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Friday, February 29, 2008

Being a Target - "College the Poor Kids" Way Follow-up

All I can say is wow! Today my traffic exploded to where at 9am this morning I had my biggest day ever all ready!

This is all due to the coverage by msn's MoneyBlog on my piece "College the Poor Kids Way." It obviously stirred up strong emotions as I thought it might.

First off, regardless of your opinion thanks for visiting! I really appreciate anyone who has clicked over to see more about the blog and perhaps read a bit more. If you like what you are reading, or just what to be notified to when I might annoy you again, sign up for my RSS Feed. It is free, and if you signup using your email account you could win FruitfulTime TaskManager software with a MSRP value of $50!

Now for a quick follow-up to the posting:

Some background on me, as some believe this is driven by my background:

  • Paid for College 100% by myself, but lived with family (Aunt and Uncle). So no room and board costs
  • Parents couldn't afford support other then moral, which was great!
  • Worked at minimum wage jobs in LA - Pizza place, Music Stores etc..
  • Wife did same
  • $150k/yr+ Income - Not a brag, just some said it couldn't be done if you paid your own way
  • Just turned 39...so not a late baby boomer that doesn't care
  • Don't drive an expensive car
  • Nice house, but we can afford it. Bought our first house at 35.
  • Support our kids, play with them, at every game, every ballet show. Made decision 6 years ago that wife would stay at home to offer even more support to them
  • Kids aren't brats...most of the time :)

I think that answers most of the questions asked.

There was a ton of great input given and great arguments made on both sides of the table on whether or not kids should pay their own way through College or not. There was, for me, great middle ground pitches made on partial pay, tying it to grades, only paying for classes of an appropriate major (ie no Klingon 301!). Regardless of your personal decision, I say, do what's right for you and your kids. Even if you want to pay 100%

One thing to consider for those that were pretty adamant that I was Hitler Jr w/Cheese for not paying 100%: Where does the chain break? College only? I can make your same case for a down payment on a house. And beyond...

Even with this dip in home costs it is very tough to buy a house on a decent starting salary, say $40K in a decent sized city. A $200K house would need a $40k deposit (to be at 20%). Maybe I should do that for the kids? I want them in good housing and living at the level that they did with us. It would be even more if I wanted them to be in a bigger house more like where they live now. Not even taking about furnishing it either.

What about when they are starting subsidizing a bit of their salary? Johnny is only gonna make $40k to start, which is tough. I could supplement another $20k and make it easier on them to not get loaded into debt.

I know this thinking loses people with each step, but at some point kids have to start living their life and not just be an extension of us. Is that point 18, 22, 30?? Not sure, but it probably is different for each kid.

As I said before; Thanks for visiting and come back often!
(picture from fotosearch)

Is Grandma Coming to Live with Us?

As more baby boomers retire there are going to be some parents that are not going to be in the position of just being able to make it. Starting late with 401k's, higher then expected health costs and frankly, longer life will add to this phenomenon.

This is the flip side of the coin of kids waiting longer to leave. We may end up living with our parents, between homes over half out life! Don't get me wrong, I love my Mom and Mother-in-law, but I could end up with both!

Personally this is not a burden I want to put on my children. And to be fair it would be child...singular, it is always one that is the go to person, either due to closeness geographically or responsibility. level.

Are we ready to become multi-generational home dwellers like many other countries?

My opinion is that, I think a lot of this will be avoided as people work longer and live better then previous generations. 100 becomes the new 80. People are vibrant and sharp, because they have to be. I also believe that the baby boomer are too independent to migrate this way in droves.

How about you? Do you see yourself becoming your parents...parents? If so are you preparing for this now via budgeting, or as part of your retirement plan?

(photo from freakingNews.com)

Thursday, February 28, 2008

Life, Liberty and the Pursuit of Money Featured on msn's Smart Spending

Last night Karen Datko over at msn's moneyBlog picked up our story, "College the Poor Kids Way." She wrote a great story about the piece and today traffic is amazing! (At least for me!)

Thanks so much Karen!

Sphere picked up our story about the impending Fed Rate cuts from yesterday's Personal Finance QuickTake: Another Rate Cut Coming!

Thank you Sphere!

Last, But definitely not least; Reuters picked up "Tax Carnival #30" that we were involved in

And one P.S to Add...Life, Liberty and the Pursuit of Money just got PageRank as well! It is just PR2 to start, but hey, gotta start somewhere and it looks like today is going to be a record day!

What Fight Club Can Teach You About Personal Finance

OK...I know I broke the first rule, but given that my last post was accused of being a "fantasy" I thought...I will go with that. It's one of those random acts of Silliness.

I really like everything Chuck Palahniuk writes, but Fight Club is such a great visual by David Fincher, that it transcends for a lot o' folk my age. What a lot of people don't get is that the story is a great allegory for Consumerism and Commercialism. Frankly...a whole bunch of ism's, but we'll focus on the first two.

The narrator of the story is a never named character that is an insomniac, at least at the beginning. As the movie shows, and as someone who has lived through that hell, you live in a daze. Not really awake not really asleep. However you really believe at times that you discover some universal truths...

I am jack's list of things to learn:

  • I am not my things - He is only free once his things are destroyed. I don't advocate this...other that your credit cards
  • Don't have a house full of condiments and no food - Condiments are designed to Enhance the flavor of food, not to be food. The same holds true with DVD players, Plasma TVs and *Gasp* the Internet. These things are to enhance your life not to be the center of it. Otherwise known as "Stuffitis."
  • Follow your Passion - Don't blackmail your Boss to do it, but...
  • You won't be free unless you have no debt - You don't need to wipe out the data centers for all of the credit card companies. Break your debt chains as soon as you can.
  • You have the control - At the end he has the control not Tyler. You just have to choose to have that power.

I know this because Tyler knows this...

OK...a bit inside, but watching it again the Commercialism allegory really hits home. Probably because I am writing multiple posts about personal finance and budgeting multiple times a day. You start to see better with the sunglasses on sometimes :) .

Wednesday, February 27, 2008

Personal Finance QuickTake: Another Rate Cut Coming

Chairman Ben Bernanke signaled to Congress on Wednesday that the Fed is ready to again cut rates to help jump start the economy according to an AP story.

The Fed is in the unenviable position to get the economy moving while not fanning the flames of inflation, which is already showing its ugly head. Bernanke is fighting an uphill battle against home mortgage and general credit issues in the market. But the economy is the top concern, over inflation fears. He pledged to adjust a key interest rate and help the economy, which many fear is on the verge of a recession, if not already in one.

"The economic situation has become distinctly less favorable" since the summer, the Fed chief told lawmakers. The country should prepare for "sluggish economic activity in the near term," he went on to say. Concern continues to grow for a new period of stagnation, where inflation grows stronger while the overall economy is weak.

The Fed is prepared to lower rates again to bolster economic growth, Bernanke said. The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," he said, sticking closely to assurances he offered earlier this month.

Bernanke said at some point this year, the Fed will need to "assess whether the stance of monetary policy is properly calibrated" to foster the Fed's objectives of price stability "in an environment of downside risks to growth." Bernanke said he was hopeful that previous rate reductions and the $168 billion economic aid plan of tax rebates for people and tax breaks for business would energize the economy in the second half of 2008.

"Should high rates of overall inflation persist," Bernanke said, "the possibility also exists that inflation expectations could become less well-anchored." If people think inflation is escalating, they will act in ways that could make things even worse, a sort of self-fulfilling prophecy. Also, if oil prices continue to skyrocket this year, it would be "hard to maintain low inflation," Bernanke acknowledged.

What this means for us:

Most believe that the Fed will cut rates in March and in April hoping to get the economy in good strides when the economic stimulus plan hits. If consumers are still worried, larger numbers then planned for would save or paydown debt with the funds instead of spending them in the general economic. This would minimize the overall impact.

Ten Financial Lessons Every Kid Should Know

I am the proud parent of three growing independent-thinking kids. No not the ones pictured, although I picked the pic 'cause it reminded me of me in High School. My parents did a lot of things right bringing up my brother and me. I wouldn't be where I am without them, especially my Mom, believing in me.

However today the one thing I look back on and wish I had a better understanding of personal finance when I was younger. Today, I understand why; my Mom was just trying to make ends meet, and given my award winning personality from 13-17 I probably wouldn't of listened, because I was lucky...I already knew everything.

Our kids though will leave the house with these lessons understood and hopefully better prepared then I was.

Ten Personal Finance Things Every Kid Should Know:

  1. You Can be a Millionaire - If you start right away save $10K for 5 years, NEVER add to it again, get 8% average ROI, in 40 years you will have over $1 Million. Its not sexy, but it is math

  2. Tomorrow Gets Here Fast - The Power of Compounding is your best buddy and worst enemy. Start the same exercise 10 years later? You've blown nearly $500K! Do it now, do it every year and you can achieve wealth unlike anyone ever in our families history.

  3. Spend Less then you Make - A debt never earned is a life lived without debt chains

  4. NEVER buy a Depreciating Asset on Credit - And don't ask your Dad why he bought a Corvette when your Mom was 6 months pregnant :)

  5. Use Cash When you Can - It isn't old fashioned, and it will ensure #3 is a reality!

  6. Have a Success Plan - This is a plan this is always changing and at least 3 steps ahead. Never get to a space that makes you say "Now What?"

  7. Own your Things, Don't let them Own You - Life is too short to pay for a meal for four years! Do you really need the Pool Table or do you want it. Know cold Needs, Wants and Desires. Address them in that order!

  8. Know how to Balance a Checkbook, Without using Quicken! - I still do pen/paper as well as MS Money, and I have found errors both ways. Often from the banks side. But I knew when the bank messed up, and I got my money back. I wonder how many people miss those charges. Learn the basic terminology of money and don't be afraid to ask questions! The only dumb questions are the ones never asked!

  9. Only do Something you Love Doing, Regardless of the Pay - Even if it means not making as much money as someone else. Fifty years of hateful toil isn't worth it. And many who don't follow their love spend the extra to feel better anyway!

  10. Never Accept Less than what you Deserve - Whether it is a deal that wasn't handled right, or a job that isn't working out, in a positive way, you have to ask for what you want, you just might get it!

There are many more, but just think how much better off many of us would be debt-wise if we internalized these lessons! I know I would be in better shape. And isn't that what parenting is all about?

Tuesday, February 26, 2008

When Even the Rich Runaway...

Even the working rich are worried according to Forbes. "Housing has imploded, the market's a yo-yo, recession's in the air. And the 'working rich' are learning to do without." This according to Russ Alan Prince, president of a private wealth-research firm and author of the book The Middle-Class Millionaire.

Princes research points out that 78% of the Working Rich, identified as those with $1MM-$10MM in Net Worth and still working for a living, consider themselves "very or extremely concerned about their ability to maintain their current financial position." Furthermore he believes 21% of them are already reducing spending.

Compared to the first half of 2007, the last six months saw a 20% drop in Luxury spending. According to a source in the report, "Luxury consumers have never expressed such a dismal view of their financial status." This is a compounding issue for the economy as the Working Rich are known networkers. In other words they talk to one another before purchasing, which if sentiment is down can lead to a vicious circle of reduced spending. The spending is transitioning into higher perceived value items, felt to be less frivolous.

This is a big indicator the economy is in trouble as this group has been a leading indicator of things to come. Great time to make sure that your debt, budgeting and money management is firmly in place!

BTW - Broke Grad Student is running the current Carnival of Personal Finance with a great spin on the topic! Take a look!

The spending is a mixed bag of information though. Hi tech gagets continue to sell well, but Jewelry is down. Luxury car are stable, but sports cars are slowing.

Save 50% When You Dine Out

As I start to pull together our information for February I am struck by something. Our Dining Out amount, when it is just us two, has really fallen, frankly in half for an average meal. This has allowed us to have, pretty frequently, left over funds in that Envelope!

For us, and probably anyone married with three kids, we often eat out to escape. It is nice to have adult time together. It is frankly nice to not order food through a Clown's Mouth when we do it either! :) We are both foodies, and Mrs. X is an amazing cook so we would good well made food. Unfortunately this can equal expensive (at least to us) and can leave buyer's remorse on the tongue!, not to mention in the past, the credit card!

Guide to Save 50% when doing the Full Dining Experience:

  • Drinks - This is a restaurants profit center. If we are gonna have a drink, we will have one at home with our...($12 Savings)

  • Homemade Appetizer - We plan out those dining nights and there is a great little Harry and David store here that has amazing appetizers (Stuffed Bacon Brie! mmm) that just has to be heated up. I will pick it up on the way home the night before, Mrs. X pops it in at the right time and with the drink above and we are half way through dinner before we leave! ($8 Saving w/purchase)

  • Specials - Restaurants try specials to see if new things work at that location OR if you are in a quaint getaway, just because they want to! It is a great way to try new stuff and save money! ($10-$20 savings)

  • Dinner Drinks - We are water-ers now (tap please! love the planet), but we will have a glass of wine. Often they will have a good wine by the glass, especially at a small restaurant, or...Bring your own. Most will charge you a cork fee, but that is nothing compared to 1.5-3x markup! ($10-$30 savings)

  • Pay Cash - Unless you like doing dishes you will stay to budget! (Priceless!)

  • Dessert - Have it, but not at the restaurant! Find a great little bakery and pickup some neat little deserts there. Or even go for Ice Cream together! A third the price of having it at dinner! ($10 savings)

  • Babysitting - Your reduced time out saves money. This is one I give you 100% walk away from if the weather is good go take a walk together, or go to the park and breathe! (skip the savings and take the lady for a walk, bub!)

This is still an extravagant night, but she is worth it! But if you can do the whole night for $50-$60 instead of $100-$120 you can enjoy it at the time with no post-traumatic credit disorder and protect your budget at the same time!

Monday, February 25, 2008

Personal Finance QuickTake: Visa IPO

Visa is set to launch an IPO (Initial Public Offering) before the end of March according to the AP. Based on the initial numbers this may be the largest IPO ever. The offering is expected to raise $19 Billion , if it does it would signal to Wall Street that the market is back up and running.

Visa's IPO will have little initial affect on its customers, but the banks that issue the cards are expected to share a $10 Billion windfall. This influx of cash could keep banks from raising rates or cutting back on consumer credit lines.

Both MasterCard and Visa are not banks nor lenders, they are transaction processors that get paid fees by the issuing banks. This is different from American Express or Discover that offer and back the banks themselves.

Visa is the largest US processor of these transactions with over 50% market share. Last year Visa processed 44 Billion transactions, or $3.2 Trillion Dollars, nearly double MasterCard. Visa will be the last major credit card provider to go public as MasterCard and Discover went public last year.

What this Means:

Visa gets paid for the transaction we place whether or not we pay them off the next day or not. But 44 Billion transactions? That is 7 transactions for every man, women and child on the planet! $3.2 Trillion equals $533 for every man, women and child on the planet! And these numbers are only Visa. Add in MasterCard, Discover, American Express...

This is really amazing! This is an industry that is really younger than 50 years old! Sadly this is a very scary amount of transactions and debt that we as a people are ringing up. At some point it becomes overwhelming and could lead to massive amounts of bankruptcies and people not saving for their futures.

Are we moving to a non-currency world? Are you breaking your debt chains or adding to them?

College the Poor Kids Way

Mrs. Micah featured a post recently about a sister who was talked into co-signing for her sister's student loans. Not surprisingly this did not turn out well. But it raises an interest point. Many of us are ill prepared for our financial life when we go off to college, or on our own.

Oh sure we think we are. We get signed up for credit card, and maybe even get a FREE t-shirt for signing up! We probably then only use the card for emergencies...no pizza or beer left in the house! Taking our girlfriend out! Maybe even rent once or twice.

Pretty soon that one is maxed, bummer, luckily you get a second one to help pay the first minimum payments. If you are lucky this ponzi scheme keeps up until you leave school and get a real job. Now you are saddled with big student-loans and credit card bills!

Some kids are "lucky." Their parent fit the entire bill down to spending cash and help with those pesky Credit Card bills. They want their kids to have the best start possible. Unfortunately, either situation sets up for potential failure. You either engage in the workforce with pre-made debt chains, or no real sense of how life works.

Our kids won't be like this. First we have made a conscience decision NOT (and I smell the angry emails already) to pay for their education past High School. We will help them with 100% free rent and food, in exchange for chores if they chose to go somewhere close.

Why oh Why you cheap *#$^ !?

Every single kid we knew that went to college on the parent express left school 100% unprepared for real-life, if they graduated at all. They took basket weaving and Klingon 301. They never worked the menial jobs that give you an appreciation for honest work, honest wages.

No I don't want our kids saddled with an insane amount of debt leaving school either. I would rather see them take 5-6 years to graduate and come out 100% paid.

Everyone that I know paid their own way had it hard. But they studied hard and really wanted it. Guess what? When they did graduate they had a huge sense of accomplishment! They, on their own completed one of life's milestones! What independence!

I call this: College the Poor Kids Way!

To do this you can't just throw then in the deep end at 18. You have to make sure they know what they need to succeed in the world. The whys and hows of Credit. The basics of budgeting and money management. Even a bit about investing.

Their first real investment will be in securing more income by having a college degree. Their investment will be in themselves! And what a great investment to make!

In conclusion:

Don't think for a minute that this means we don't value a college education. There are way to many studies that show the value of post-High Scool Education. We just believe that giving the lifetime gift of independance, through life experience, is worth 5-6 tough, but managable years.

(please throw tomatoes..they are softer!)

Sunday, February 24, 2008

Our First of Four Winners...

At 10PM PST last night used Random.org to give me a number to determine the winner of The FruitfulTime TaskManager Software.

The software selected Shuchong, a RSS reader who is soon to be Law Student! Shuchong is the author of But WHY Doesn't it Grow on Trees Blog which is a great look into the mind of a really bright person at that next stage of life. It is a new blog, but given the great writing sytle, one that will surely become a favorite. I really applaud the goal of the blog as well, which is trying to graduate from Law School, without owing any more debt they they do now! I encourage you all to take a look!

Here is what Shuchong had to say, "Thanks again! I've really been enjoying your posts, especially as I anticipate making debt snowballs of my own in a few years time. "

Congratulations Shuchong!

Remember there are three more chances to win the contest, next week at the same time I will pick the next winner, Just register for my Email RSS Feed, or stay registered! I look forward to picking your name next!

Our First Winner and Best of the Week

Exciting photo finish as I had some more sign up for my RSS Feed rigt before 10PM PST, the time for the first drawing. The winner has been notified and I hope to get a quote in time for my mid-day post!

For everyone else there are three more chances and you are already entered! If you are already signed up, you are entered for all of the contests as long as you are a subscriber at that time! If you didn't sign-up yet still great chance to win! Sign up NOW!!!

The blog had a great week as week added a bunch of RSS and regular readers, we were quoted in a blog on msn Moneyblog and there were some great posts out there that I want to make sure you get to see!

Best of the Web:

  • Mrs Micah - She had a great post about people scrapping her site. This is where sites use code to use your posts as their own, She even included a great form letter!
  • ShoeMoney - A great piece about Ringtone scams, greedy News companies and one of the funniest clips EVER about Spam! Do not watch it while drinking Milk as it will come out of your nose!
  • My Dollar Plan - Did an amazing job pulling together a cool list of the most popular Personal Finance Blogs by their RSS numbers. We aren't there...yet! But a great "To Read" list.
  • Paid it Down and Moving Forward - Sharon does such a great job, she wrote a post that really hit the reason I don't like Dentists...
  • Birthday's!!! - Both Need to be out of Debt and Plonkee are celebrating First Blog Birthdays. Congratulations, and Thanks for all of the great insight!

Our Most Popular Post of the Week:


  • Second time on msn MoneyBlog! (Officially beat to death, I know!)
  • Biggest Individual day ever at 90 visitors (Inching towards the 100 mark!)
  • Over 9000 Page Views
  • Over 3300 Visitors!
  • Our First Poll Showed that Classical and 60's Music are your favorite to work on you finances by! Thanks for voting!

That's the week that was. There are some great links to check out to help budgeting, money management and your finances!

Saturday, February 23, 2008

First RSS Winner Picked Tonight!

Tonight is the night! I am really excited!

At 10PM PST I will be picking the first of four winners in my RSS Contest.

There is still a lot of time to sign-up! Just Click HERE!

If you win I will email tonight and see if I can get a quote from you and link to your blog or website. Even if you aren't picked this time you have 3 more chances to win. Just stay signed up! Tell your friends. Tell your unorganized friends twice!

Register now! This is one of the best chances to win, given that we are a new blog!

The Fruitful TimeManager Software is a $50 MSRP value and you could be using it tomorrow for FREE!

Best of Luck!

A Tale of Two Salesmen

Sales and Marketing generally doesn't get along. If sales are going hot, they are obviously the most skilled person to scale such heights, and if sales are bad, marketing didn't find the right message. Now remember though this is coming from a marketing guy, not a sales guy. I think we marketers are perfect...OK I don't, but I wanted to set this story up so you would understand that when I say, "You Have to Be a Great Salesperson in your Career." You'll know I am not just drinking the sales Kool-Aide. I will get to the why in a bit. This story takes place when I was just starting out in my career, but I was a Merchandising Buyer. Only the names have been changed to protect the stupid :)

This story involves two salesmen. Let's call them Bobby and Buzz. They have both been in sales for years, both had risen to top sales posts had all of the contacts needed to generate their quota.

Bobby would call at the end of every month, or 3 days before the end of the month at the end of his quarter, half or year. Every call went something like this:

Bobby: "Whatcha got for me this month Racer?" "Well you better get some of my new 'Y' on order now we are running out!"

Me: "Bobby shocking to hear from you at the end of the month, but we are good, thanks."

Bobby: "Come on Racer, I need $100k to make the month. I'll give you an extra 3% off."

Me: "Well, Bobby," I would say smiling on the other end of the phone, "I don't need $100K of your widgets, that would be 4 months supply, so it would take getting another 10%, not 3%."

Bobby: Silence..."OK, let me check, we normally can't go that low." Then he would call back and say, "OK, I can't go 10% but I'll go 8."

Me: "Fine", I'd say, "I need terms then, 60 days."

Bobby: "Done" said El Bobby faster than a fox running from the Chicken coup...

Problem was Bobby thought he really got one by my because he would have gone to 10%. Well...not quite. I needed the goods anyway, plus I got terms which were worth about 1.5% then. I would have ordered, but I knew he would call and offer a discount. The nice thing was I only had to talk to Bobby 12 times a year, and then I would light him up like a Christmas Tree.

Let's Contrast that with Buzz.

I talked to Buzz 4-8 times a month. He never asked for an order on any call. He would ask about my wife, kids, dogs, music, etc.. He knew my favorite lunch place, my favorite dinner spot, what were the good times to call, and what were the bad times. He would ask me how things were selling through, did I need to return anything, how was my stock levels...Buzz always made his numbers and he never had to discount. He knew our business as well as us.

So what are the lessons for you, your career and life?:

  1. Make it easy to do business with you - Buzz always made sure we were selling through. He knew how every facet of ordering took place so we never had an issue with his shipments
  2. He made each of us feel as we were friends - Not superficial friends, but real ones. He took the time to connect with almost everyone at the office.
  3. He put you over himself - You could call 24/7/365 (he insisted) but he would never do the same back. He respected your time. Our business mattered more to him then a single order!
  4. He worked every day, not just on deadlines - He didn't get as big of single orders as Bobby sometimes, but he didn't need to have a fire sale each month either! No Christmas Eve calls!
  5. Never an integrity issue - If we couldn't do something he would never try and go around you, to your boss, or bosses boss. Bobby did, and no one trusted him because of that.

Unfortunately there are 100 Bobby's out there for each Buzz, but whether you are in sales, marketing or any job, apply those principles and you will go far!

Friday, February 22, 2008

Personal Finance QuickTake: 10% of Homes Underwater

According to a new report from Reuters, 10% of homes are underwater. No, this is not a global warming post we are talking about the loans being underwater, or the Homes being worth less (often much less) then the loan is currently valued.

According to Mark Zandi, Chief Economist at Moody's Economy.com, 8.8 Million Homeowners, or 10.3% of the total, are in over their heads. as a result millions of home owners have incentive to abandon their homes.

This ties to an earlier post as well as an article on msnMoneyBlog that quotes me in it (plug!). The issue is not just those people and the bad bank loans. It is also that underpriced homes are hitting the market at the worst possible time, when sales are abnormally low. The homes are underpriced because the banks want to get the houses off of their books, they have no reasons to hold them it is only tying up cash flow.

According to Mark Zandi, each foreclosure on a neighborhood block reduces the value of all homes on that block by almost 1.5 percent. That is a hefty hit! on a $500,000 house that $7500 gone. In many neighborhoods, especially in California's Bay Area and Detroit, you can have 20% being for sale! I don't believe that this is a cumulative affect, but more like a logarithmic one. In other words, one house in default would cost you $7500, two would cost $20-25K!

So when do they see it turning around? Zandi expects home sales to hit bottom this spring, housing starts to reach a nadir this summer and house prices to trough in the spring of 2009! Nice...

$5 Million Reasons to Bank in New York

Well after my issues with E*Trade I think I have found the perfect bank for me. Sure I will need to move to New York, Commerce Bank really has the best terms around.

Benjamin Lovell had $800 in his account and was going to make a deposit when the teller told him he had $5 Million in his account already! That is about 624900% Interest, or 624895.9% better than E*Trade!

Well Old Ben couldn't believe his luck and over the next little period he withdrew $2 Million. He bought Jewelry for his girlfriend and used some to invest...hopefully not in Commerce Bank Stock! Ben realized this wasn't his money, and unfortunately for him, so did the bank eventually. He is currently sitting in the pokey awaiting trial on $3 Million Bail...which is what he would of had left in the account! Not intentional, probably, but funny none the less.

These sort of errors happen all of the time, probably more often then the banks would prefer that we know and not usually this size. They take the money back out and if it is gone, like Ben, ask for it back, demand it back, then call the police. Yep, whether it was the banks fault for giving him access to the funds or not, it is still stealing and a potential felony if more than $1,000.

This is one of those times were even the best of us would be tempted, especially if we were under other pressures, as he apparently was. However, stealing is stealing whether it is candy from a baby, money from crooks like in "No Country for Old Men" or banks that make stupid mistakes.

It is sort of like this famous story attributed to be Winston Churchill to Lady Astor:

A certain gentleman inquired of a lady whether she would be willing to sleep with him for 50,000 pounds. After some hesitation, the lady replied that she supposed she would, in consideration of the magnitude of the offer. Then he asked whether she would sleep with him for twopence.

"Certainly not," she responded with indignation. "Just what kind of lady do you think I am?"

"Madam, I believe we have already established that," he remarked calmly. "Now we are just haggling over the price."

That being said, I am still tempted to switch banks :) How about you? What would you do? James Bond-like escape to Central America or Jimmy Stewart call to the Bank to report the error even though the pressure would be pretty tough?

Don't forget, there is still time to win our RSS Email sign-up contest! Just sign-up HERE or on the top left portion of the main page!

(card by Parker Bros.)

Thursday, February 21, 2008

Personal Finance QuickTake: Fed Gloomy Forecast

The Federal Reserve put out a rather gloomy forecast on Wednesday. They have lowered growth, employment and other economic indicators due to damage to the housing and credit markets.

According to the minutes of the Fed meeting on Wednesday they are very nervous that cuts up to this point aren't enough and won't be enough to keep the economy from continuing to weaken. "With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the committee agreed that downside risks to growth would remain even after this action," the minutes of the meeting showed.

The Fed said that it now believes the gross domestic product will grow between 1.3 percent and 2 percent this year. That's lower than a previous Fed forecast for growth, which at that time was estimated to be between 1.8 percent and 2.5 percent. Based on those numbers Unemployment is expected to rise to 5.3%.

Clearly the economic slow-down is heavier and faster then the Government thought it could have been. I would expect the Fed to continue to cut interest rate in our to try to jumpstart the economy. However, the deeper the cuts the more likely and higher we can expect inflation to rear its ugly head!

On a side note it looks like not just on this site, but most others Google's Feedfetcher is broken and unsubsribribed everyone that was using that service. At first I though it was just me, but aI saw som sites like www.johnchow.com lose 6000 subscibers! I would suggest thatif you were using that service, to resub through email HERE. Not only will GET the articles (for Free of course) but it will enter you into my current RSS signup contest!

Save the Penny, Save the World

OK. Maybe I've watched the box set of Heroes Season One too many times recently, but once again people in Congress are trying to kill the penny again. 60 Minutes ran some great reports on this topic recently.

Given the run up in the cost of all commodities, especially Copper and Zinc, it should be no shock that the cost to make a Penny AND a Nickel are higher than the face value on the coins. No one is talking about offing Jefferson ...yet, but old Abe is in the cross-hairs again.

In 1982 they changed the Penny from 95% Copper and 5% Zinc to 97.5% Zinc and 2.5% Copper. But now the price of Zinc and Copper are such that the penny costs 2 cents to make. So what to do?

I frankly can't see the US Congress cutting the penny. The short term savings of $130 Million to stop all production of pennies, doesn't outweigh the inflation estimates of $600 Million from the American for common sense. Advocates that say, "prices will round down too and balance this out", sure have forgotten what happened to all of those countries that changed over to the Euro.

The next morning in Germany, instead of just seeing the equivalent price in Euro's from their old Deutche Marks, they found prices rolled up to the nearest Euro- .99 mark. An average inflation of 4.5%...overnight! This alone has been the rally call for other European counties to avoid the currency!

The US economy is scared with 3.1% inflation over a year...imagine 4.5% overnight!

I don't think this has real legs to get passed, but instead of charging the mints with monitoring and adjusting metallurgy as needed, some in Congress take a knee-jerk reaction that could cost us hundreds of Millions!

Abe, save us...you are our only hope!

Wednesday, February 20, 2008

Personal Finance QuickTake: Bankrupt Brands

Sharper Image and Lilian Vernon announced that they were declaring bankruptcy today according to USA Today. Hit by slower than anticipated Christmas Sales as well as a lackluster year both brands announced separately that they have filed.

The real question is, Is this a one-off issue with poor performing brands, or the start of something big? According to the report some are predicting that this is the beginning of an avalanche of bankruptcies by companies.

From the report:

"You'll see a record number of bankruptcies over the next 50, 100, and 1,000 days," said Burt Flickinger III, managing director of the New York-based retail consulting firm Strategic Resource Group. "Consumers are cash and credit constrained. They're out of purchasing power."

The International Council of Shopping Centers projects 2008 store closings could reach 5,770 stores in 2008, the largest number of closings since 2004. Retailers as a whole reported their worst January same-store sales in almost four decades.

Flickinger said the problem is partly food and fuel inflation. While consumers used to pay 10 cents of every dollar for food and fuel, they now pay up to 20 cents per dollar.

What this means

As the Consumers go, goes the economy. The weaker die off first, but it is really the symptom of the larger issue that the economic boom of the last few years has been fueled by debt. Debt often obtained via Real Estate. That has dried up. Credit Cards are full. Where is the next wave of buying going to come from? And what happens if it doesn't.

What happens is, that we go into a recession. If we aren't prepared for it it will be twice as hard.

E*Trade is Up...sort of..and MSN and other updates!

My E*Trade account is now working...sort of.

I had forgotten that six years ago I had an E*Trade account for some stock options that I cashed out when I moved to a new job. This was the only time I used it. But when I signed up for my new Complete savings account, even though it gave me a new log-in et all, it linked the account to my old account and reset the password and log-in! No wonder I couldn't get in to see it!

The phone rep Julie, although I believe she was in India and not her name, was very nice and walked me through the labyrinth to get it fixed. I do have my Wells Fargo Checking tied back to it and all is well...well sort of. The email address locked to the account is my old email account at an ex-job! When I go to change it, it emails the old no-valid email for me to confirm the change...which I can't since it goes to a dead account! This has been draining to say the least. I will call and fix this last piece, but talk about a lot of work for a little bit extra!

The first update is that Life, Liberty and the Pursuit of Money has been Featured again (second time!) in an article on MSN MoneyBlog's Smartspending! This was a great article by Karen that features a quote from our piece on the people walking away from their homes.

Second update is that the RSS Contest is going well. Lots of entrants, but still not so much to blow Your chance to win. I am really looking forward to awarding the first piece!

Last update involves a meme post I made and took down. While I feel that post had the best of intentions, to promote other blogs, it felt like a gray area in the Big G'g TOS. So I pulled the post on my own. I am not out to game any system and even the appearance felt wrong.

It harkens back to a saying I learned from a great teacher one time: "The More you Know, the more you Know you Don't Know!"

Tuesday, February 19, 2008

Personal Finance QuickTake: Uneasy Feeling

Yahoo had a really good article today talking about consumer sentiment. Basically even through the housing boom and access to way too easy credit, consumer sentiment has been a bit wary. It was almost like everyone knew this was too good to be true.

Easy credit has led directly to a disconnect with consumer's paycheck and their ability to spend. Gas prices rise, which raises price inflation food and travel, heap on medical expenses running at high double digit growth and a melt down is inevitable.

This is called...inflation.

The problem is you don't fix inflation by lowering interest rates! You do by raising them. This puts our Fed in a bit of a bind. If the raise rates the economy tanks, if the lower them inflation goes nuts.

How bad can inflation get? Picture Europe before WWII. Literally wheelbarrows full of money to buy bread! Not worth the paper it is printed on...Not saying go dig a trench and hide, it it foretells of tougher times ahead. It also says that this doesn't get fixed with a $1200 check from the Government.

How do we cope? Get out of debt. Save and spend less than you make. Not sexy but it works!

Don't forget to sign up for my RSS feed Contest. You could win a $50 value piece of software to help you organize! Just click HERE to enter!

Monday, February 18, 2008

No Emergency Fund = Limited Options

It is all well and good to talk about Baby Step #1, getting an Emergency Fund, but things can and do happen as you are building that fund. We all know the drill, you get that first $75 in the Fund, start thinking about, “How you are really gonna do it this time”…and then your car acts up; $200.

What are you going to do?

We were in the exact boat five years ago. It was winter; we weren’t controlling our spending and living paycheck to paycheck. And as Murphy’s Law works, we had a series of those Ninja Bills that I always talk about. Also, we had written too many checks and were going to overdraft our checking account.

The stupid part is that these were due to not tracking our debit card purchases. She and I were spending without seeing what the other was doing by only checking what the ATM had showing!

So these five overdrafts were about $100, but the penalties at Wells Fargo were going to be $25 per item or an additional $125…$25 more than the checks. Regardless, we didn’t have $100 much less $225!

We looked at the following Options:

  • Credit Card Transfer – We didn’t even have enough credit to do this.
  • Direct Deposit Advance – My check was (and is) Direct Deposited and Wells Fargo offers an Advance on the amount, but it costs $20 per $100 borrowed! For two weeks that 520% Interest!
  • Payday Loan – The horror stories you see on the news scared us off.
  • Borrow from Friends – Too new to the area. A bit, awkward asking a new co-worker for money!
  • Sell Something – This is what we decided on. We sold some used video games and DVD as well as old jewelry my wife had.

We paid the debt, but it was really humiliating. It taught us though that you have to have something, and if you don’t, you have to be prepared to make some sacrifices.

(This post was paid for by National Payday)

Dealing With Budget Windfalls

Some of us have irregular pay involving bonuses. These are often based on cryptic calculations that involve the Mayan Calendar and a jar of Mustard...In other words you can't count on them. Sure you might have a pretty good idea, but it is hard when you are expecting one amount and another comes in.

Many with this sort of Bonus don't budget it even though it can be up to 30%+ of our pay or we budget at the lowest imaginable payout. The reason is the last thing you want is when you finally get the check to be disappointed. I have been there. One time I was sure my bonus was going to be $10,000 based on the previous year. When I got the check it was less then $5000, still a great amount...unless you wrote checks or planned out more!

This post came up because I was reading a favorite Blog "Paid It Down and Moving Forward" by Sharon. She and Hubby received his Yearly bonus and she is now Consumer Debt Free (Way to go Sharon!) and well better funded in their Emergency Funds. They also bought one thing; A Dell laptop. A very nice purchase to help her with her Blogging and other needs. While she didn't get beat up her readers, I have seen others that have been, with statements like, "You aren't Serious about getting out of debt!"

Here is what I suggest about these, windfalls be responsible...to a point! Remember, these aren't gift, this is part of your pay. You basically have had it held until the end of the year. You haven't been able to spend or invest it or pay for any little extras. I like to look at every bonus in three buckets; Near-term, Medium-Term and Long-Term. I try to get about 1/3 to each bucket as well.

So this process begins when you are doing your yearly budget. What are you expecting to get? Not the best case but not $0 either. Then I look at what yearly bills I have. Will the bonus cover that? What is it doesn't? In our case, Property Taxes and Christmas. My bonus should cover those, but in case it won't I plan out how much per month I need to put into achieving that amount and pay towards it. When/If the Bonus arrives I fully fund it.

When the money arrives I fund those yearly bills first, then I look at my near-term needs. Any Bills that is would help to either catch up or get ahead on? If so I do that. Next-up, I start working, or reviewing my Baby Steps. Is my initial Emergency Fund fully funded? Do I need to catch up on any bills that aren't urgent, but are important, like car repair, new tires, etc..

After that I jump into the big pool of Baby Step #2, paying off consumer (non-mortgage) debt. If, and only if, that is all done, I suggest getting something that is in your "Would be nice stack." I would put a limit of no more than 5% of the total, it can even just be part of a uber-vacation fund you are saving for! The reason is that If we don't treat our selves every once in a while we will blow it big time at some point! Like a good diet that Ice Cream Sandwich won't kill you once a month or so...every night though...

Beyond that I would suggest you work the rest of the Baby Steps!

So Here is that Order Again:

  • Yearly Bills
  • Near-term needs
  • Emergency Fund Baby Step #1 - Initial Emergency Fund
  • Important, but not urgent bills - Tune-up, Car Repair, Piano, etc
  • Baby Step #2 - Pay off as much consumer debt as possible
  • Get something that is in your would be nice list - Not to exceed 5% of bonus Total
  • Baby Step #3 and Beyond...

I am not a financial council. I am just someone who has had a lumpy income for the last eight years and made all of the mistakes you can! Windfalls don't happen everyday! Go get advice if you want it. Just get out your Success Map, Budget and work your Money Management!

Congrats again Sharon, I loved this line from her Blog, "while it's WONDERFUL to be cc and car loan free, we will not lose focus and will continue to SAVE. We will NEVER, and I mean NEVER have credit card debt again."

Don't forget to sign up for my email RSS feed for a chance to win some great software from FruitfulTime, a $50 Value!

Sunday, February 17, 2008

Giving Away $50 Software and Best of the Week

Great week all around for the blog we had our biggest single week ever with Traffic, began our first RSS Signup contest, had more comments then ever, AND read some truly great posts out there this week.

First on the RSS signup contest, there were some questions emailed to me. The contest will run for the next four weeks. On each Saturday night during the contest I will run a list randomizer to pick a winner from my Email RSS list. Unfortunately there is no way for me to pull the regular RSS list as well, so if you are a standard RSS reader, just sign up for the email version to enter yourself in the contest! Second there is NO cost to enter, just sign-up! And last NO you don't need to enter every week, just once and you are in for every drawing. So enter early, to be entered into all of them!

Next it is time for my Best of the Web:

  • ShoeMoney - A great Post/Video this morning. A Rap about SEO (Search Engine Optimization). Great starter course in the shape of a Rap tune...pretty original, and catchy!
  • Collecting My Cash - This post shows really well that good people are hard to find, but you better do whatever you can to keep your Great people, which Wealthy! is...of course!
  • Catherine Lawson - A Total favorite blog (and person!) had a neat article talking about Bands blogs. Being a musician at heart, if not at practice, this had great points for all bloggers!
  • Ian Denny/ Phoenix From the Ashes - Every time I read his blog it feels like I am reading the beginning chapter about a future king of the business world! This lesson is about Cash Flow. It is written in the Business Sense but it plays the same for all of us.
  • John Chow - John is one of the most successful bloggers out there. In this post he explains why you should set up your business separate from yourself.

The Most Popular Blog Article of the week according to Feedburner:


  • Over 8000 Page Views
  • Over 2800 Visitors (more than 500 over the week!)
  • 120 posts!
  • First RSS Contest!

That's it. There are some really links to check out to help budgeting, money management and your finances!

RSS Signup Contest

This is gonna be fun! I was talking (well...emailing) with some of the Great Folks over at FruitfulTime about my blog, and they offered me a no-brainer deal. They would give me four copies of FruitfulTime Task Manager to giveaway on my site to my RSS Readers!

That's right all you have to do to be eligible to win this $50 value software is to signup for my RSS feed via the email link at the top left of the page. Over the next four weeks, every Saturday Night I will grab all of the RSS email names (it has to be RSS email, as it is the only way I can grab the names!) use a random list generator and if your name comes up...you win it! I contact you and send you the key to download for free! I will also mention the winner and their Blog in my Sunday recap!

This is not a huge RSS feed blog (yet!) so I believe you have a pretty decent chance here compared to other contests! All you have to do is make sure you are signed up, and you are eligible for each weeks drawing! If you are already signed up for email RSS from this blog, no need to do anything! You are already entered!

Let me say this too!...this is NOT a Paid Post. I am getting nary a Nickel for talking about this software!

This software is really cool! FruitfulTime TaskManager is a neat piece of software to help you get organized.

Here is the Feature List:

  • Feature List of FruitfulTime TaskManager
  • Easy to use, intuitive User Interface (UI)
  • Create / edit / delete tasks
  • Create subtasks to divide a big task into smaller manageable steps
  • Set the priority for each task / subtask
  • Specify the task / subtask start date and due date
  • Set and monitor your progress on each task / subtask
  • Configure reminders so that you never forget a task
  • Add references to files and internet bookmarks related to a task
  • Jot down notes related to a task
  • Notes can be formatted using fonts and colours, and can include lists and pictures
  • Easily export task notes for use in other products, such as Microsoft Word
  • Add contact details of people somehow related to the task
  • Assign tags to a task for easy and quick filtering of your To Do List
  • Print the task list, subtasks, and notes
  • Easy and powerful filtering of tasks through tags and dates
  • All of the data is secured with the Advanced Encryption Standard algorithm using a 256 bit key for maximum security
  • Easy and quick installation
  • Supports installation on a USB drive so that you can carry your task list with you anywhere

System Requirements:

  • Microsoft Windows 2000 / XP / Vista
  • Microsoft .Net Framework 2.0

What are you waiting for? Sign-up now!

Saturday, February 16, 2008

Sharpening the Saw Follow-Up

My morning post talked about "Sharpening the Saw" from Covey's Book, 7 Habits . I thought about what I said and I needed a good dose of my own medicine and really took the day to sharpen the saw.

I really decided to pretty much take the day today and not blog until the family was pretty done for the night, it wasn't just me that needed to recoup some energy it was all of us.

First thing I did early this morning is to play 9 holes of golf with some friend from work. It has been too cold or rainy for the last 3 months to really play, but today was great. This is a very economical Municipal Course that only costs $11 for 9 holes, which is 1.5 hours at least, not bad. But the owner told us since it was pretty slow and we play there a lot that we could play as much as we wanted for the $11! $11 for 3 hours is even better! On the second 9 I even shot my second best score ever!

Once that was over we decided to make the rest of the day a family day with no TV or video games. And other than my oldest going to the mall for an hour we were all together for the rest of the day. We then decided to use our allowance to get a reasonably priced dinner (tough with 5 people!) and go see a movie.

We had a great time and now although I am physically tired, I feel good mentally. So while I haven't got 1/10th of the stuff done that I wanted to today, I got stuff done that was really important...I sharpened my saw!

Five Great Ways to Sharpen the Saw

I am a fan of Steven Covey's "7 Habits" Book. All of the tips are really helpful to see you become more effective.

For me though, if you really want to make some movement in your finances, budgeting or life in general, one step more than others gets ignored. And it is a perfect Saturday topic...#7 is "Sharpen the Saw."

This comes from a story about a lumber jack that is sawing harder and harder and just not making the same progress as before. When someone asks if he has sharpened his saw, he says he doesn't have time, he needs to saw.

I am really notorious for doing this...getting so myopic that I am only focused on the trees, not the forest. I need to remind myself that a well-timed break can actually save time sometimes! I this spirit I offer Five Great Ways to Sharpen the Saw up and get you back to top form in no time.

Saw Sharpeners:

  1. Exercise - I know, half of you jumped to number two, but it is true. Not only is it good for you, but it can take your mind off your troubles, even if it is 30 minutes on a elliptical or walking around the neighborhood.
  2. Hobbies - I can tell a real difference in what I am getting done now vs when our little Monday and Friday Golf game was going on. I am not the only one, my wife said just last week, when am I going again. Luckily this one gives me a little of number one as well.
  3. Take a class - On something 100% not related to work! Non-credited if needed. Like to cook, take a once a week French cooking class at the local Community College. Learn auto repair. You'll actually save yourself money in the future!
  4. Meditate - Oh now I've lost you :) It does need to be in an ashram in the mountains, just sit in a hot bath-tub and clear your mind...you too guys. The ladies have it right, a hot bath can really relax you. Let your problems float away.
  5. Read - This is something other than the sports page, or the grocery coupons. Actually go to the library! There are great people who work there (like Mrs. Micah) who are there to help open your mind. So I don't go ing a rut of reading the same thing, I will ask the librarian, what's cool, what are people talking about? I also like Biographies as it gives you real world example of people that have gone through either similar issues or even worse and come through.

In a 24/7/365 world we need to break every once in awhile, except from this blog, read it everyday :) Seriously though just clearing away a little of the mind clutter will really take you much further, much faster, whether it is life, budgeting or managing your money!

Friday, February 15, 2008

Personal Finance QuickTake: RIP HD DVD

Wal-Mart announced today that they will only carry Blu-Ray next Generation DVDs moving forward. Frankly, this is the death knell for the format. This is just the latest defection from major retailers. Best Buy and NetFlicks have also discontinued stocking the product.

From the report:

The so-called format war between HD DVD and Blu-ray has been a thorn in the side of retailers, which have had to commit shelf space to devices from both camps even as they field complaints from frustrated and confused customers.

Next-generation DVDs and players, boasting better picture quality and more capacity, were expected to help revive the $24 billion global home DVD market. But Hollywood studios had initially split their alliances between the two camps, meaning only certain films would play on a consumer's DVD machine.

So Why Different Formats?

To be fair to Toshiba and the HD-DVD format, the split between formats comes from one thing, IP, or Intellectual Property. Sony/Philips invented the CD, and the DVD. This means that every blank CD or DVD generates partial pennies for Sony/Philips. If you are Toshiba or any of the other electronics manufacturers, or studios, do you want to pay Sony? No. But CDs caught on, then DVDs did as well.

When it came time for the next-gen DVDs Sony said, "Here you go!" And...to make sure it does well every PS3 will have a player built in. So the studios couldn't just ignore the format. But at the end of the day all this dual format stuff did was to scare off the consumers from buying...and no one wants that.

RIP HD-DVD...We hardly knew ya!

My New E*Trade Account Sucks

This weekend I opened a Complete Savings Account at E*Trade. It was at 4.4% interest with no minimum and pretty light restrictions. I want this account to tuck away the money I am saving for my 2008 Property Taxes and Christmas.

The account itself is probably fine (I hope,) it is just the E*Trade Instructions and communication has been horrid! I get a note saying the account is set up, but then I can't see it on the Log-in page. I try to set up My Wells Fargo Checking to be able to transfer in; it grabs my information and then clears out the UI...Over and Over. You can't tell it is set up until you get an error message telling you that you already set it up!

Then you have to verify the account...but it doesn't tell you how, or walk you through it! I finally got that set up and the money is out of my checking ($100 in seed money in case it didn't work). So now I can see my Wells Fargo Account in my E*Trade account...but not my E*Trade account!

Guess what?...no way to email them about it, you gotta call...an EBank? I am busy here folks! In the mean time the 4.4% account that I signed up for is now 4.1%! I knew the rate was subject to change, but wow!

This was also an experiment of sort for me as I have never really had a bunch of accounts to take advantage of higher rate. I just left everything extra in my Wells Fargo Savings drawing a whopping 1% interest. It was tied to my checking account as overdraft protection, which was good as we were not exactly...on it before. It saves us a bunch of late fees.

Here is the new plan:

  • Checking - $300 - After all bills keep amount due to potential medical bills and pharmacy needs. It is interest bearing, but the amount is like 0.25%!
  • Savings - $2000+ - This is our Emergency Fund, Baby Step #1. We have $74 auto-transferred each 15th of the month. This coupled with a minimum in savings ($1000) and using bill pay gives me the best Wells Fargo Rate: 1%
  • E*Trade - (Eventually)$5000+/- - This were I want to save for our longer bills like Property Taxes and Christmas. Now at 4.1%. When we get to Baby Step #3 (3-6 months expenses) we may put that here as well.

Seems like a good plan to me! But feeling a bit stupid that I went with E*Trade. Well I understand why they didn't have a great reputation on bankrate.com (which is a great site BTW).

How about any of you? Been through he same thing? Worse with an online savings account?

I am really glad I am playing Golf this weekend!

Thursday, February 14, 2008

Personal Finance QuickTake: Fed Ready to Act

Today Fed Chairman Ben Bernanke told Congress that the Fed was ready to continue to act as needed to support the economy. He also stated though that signs point to growth later in the year. The Fed has lowered interest rate 2.25% since September, lowering the rate to 3%.

From Reuters:

He acknowledged that the growth outlook has worsened over the past few months. His comments reinforced investors' expectations the central bank would lower interest rates by a half-percentage point at its next meeting on March 18.

However, the central bank chairman also said he expects sluggish growth to give way to a somewhat stronger expansion in the second half of the year as the impact of fiscal and monetary stimulus now put in place is felt. Bernanke painted a somber picture of risks facing the economy, and U.S. stock prices and the dollar fell on his gloomy assessment. In early afternoon, the Dow Jones industrial average was down more than 140 points, or 1 percent.

So it looks like more cuts are coming and they are doing whatever they can to avoid a recession, perhaps even at the cost of future growth as inflation becomes a bigger concern.

Most Common Financial Mistakes to Avoid

In Personal Finance for Dummies, by Eric Tyson they discuss some of the key traps that people fall into with their personal finances. I know these series of books have a mixed reputation, but I like his personal writing style as it is informative and yet fun to read.

Here are the Top 10 Most Common Financial Mistakes to Avoid with comments by moi:

  1. Not Planning - Sounds basic, but I read about so many people who are only focused on their debt. That's great, but it is only one part of your financial picture. Failing to plan really is a plan to fail. Get a Success Map in place that lays out your next 3-4 steps at least!
  2. Overspending - Um...yup. That's bad! Basic accounting, regardless of what web companies used to say, clearly shows that you have to have more coming in then going out. Positive Cash flow. You can borrow for a time, but no flow...no go.
  3. Buying on Credit - See above. A cash management system can literally save you thousands a year. I credit this as the single best move we made when we turned the boat around. We generally die from 1000 cuts, not an enormo blow out. Paying for dinners you had five years ago is pretty silly.
  4. Not Saving Early Enough for retirement - Guilty. "Don't worry I am gonna die young and leave a good lookin' corpse!" Well think of it this way...If you save early and often and you are that 0.001% that won't need the funds, you can leave the money to relatives or a great charity. If you wrong, you get to eat Meow Mix for 20 years :)
  5. Falling Prey to Financial sales Pitches - It is the herd mentality in us. No one wants to be the last in to a sure thing. Stock tips, unless you have illegal knowledge, are gambling. Even worse are the annuity sales people that get Grandma to sign over the mortgage payments.
  6. Not Doing your Homework - Don't be lazy with your finances. It won't miracle itself great. I know so many people who either have their 401K at a way too conservative number like 90%+ MMA funds, cause they are afraid to lose anything and those the are 90%+ in high risk high growth funds. It needs to be a balance, depending how close you are to retirement. Take the time to read everything and ask questions. At our 401K meeting no one asks any questions! Or they ask questions like...why is this down? A single extra percentage can mean thousands in your fund when you retire.
  7. Making Decisions based on Emotion - Another one I see, especially right now. a very nice lady in her early thirties in our department saw her 401k down 8% and wanted to flip everything to low-yield bonds. Another was gonna change their allocation every quarter depending on what was hot in the previous quarter. Chasing winners is a fools errand, don't do it.
  8. Not Separating the Wheat from the chaff - This refers to following advice from a single voice...like me! Get a bunch of different opinions, find someone you trust. Don't just take the first advice you hear.
  9. Exposure to catastrophic risk - Make sure your insurance is up to snuff. It is horrible enough to lose everything, but t have to start all over as well is unthinkable.
  10. Focusing too much on Money - Don't be a zealot! you don't really need to track who spent what on gum. Also money needs to be the ends to a mean, not the other way around. It is important, especially when you don't have it, but your relationships are far more valuable!

All in all a pretty darn good list. I have hit every single one of these mistakes...multiple times on some of them. I am not a financial planner just someone in the same boat as you. The important this is to be in charge of your Success Map, Budget and money management, not to let them be in charge of you!

Any other common mistakes that you have made? Comment! Share!

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Wednesday, February 13, 2008

Personal Finance QuickTake: Yahoo talks to NewsCorp

According to a Yahoo news report (and they would hopefully know...), Yahoo is in talks with NewsCorp in attempts to stave off Microsoft's Hostile Bid.

Yahoo rebuffed Microsoft's advances on Monday, but given how the "No thanks" was worded it seemed as if Yahoo wasn't saying no, period, Just No at this price.

Microsoft seemed to initially have the field to itself with this high of an offer, but Yahoo being smart is trying to find the best deal possible. NewsCorp has been emphasizing its web portion of the business more and more culminating in a buyout of mySpace last year.

This is either a strong attempt out of Yahoo to raise the bid to the mid-40s or above, or they are so desperate not to be assimilated that they are running to whoever will off shelter.

Microsoft will see what comes out of this, but they don't have all the time in the world. To launch a proxy fight and dump Yahoo's board they would need to be prepared to fight by mid March.

It is gonna get interesting!

Listen While You Work

OK this a Bizaro-World post that fits into the "Random Acts of Silliness." As I was paying bills and getting ready to blog, I turned on iTunes as I do when I write, and I began to wonder if I am normal, well as normal as normal gets. I wondered, "What do others listen to when paying Bills or Blogging."

Now, I thought, that could be a fun Poll!

For me, I have always been tied to music as a student of music or Professional Musician (another oxymoron!) or like now am tied to music even in marketing, so I tend to have music playing all day as it helps me concentrate.

I also have the CD collection of a schizophrenic monkey...I know everyone says that, but I do. I have David Cassidy and then Danzig is the next artist!

So I looked at my Top 10 Songs played this month (artist then track):

  1. Enuff Z'Nuff - New Thing
  2. Beatles - Mean Mr Mustard
  3. Beatles -I Me Mine
  4. Blondie - Dreaming
  5. B.W. Stevenson -My Maria (this is the Original version!)
  6. Racer X -Heart of a Lion (Huge Paul Gilbert/Anime Fan! - Hence the nom de plume)
  7. Weird Al - Canadian Idiot
  8. Jerry Reed - She Got the Goldmine (I Got the Shaft)
  9. Missing Persons - Words
  10. Beach Boys - California Girls

So how about you? Listen to anything doing bills? Something happy to feel better, or blues to wallow in the sorrow or Alarming ARMS?

Budget by Beatles? Money Manage by Monkees? Saving by Santana?

Fill out the Poll and if you use other comment here to share!

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