|July 28, 2015||Posted by Joseph Buchignani under Uncategorized|
Read once, and never be confused by “debit” vs. “credit” again!
Double-entry accounting is a hard concept. When I attended the University of Illinois’ top-ranked accountancy program, it was explained so poorly that I dropped the major in frustration. The joyless, dumpy, glorified TA expected us to simply memorize and apply the five-rule formula like good robots.
- Assets Accounts: debit increases in assets and credit decreases in assets
- Capital Account: credit increases in capital and debit decreases in capital
- Liabilities Accounts: credit increases in liabilities and debit decreases in liabilities
- Revenues or Incomes Accounts: credit increases in incomes and gains, and debit decreases in incomes and gains
- Expenses or Losses Accounts: debit increases in expenses and losses, and credit decreases in expenses and losses
Is your head spinning yet? Ready for a quiz? It gets even worse when you realize that the debit column can have both debits and credits in it, and Oh sweet Sarbanes-Oxley please kill me now.
I don’t learn things that way. I need to know WHY.
There’s no reason to teach this concept poorly. It’s intrinsically exciting. Double-entry accounting and the joint stock corporation are the two pillars of the modern economic miracle. It even has a fascinating backstory set in Renaissance Italy – Venezia, to be exact.
So let’s go back in time to that exemplary homo economicus, Guglielmo Bugliani, and his three faccia a culo junior clerks.
Guglielmo (we’ll call him Gugli for short) has a problem. More like a thousand. Ships sink, cheating Jew merchants rob him blind, the canal floods his shop, grifting councilmen pick his pockets bare, and his gran disgraziato junior clerks can’t balance the pezzo di merda account book.
Of course, he doesn’t know WHICH clerk is screwing up the figures. Probably that nose-picker Piero. Gugli beats them all, just to be sure. This does not improve the ledger, but it makes him feel a little better.
All this would be just another day in Venezia, except for one man: Luca, “chief” junior clerk, a reserved fellow who dares to dream big. He is tired of the beatings, and decides to design a system to get the boss off his back.
So, how to design a ledger that even Piero can’t screw up?
Clearly, that is impossible. But it WOULD be possible to make a ledger that rudely disagrees whenever Piero forgets to carry a one.
Thus double-entry accounting was born. If the two columns don’t add up, Piero has to stay late and redo his work. Peace at last!
Credebbit. Dredit. Ribbit. Burp?
The two columns were called “debit” and “credit”.
Except… they weren’t. Not originally. At first, the columns were just called “for” and “to“. (That’s “per” and “a” in Italian.)
Why do we care what they were called originally? Because the modern names are so confusing!
“Credit” is a plastic card that buys things you can’t afford, a score that means you can’t get a loan, and a super-hard problem for extra points at the end of the test. “Debit” is another plastic card with overdraft protection, and a withdrawal on your bank statement. Whereas “credit” is a deposit on your bank statement… wtf?
Which one is good? Which is bad? Why are they so stupid?
Here’s the key: the names don’t mean anything.
The system was designed to keep Piero from screwing up. The two columns have to add up to the same amount. That’s it. The rest is arbitrary.
We might as well call them “left” and “right”. In fact, that would be a helluva lot easier for beginners.
1 + 1 = 11
So Luca sits down to design two columns that always add up to the same amount. How does he do it?
Rule #1 – always add or subtract the same amount from both sides. Duh.
Left | Right
+100 | +100 or…
+100 | +50 +50 or…
-75 | -25 -50
Even Piero gets it.
Ok, let’s start taking business accounts and jamming them into our pretty two-column ledger.
The net worth of Gugli’s business is 100 gold ducats. Why? Because he has 100 gold ducats in the strongbox.
The net worth is “Equity“. The gold ducats are an “Asset“.
Hey look, the two sides add up! Success.
What if the gold ducats are a loan, not Equity? Gugli owes Shylock 100 gold ducats!
Still balances. It’s a problem for Gugli, but not for Luca.
If you’re very smart, you noticed something. Because we put Asset on the left, we have to put Equity and Liability on the right.
Why is Asset on the left? No reason whatsoever. Just because. But you can work out the rest of it from there.
Your Account Has Been Frozen For Suspicious Activity
Luca has three accounts: Assets, Equity and Liability. He can completely describe Gugli’s business – as long as it’s frozen in time.
But of course, businesses change. That’s the whole point. Otherwise, Gugli could keep his money under the mattress.
To add the time dimension, Luca needs two new accounts: Expenses and Income.
Which goes where?
The easiest one to figure out is Income.
Gugli gets paid 20 ducats for helping a certain silk smuggler avoid the taxman. +20 Assets! +20 Income! So Income has to go on the OPPOSITE side from Assets!
The two columns match. We’re good.
Obviously, Expenses and Income go on opposite sides from each other. So:
Not convinced? Let’s double check that the Expenses entry is in the right place.
Gugli spends 5 ducats seeing a certain bare-breasted courtesan. Then the fat cazzo orders Luca to call it a “business expense”. Assets -5! Expenses +5!
Yep, we’re good. Now if only Luca could afford the same. (Embezzlement!)
One Memorization to Rule Them All, and In the Darkness BIND THEM!
Check it out. You only need to know ONE thing, and you can work out the whole chart:
“Assets go on the LEFT (debit) side.”
(Makes sense, right? You read starting from the top left of the page. Accounting is for rich people, and the first thing rich people have is lots of Assets. Credit cards are bad because they make you broke, so debit is good, so debit goes first. “Left + Assets + Debit”. Rule memorized for life.)
The rest follows naturally. Assets suggests Liability and Equity – the static triad.
Then the second pair adds time: Income and Expenses.
On the LEFT, adding is called “debit”.
On the RIGHT, adding is called “credit”.
Total debits = total credits. Total left column = total right column.
Now you know double-entry accounting.
(Why couldn’t my stupid TA have explained it like this? Today I’d be a well-paid but joyless CPA, with a Quicken-sized ulcer gradually eating its way through my peritoneum… never mind.)
*NB I am part Jewish and part Italian, so no racist jokes were made in this post. Logic.
**NB Apparently University of Illinois is not to blame. I looked up a bunch of explanations online and everyone is teaching it the same horribly confusing way – memorizing the debit/credit +/- status of each individual account type. WTF!!!!
|December 5, 2014||Posted by Joseph Buchignani under Uncategorized|
I composed this email for Cal Newport, but found he’s deliberately unreachable, so I thought I’d post it here instead.
I’m a fan. I’ve read your books, adapted them to my purposes, and taught them to my students.
I watched with interest your transition to the world of work and struggles to articulate an effective post-college productivity system.
I think what’s missing from your system is an understanding of real strategy. Basically, undergraduate college and high school don’t require strategy, because your objectives are all handed to you, and information is more or less perfect. Then you get to the real world, and discover things don’t actually work that way.
The world’s armed forces have made similar discoveries, and I think the strategic evolution is most advanced there, forged in the ultimate crucible of war. I highly recommend you read William Lind. His description of the three generations of warfare is lucid, compelling, and generally applicable.
Essentially, your academic productivity system is an excellent implementation of 2nd generation warfare thought. In metaphorical terms, a student’s life is like fighting war as a video game where you have perfect information about your enemy and your units at all times.
In the modern economy, life is more like real modern warfare – you’re rarely certain where your own forces are, and you definitely don’t know the location of the enemy. You don’t even know your objectives half the time.
The answer to this radical environmental change is a similar revolution in thought – 3GW – as practiced by the German blitzkrieg. Recon pull, avoid the surfaces, exploit the gaps, assign a schwerpunkt and roll up the enemy’s rear. It means constantly executing the OODA loop – observe, orient, decide, act.
This chaos wreaks havoc with any fixed schedule. So as wonderful as that tactic is (and as wonderful as trenches are at protecting troops), you have to get out of the damn trenches and maneuver. Recon casualties are guaranteed, risk is part of the game, but the reward – rapidly paralyzing, overwhelming and annihilating the enemy – is well worth it.
My vague impression is that most of your post-college innovation focuses on deep work. This is only a tactic. I think you need to zoom out of the tactical level to meet the challenges of the new environment.
In my opinion, no productivity system has properly implemented the lessons Lind puts forward, so this is more of an opportunity than a criticism. In fact, I’m working on something myself, along those lines. But the more, the merrier!
If you want to check out Lind, I recommend starting here:
My own system is called Cyborganize, but I’m redesigning it precisely because I was also stuck in a 2GW mindset. Trench stalemate is an ugly, ugly thing.
|March 21, 2013||Posted by Joseph Buchignani under Uncategorized|
For the most part, Forney’s book is an explanation of how to convert an internet writing addiction into small potatoes profit, enough to maybe fund a minimalist lifestyle. There’s potential to get bigger from there, but Forney hasn’t done it yet and so can’t speak to that much. But often getting that initial traction is the hardest part. It’s a book for blogging newbies, and succeeds as that.
If you aren’t an introverted reading and writing internet addict, you should ignore this book and move on. If you are, this is a chance to turn an addiction into a mildly profitable hobby, and maybe an eventual freedom business.
Where the book shines is it covers a missing step that the Tim Ferriss’ and even Ramit Sethi’s of the world don’t cover. That first hurdle is often what prevents people from ever getting traction.
The idea appears in chapter 4, “The Three Tiers of Online Hustling”, which is the only chapter that was interesting to me, a longtime internetter. It is actually an extension of my Cyborganize.org concept of T3, T2 and T1 blogs, applied to monetization. (Forney picked the idea up from an older blog of mine that went defunct.)
He’s correct, a T3 blog is a great search platform to find what things you write about that will actually interest people. This can then be parlayed into an online side business. Blog interest doesn’t guarantee a workable financial model. But it signals that #1 you can generate content on the topic and #2 there is attention for what you generate. Audiences have inherent value, some more than others. Finding that value is impossible if you don’t enjoy generating the content to grow the audience.
It’s how to go from internet ramblings to (maybe) a Roosh lifestyle. Light on details, but the conceptual model is there.
Note – while you’re in the struggling T3 to early T2 phase, don’t promise to make eventual products free. Fight the ingenopathic urge.
For examples of people who made it big doing something like this, look at Ramit Sethi and Tim Ferriss. However, in both cases they started at T2. You may not have the discipline for that depending on your compulsion to write, and your writing ability. Starting at T3 makes it easier.
As a reviewer, I have to say that it sounds like Forney doesn’t enjoy what he’s doing because he’s being overly disciplined about his process. I support an organic content generation strategy – you write what you feel like, then work with what you’ve got. It sounds like he’s forcing his raw content generation, which isn’t good.
If you’ve got the writing bug, Forney’s book is worthwhile and covers a lot of technical tips that will bring you up to speed. Although Forney’s methods are overkill, his explanations will save you countless hours fiddling with stupid stuff. If you’re writing a blog, you should get the book. Buy it here.
|November 5, 2012||Posted by Joseph Buchignani under Uncategorized|
This site is unfinished. I started doing some other things and will come back to it.
Occasionally I get requests from people for help or advice in setting up their organizational systems.
Get in touch with me on Skype chat and I’ll walk you through your own customized setup for free.
I get something out of this too, because it gives me insight into my audience.
|April 4, 2012||Posted by Joseph Buchignani under Uncategorized|
If you require a proxy to connect to Dropbox, you may run into an error with the GUI installer that prevents Dropbox from starting on Ubuntu.
The solution is to follow the instructions here.
You will need to enter two lines into the terminal, and start Dropbox from the terminal. Or you can add the startup line to your startup file.
|March 6, 2012||Posted by Joseph Buchignani under Uncategorized|
Scott Young is a recognized expert on rapid learning and hacking academia. He recently wrote a post describing how he is completing the MIT computer science program at 4x the normal pace.
What is Scot’s philosophy of learning?
“Most students learn in an iterative fashion—take lesson one, master it, then move onto lesson two. The academic system basically enforces this method of learning since lessons and homework are trickled out in lockstep.
There are two weaknesses with this approach. First, you don’t get to see how early concepts are going to be applied to later ones. Second, it doesn’t allow you to invest your time in the topics you find most challenging, instead you conform to the pace of the group. …
I prefer a recursive strategy. First I “learn” the entire course material, which usually doesn’t mean I’ve mastered it, but I understand the basic principles. Then I recursively deepen my understanding on harder topics until I’ve mastered it. This deepening can be done by deliberate practice in problems as mentioned previously or by using intuition-generating methods like the Feynman Technique.”
Some very interesting ideas. But how do they apply to those of us working in the real world?
Well, you can observe two things about Scott’s strategy:
1. It is high speed and high volume
2. It is recursive
Step 1: He scans a large body of material at high speed.
Step 2: He then returns to the hard (but valuable) parts, and focuses on them.
There is only one info management algorithm in the world that is specifically designed to support this workflow: Cyborganize.
All the other info management systems are locked into a linear, progressive paradigm, much like the way traditional academia works. These systems, such as GTD, expect a predefined life path in which “reading assignments” and “homework” are doled out in paired bits.
That is not how life works.
If you read any Steve Blank, you know he is constantly hammering the differences between traditional management and entrepreneurship. Traditional companies are designed to execute an established business model. That is what traditional info management systems are good at. But startups must SEARCH for a viable business model, before they can ossify into a structure optimal for executing that business model.
Well, life is much like a startup. If you intend to grow and evolve as a person, then you need Cyborganize, because you need to SEARCH for new life models.
On the other hand, if you just want to be a union man punching the clock, then GTD is fine for your utterly predictable life.
Personally, I think you can achieve greater happiness with a flexible, evolving approach. But I don’t judge those who find stasis fulfilling.
|March 6, 2012||Posted by Joseph Buchignani under Uncategorized|
“Stanford Professor BJ Fogg identified the three things you need for behavioral change: motivation, ability, and triggers. A trigger is reminder to do something now. ”
– quote from Ramit Sethi’s blog
Compared to some of the tools out there, like PersonalBrain and Ultra Recall, the tools I recommend for Cyborganize seem pretty simple and limited.
That’s a good thing.
Why? Because fewer organizational options means you have obvious triggers guiding you to the next step in your info-processing algorithm.
That’s why i don’t like wikis and other open ended tools. Too much choice equals no triggers. You have to think hard to figure out what to do next. That takes your mind off the content.
Mindspace is critically limited. Having a confusing workspace can cut your effective intelligence in half.
The Longform Loop goes from Org-Mode to WordPress. Because they are simple, both of these apps keep the triggers rolling continuously. This small-chunks cognitive labor, with the next step always clear.
That way, you can focus on the ideas. Your mind can wander off onto tangents. You can completely lose your place. Simply glance at the screen, and you know what to do next.
Freedom to think is freedom to work.
|March 5, 2012||Posted by Joseph Buchignani under Uncategorized|
I think I’m coming around on CT.
The markup is still way too intensive for the earlier stages of fast text flow that Cyborganize demands. And the structural possibilities are too defined and diverse.
But as an end-stage to the Longform Loop, it makes a lot of sense.
I can see also that it has the potential to fulfill a large part of what I wanted UR to be, but found it too slow and limited to be – a fairly intelligent interconnected text database.
Obviously there are a lot of powerful possibilities here. But you need to already know what you want to do, and be sure it’s not going to change much, before you do it.
One question. I’ve been thinking about UR for a contact manager. Would CT do that better? I don’t see anyone using it for that, and UR seems like a natural choice. Then again, it might be nice to have everything, including contacts, integrated in the final T1.
Here’s a demo vid of CT: http://www.coulthard.com/index.php?/blog/comments/academic_research_using_connectedtext
The home page is also pretty informative: http://www.connectedtext.com/
|December 17, 2011||Posted by Joseph Buchignani under Uncategorized|
Hallelujah, finally found a decent free WordPress theme. I was beginning to think such a thing didn’t exist.
I have fine-grain control over all the important elements. My key criteria are readability, proper balance, and typography.
Since I have control over font sizes of all elements now, I decided to go with a fixed width for easier scanning.
I also figured out how to have a static page and a blog page together on the same site – a major improvement.
It’s right there in the options under Settings -> Reading. You just need to create a blank page and designate it as the “blog” page.
I really like all the options and functionality included in Clear Line. It does a lot more than I’m currently asking of it. And it includes nice integrated share buttons – which importantly you can turn off.
I’ll be using this for all my T2 blogs. It can be adapted for public or private needs. In short, it is Da Bomb. I am ecstatic.
Did I mention you can configure columns however you want? Control H2, H3, H4, etc? I better stop now…
Also, I picked up a new plugin, Redirection, that will eliminate the need to manually fix links when I’m reshuffling my page hierarchy or doing SEO optimization. Verrah nice.
|December 16, 2011||Posted by Joseph Buchignani under Uncategorized|
I wasn’t adhering to journaling.
In the past, I had decent adherence to a journaling system in Ultra Recall. I created separate entries for each day, with dates formatted so they’d sort in numerical order. (2012/12/16).
Then I’d make a parent over 3-4 for half week review, and over two half weeks for a week review, and so forth.
That system worked very well. Each layer of abstraction built into the next. I wound up with a comprehensive review of my life. I was able to pick out major patterns and gain a far more accurate self perspective, which translated directly into higher quality life decisions.
In other words, journaling in this manner is indispensable. If you’re not writing the story of your life, the story of your life will write you.
Obviously, I don’t use UR anymore. At first I looked for a software replacement that would run on Linux.
But then it occurred to me that Org-mode would do this more effectively. I’d just need separate text files for each layer of abstraction. I.e., one for daily entries, another for di-weekly, another for weekly, etc.
But then I realized that the fundamental problem with my journaling adherence wasn’t functionality, but presentation. WordPress offers an inherently superior dashboard style presentation than Org-mode.
Yes, choosing WordPress over Org-mode would require a bit more copy pasting during reviews. But the gains in adherence and usability would be well worthwhile.
Then I had to think through how to structure the journal in Wordpess.
At first I thought that daily entries should be posts. But that won’t work, because the posts are displayed by most recent first, which reverses the needed chronological order.
Then I realized that pages offered the perfect solution. I could still use numerical sorting in titles to make it self organizing. And WordPress supports outline hierarchy for pages. Yeah it’s a little clunky, but it’ll do.
More importantly, I can have the journal as an always open tab in my browser, to drop memories into the day’s entry whenever the thought strikes me. This massively increases adherence.
So now I’m doing my journal in WordPress. I have two days so far. It’s working well. The habit is becoming ingrained.
The following tabs are always open in my Chrome browser: T3, TweetDeck, Journal T2, and the T1 blog page that shows a listing of all my T2 blog addresses, for easy access.
This system is working very, very well. Stuff goes where it’s supposed to.
Now, when I do a review session from the daily level, that entails a little extra work, because my info is fragmented.
I need to pull data from email, my T2 blogs, my T2 twitters, maybe Org-mode timestamps, and any other sources to bulk out those daily entries.
But really, this doesn’t sound too difficult. I only review about 3 days at a time. So I just keep all three open in tabs, and add info as needed.
When done, I dump all that info from the three days into a scratch file, and do the di-weekly review. After that, I don’t have to collect supplemental info for the rest of the review process, unless I find out something retroactively. In retroactive cases, I can just add it to the day discovered, and it will work its way up the abstraction chain.
EDIT: Out of respect for the rule of three, I think I will limit reviews to only three sub-entries per round. So my structure won’t follow “weeks” and “months” and “years”. Instead, three days, nine days (week), 27 days (month), roughly 3 months, roughly 6 months, roughly 1.5 years, roughly 4 years, roughly 12 years, roughly 36 years, entire lifespan. Guess that last one will have to be given at the eulogy
EDIT: No. If reviewing is good, more reviewing is better. I will follow a rule of two instead. Two days, four days (half week), eight days (week), 16 days (two weeks), 32 days (month), 64 days (two months), roughly four months, roughly eight months, 1.3 years, 2.6 years, 5.2 years, 10 years, 20 years, 40 years, 80 years. Yeah, that’s a lot better.
Also, some reflections on the importance of journaling:
Monitoring is passive management. Active management is setting goals. Without passive management, you don’t know if you’re reaching your goals or stuck in a loop. Also, you can’t appreciate your victories or see the forest for the trees. This leads to discouragement and suboptimization. You fail to learn and adapt, and you fail to appreciate. It’s a recipe for general failure.
Later, I want to get this audio watch to log every minute, send it off for transcription or use Dragon Naturally speaking, and develop a full lifelong. See here: