of 0.024. Based on thermal conductivity alone water should heat up faster than air. However, from experience we all know that is not the case. There is another thermodynamic property that causes large bodies of water to take longer to heat up compared to air, heat capacity. Heat capacity is the amount of energy it takes to cause one gram of substance to rise one degree Celsius. A calorie by definition is the amount of energy to cause 1 gram of water to rise by 1 degree Celsius. The equation for heat capacity is found below:

where c = specific heat capacity (J/g°C), Q = heat (J), m = mass of substance (grams), ΔT = the temperature difference (°C)

Water’s inter-molecular hydrogen bonding allows more energy to be stored in those bonds before a temperature change is manifest. Water’s heat capacity is 10x greater than iron’s and 4x greater than air’s. This explains the disparity in temperature rise as the air heats up and the lake water remains cold throughout the spring. A lake requires 4x the energy transferred that the air does to see a 1 degree temperature rise.

Convection

Convection is the transfer of heat by a fluid via bulk flow. Getting cooled down by the wind and cooking pasta with boiling water are two examples.

As particles heat up they rise due to their lower density and by so doing transfer heat and allow other particles to heat up and so on. Boiling is the best example of this. Nucleate bubbles rise as they are heated until they collapse at the surface transferring heat throughout the pot. The equation for convection is found below:

where Q = heat (J), h = the convection coefficient (W/m^2*K), T∞ = the temperature of the bulk fluid (K), Ts = the temperature of the surface being heated (K).

The convection coefficient is a function of the fluid and the speed of that fluid among other factors. Water has higher h values than air which should makes sense because water is more dense and would transfer more heat due to the increased amount of molecules a given surface is in contact with. Convective coefficient values also increase as the velocity of the fluid increases. This is why fans are used to cool electronics; air is more efficient in convective heat transfer when the hotter air is blown away. This is called forced convection. The Engineering Toolbox created the plot below that shows the relationship between the speed of air and its convection coefficient.

Air - heat transfer coefficient

Computers have fans in their cicuitry to increase the convection coefficient, but they also use fins. Heat leaves the computer and travels up the long thin fins before the air cools it via forced convection. The fins don’t affect the heat transfer coefficient. Instead they increase the surface area which also increases heat transfer and prevents the computer from overheating. A picture of this type of heat transfer optimization is found below.

Radiation

Radiation is the emission of electromagnetic energy by a substance and the absorption of that energy by another substance. Simply put, any time you see something that is bright/red hot like a coal or the sun it is transferring heat via radiation. The math behind radiation is complex, but the bottom line is the closer an object is to a black body the better the heat transfer. As we all know wearing dark colored shirts is not a good way to stay cool in the summertime!

Now most of the time, there are multiple methods of heat transfer simultaneously occurring for a given situation. However, one method usually predominates. I hope this post was instructive and you will look for instances of heat transfer in your own life.

*How Things Work Now is an excellent book with basic explanations covering an array of technical subjects including heat transfer. A link to buy the book is found here

Compound Interest: Make it Work for You

When Albert Einstein was asked what mankind’s greatest invention was his reply likely stunned many engineers and scientists of his time. His reply was not the vaunted steam engine or any of the other brilliant technological advances. His reply was: compound interest. If we understand compound interest we will avoid paying it and strive to make it work for us. The concepts behind it are critical in planning for retirement. Einstein also referred to compound interest as the, “Eighth wonder of the world.” The key is time. Compound interest is an exponential function and the higher the interest rate the more quickly an investment or debt reaches rapid growth.

where P = principal, FV = Future Value, r = interest rate, n = compounding period, and t = time

The exponent term “nt” does the heavy lifting. The greater the time and number of compounding periods the greater the exponent. The number of compounding periods is usually not controllable, but time is.

Stocks, bonds, and cash (held in a high yield savings account) are shown below graphically. These calculations are based on assuming a conservative rate of return of 8% annually for an index fund based on the S&P 500, a 2.8% return for a portfolio entirely of bonds based on the last 30 years of U.S. Treasury returns, and a meager 1% return from a high yield savings account. Many employers match retirement funds up to a certain percentage. Contribute the full amount to get the full match. Few investments will yield 100% return; it would be foolish to turn down free money. The full equation that takes into account a constant monthly payment is found below:

P	PMT	r, savings	r, bonds	r, stocks
$1k	$500	1%	2.8%	8%

With an initial investment of $1,000 and monthly payments of $500 per month and interest compounded monthly the following plot is obtained.

The graph illustrates the importance of time. All investments look almost identical even up through year 10. This is due to the bounds of the graph. The amounts are substantially different but not relative to the future value at year 40.

Year	Savings	Bonds	Stocks
10	$64,180	$70,472	$93,693

However, given enough time small monthly payments of $500 lead to a significant sum of money. I chose 40 years assuming you start investing in your mid-twenties and retire in your mid-sixties. Investing in your twenties is the best thing you can do to for your retirement account. The exponent is proportional to time and those dollars contributed in your twenties will compound many more times than dollars contributed later on in life. Over 40 years this particular fund entirely based on stocks yields $1.8 million dollars!

It is recommended to have enough money for retirement to replace 70-90% of your current annual income. Depending on your salary and how luxurious you want to live in retirement you should check now to make sure you are stocking enough money away (pun intended) to secure your future. Taxes will eat a chunk of your cash and the discussion of Roth versus traditional 40lk/IRA is a post for another day. Inflation is easy to take into account. The average annual inflation rate is 2%. Simply subtract that from the investment’s rate of return to get a real return of investment. The same data set from above is graphed with inflation taken into account.

This plot should further convince you that stocks should be the predominant investment in any retirement portfolio if you hope to see significant growth. Bonds and cash are useful to protect those who are about to retire from the volatility of the stock market and are good for portfolio diversification. The spreadsheet I used to generate these graphs is provided below. An iterative approach would be to adjust the monthly payment number until your retirement goal appears on the graph. Please use it as a resource to help you meet your retirement goal no matter how far away it is. The time to plan is now. Compound interest favors those who invest early and often. In the words of Abraham Lincoln, “I will prepare and some day my chance will come.”

Excel Spreadsheet Free Download:

Investment Spreadsheet Calculations

*Disclaimer: I am not a certified financial adviser and the content of this article is not meant to substitute for professional financial advice.

Mission Statement

Continue reading Mission Statement