Anyone in a money club (from the article says, not many people are)? What do you do? Is it worthwhile?
I've heard of investment clubs for quite some time -- but never a "money club." Interested to see what you all think.
And maybe no one is in one but would like to be. Interested in hearing about that as well.
This is one of those posts that will accomplish absolutely nothing (or very little at best), but is fun to banter around back and forth, so I'm going with it. Here's my question:
Who's to blame for the current problems with the American economy?
I know, there probably is not a single person/organization responsible, but maybe there's one or two that are MOSTLY responsible. Anyway, here are the leading candidates for blame as I see them:
I'm sure there's a whole host of other candidates, but that will at least give us a start. Let everyone know whet you think in the comments -- should be fun! ;-)
P.S. Just found this piece that asks the same question.
Here's an interesting piece. I think we all know by "gut feel" that food prices rarely go back down once they go up -- even if the reason they went up in the first place (like high gas prices) has gone away partially. Some insights:
[Food] companies hesitate to hike prices because it might push consumers to into the arms of a competitor, or to cheaper alternatives.
But once a price hike is in place, it virtually never goes away.
Yeah, don't I know it...
A few pieces relating to the current financial crisis in America:
We haven't cut back on our giving -- in fact, we're way ahead for the year so far. But I can see how "helping others" could take a backseat when so many people are uncertain about their personal futures.
"The Bush administration's controversial financial bailout proposal may be getting a heavy dose of criticism today from angry lawmakers on Capitol Hill, but Warren Buffett tells us he wholeheartedly supports the plan. He told CNBC's Becky Quick over the weekend, 'It's what I would do if I were there.' "
Buffett has no love for Bush, so he's not supporting the plan out of loyalty of any sort. Just having him come out in favor of the effort makes me feel better about it (though I'm still uncertain.)
Yikes! How did I miss this? What's our government up to? Are they crazy? I can see that we might need ONE car manufacturer for national security purposes (aren't they used to make tanks/other vehicles in case of a major war?), but we're giving money to all three? And is Chrysler even a US company anyway?
Here's a warning for those of you out there looking to get out of a possible foreclosure. It appears scammers are preying on people needing mortgage help. The details:
Interviews with legal aid offices and law enforcement officials around the nation indicate the problem of so-called “foreclosure rescue scams” has spread like wildfire, neatly paralleling the downturn in the mortgage market.
There are many variations on the scams, but they all boil down to two types. There’s a simple fee-based racket, in which the criminal offers to help the homeowner stave off foreclosure, collects an up-front fee and then disappears. But the more lucrative scam involves seducing homeowners into complicated transactions that allow con artists to steal equity in the house or walk away from the closing table after netting thousands in phony payouts.
It never ceases to amaze me the depth some people will stoop to in order to make a buck.
Just saw this today from the Wall Street Journal -- 10 steps to take during the current financial crisis:
1. Check that your bank accounts are federally insured.
2. Make sure your brokerage accounts are federally insured, too.
3. Put money in thy purse.
4. Set up a home equity line of credit while you still can.
5. Refinance your mortgage.
6. Stop pulling a Monty Python when it comes to your worst investments.
7. Don't panic.
8. When it comes to your short-term money needs, nothing has changed.
9. If you are investing for five years or more, buy some stock.
10. If you want to worry about anything, worry about your taxes.
I'm especially focusing on #7 and #9 (though I'm buying index funds). How about you?
Here's a wrap up to our sneaking-food-in-a-theater discussion. For background, I asked if readers thought it was ethical to sneak food into a theater and there was a lot of discussion (80 comments as of this writing.) I then emailed my local theater to see what their policy was as some commented that theaters don't care if you bring in food. It took my theater some time to respond (longer than they told me it would), and here's what they said:
Thank you for your inquiry regarding outside food and beverage. It is certainly a relevant topic and I appreciate the opportunity to respond.
I really do empathize with people’s financial situations, and also know that many continue to hold going to a movie as an affordable, enjoyable, and valued experience. We hope that our guests find value in the movie going experience at our theatres – the big screen, state of the art digital picture and sound, comfortable surroundings, friendly and helpful service, and the best tasting popcorn known to humankind.
In answer to your question, we do not allow outside food and beverage. Without the concession stand; box office tickets would be much higher, technology upgrades and renovations much lower. Honestly, without concessions, movie theatres and movie-lovers would both be in big trouble.
Thank you again for contacting our theatre. Please accept my humble apology for not meeting our own deadline of response. For that, I would like to send you 2 free movies passes, if you would provide me your address. I hope my response to your inquiry has helped and that you’ll find value in your next visit.
So there you have it. Bad news for me, but he was kind enough to offer the two free tickets.
As I told him, I won't take outside food into the theater again, but instead, as many people suggested, I'll simply wait for the movie to come out on DVD for most movies. In the end, the theater will get what it wants from me (no outside food) but will also get fewer visits. Sounds like a lose-lose proposition to me.
Then again, maybe this is just a sign that I don't need to eat so much candy anyway! ;-)
Check this out from The Simple Dollar:
A few days ago, my truck acted up yet again, with the truck chugging badly before shifting gears (with the chugs vanishing quickly after the shift). Before long, the ol’ “Check Engine” light came on.
Given that it’s already accumulated about $3,000 in repair bills over the last year before this - almost adding up to the Blue Book value of the truck - we’re very hesitant to keep throwing money into an unreliable vehicle.
I went through something similar to this four years ago, but it was worse. It was with TWO cars.
I had a 1994 Maxima with 95,000 miles on it and my wife had a 1991 Civic with about the same mileage (maybe a bit more.) They started taking turns with a $250 repair here, a $500 repair there, and then it started to get really expensive. This was starting to go. That was starting to go. We needed to repair or replace something. The list seemed to go on and on.
So we decided to bail. We bought my wife a new car and six months later we got one for me. We had our old cars fixed and inspected, then donated them to a charity. We had reliable transportation again.
Fast forward four years. My wife's car is at a measly 23,000 miles (she only makes short trips around town) but mine is starting to approach the "decision point". It's at 71,000 miles (we take it on all vacations, etc., so it gets the really big miles.) My experience shows that the bills start mounting around the 90,000 to 100,000 mile point, so I have a couple years to decide what to do for sure. But my plan is that in a year I'll start sorting through options for replacement and a year after that I'll go through my tried and true method for getting a great deal on a new car.
This brings me to my question for this post: how do you decide when it's time to get a new car? A certain number of miles? The first big repair bill? Something else?
Food for thought -- found this in the FMF archives: When to Say Goodbye to Your Old Car.
For those of you wondering, I haven't yet received a response from my local theater -- even though they promised they'd get back to me within "two business days." Think they are dodging the question?
Regarding our sneaking food into movie theaters discussion yesterday, one commenter had this thought:
I worked at an AMC theater at one point. Their official policy was outside food is allowed to be brought in as long as it doesn't smell. (No pizzas, etc.)
So maybe many (most?) theaters actually allow you to bring in food? If so, it puts a whole new spin on the "ethics" of the situation.
BTW, I just sent an email to my local theater asking about their official policy. They replied with an auto email saying that they will respond within two business days. I'll keep you updated on their response.
Following up on our last ethics discussion, I thought I'd ask this question:
Is it right to sneak food (or drink for that matter) into a theater?
Let's face it, snacks at movie theaters cost a fortune. Boxes of candy that cost $1 on the outside run $3 or $4 (or more!) at a theater. And don't even get me started about the cost of popcorn and soda. Most of these are waaaaaay over the top when it comes to price.
But does that give us the right to sneak snacks into a theater? Is doing so wrong? Or is there no problem with it ethically?
I'm asking this because we do it all the time. We regularly stop by Walgreen's on the way to a movie (we don't see that many movies, so "regularly" is all relative) and pick out the candy we like in theater-size boxes. Then we sneak the treats in and enjoy them during the movie. My wife isn't a candy fan, so she often takes pretzels. (BTW, we "sneak" them in using various methods -- purses, pants pockets (taking the candy out of the box, putting it in a baggie, and placing it on one of those knee-level pockets on many men's shorts these days), and coat pockets (theaters are cold even in the summer, so no one notices when you bring in a light jacket.))
For those of you wondering, we ALWAYS take out our trash. I think it's obviously rude to buy outside food and then leave wrappers, etc. on the floor for the staff to clean. I just don't know about the practice of bringing food in in the first place.
What do you think?
Note: This post is part of the most recent ProBlogger Group Writing Project.
Ran into these two pieces today and thought they'd interest you as well:
Big mistake: Wife sells DVD case with $1,200 inside for $10:
When Tracy Holmes of Belleville sold three DVDs for $10 at her garage sale Aug. 15, she thought she was doing well. She was getting rid of some movies that she and her husband hadn't watched in a long time and making a little money as well.
About a week later, when her husband, Fred Holmes, asked her what had happened to the DVD of "Sin City," she suddenly felt sick.
Her husband had been secretly saving up money, at least $1,200 so far, for a Christmas family trip to Disney World in Florida for the couple and their three children.
"He thought apparently (the DVD case) was a great spot to hide it from me, and it was," Holmes said. "I didn't think to look there."
As best she can remember, Holmes thinks the man who bought the DVD was about 6 feet tall and in his 50s or possibly 60s. She's hoping that if she gets the word out, the buyer will return the money.
Oops!!!
D.C. Tries Cash as a Motivator In School:
For years, school officials have used detention, remedial classes, summer school and suspensions to turn around poorly behaved, underachieving middle school students, with little results. Now they are introducing a program that will pay students up to $100 per month for displaying good behavior.
Beginning in October, 3,000 students at 14 middle schools will be eligible to earn up to 50 points per month and be paid $2 per point for attending class regularly and on time, turning in homework, displaying manners and earning high marks. A maximum of $2.7 million has been set aside for the program, and the money students earn will be deposited every two weeks into bank accounts the system plans to open for them.
Holy cow! Where was this program when I was in school? I could have funded my college education this way! ;-)
Shoemoney recently asked his readers how much they tip their hotel maid.
Uh, you tip a hotel maid? Really?
Ok, I know I'll get comments about being a tightwad and so on, but really, isn't maid service part of what you pay the hotel for? You don't pay them extra for using the water, towels, and pool (usually), so why tip a maid? Do maids earn below minimum wage like waitresses and are expected to make up the extra with tips? And what about the servers (the ones who set out the food and keep it stocked) at those free breakfast buffets? Do they get a tip too? What about the front desk people?
Anyway, as you can see, I'm confused. Maybe you all can point out what you do and why -- I'm sure that would help.
So, do you think this is a good idea or waste of time? A summary:
For those of you wondering, there's no shipping charges (it's supposedly taken off on the final, confirmation screen), so there are no additional costs.
My question: is it worth the time and effort or is this way of making money too much hassle for too little reward?
Ran into this a couple weeks ago. It tells about how some people are putting off dental care because of the bad economy. The overview:
In a painfully slow economy, more dental patients are delaying the decision to put their money where their mouths are.
The piece goes on to tell how some people are putting off procedures (even routine cleanings) because of the economy. Some have lost insurance and others never had any. Anyway, the bottomline is that hard times are keeping people from having needed dental work.
The piece does offer a good solution for those who can't afford a trip to the dentist:
More state residents are resorting to low-cost clinics, said Dr. Stephen Stefanac, associate dean for patient services at the University of Michigan School of Dentistry.
Dental school students and residents provide basic services at a discounted price at clinics around the state.
We haven't put off any dental work due to the economy, but we are getting a second opinion on braces for my son.
How about you? Anyone out there putting off dental work because of finances? Or how about any medical work -- anyone putting off something you've been told you need to take care of?
MSN Money has some suggestions on when you should splurge on an item and when you shouldn't. In other words, when is it worth paying more for an item and when is paying more a waste of money? Some of their examples:
Here's my take on their list:
To me, they are discussing the give-and-take between quality and price. For example:
My friend John Rizzo, an economist, points out that you can buy a $1,050 winter coat today or a $70 coat every two years for the next 30 years.
But there's a fallacy in their line of thinking. They seem to equate "expensive" and "good quality." But quality and price aren't always related. If you shop smartly, you can get some very high quality goods at reasonable prices. Readers of Consumer Reports will recognize these as "best buys". These are products that CR thinks are among the best performing in their class, yet usually sold at a much lower price than comparable items. This is how we buy most of our stuff -- we look for good-quality products with lower prices. For everything else, we usually skimp. ;-)
We have friends living in China and they recently sent me an email telling me about their daily life there. One comment stood out to me as quite interesting and appropriate for FMF:
In other unrelated news, the price of a small box of Cheerios is now 74 RMB or $10.80. On the other hand, seven seasons of the TV show M.A.S.H. are available on the street for 30 RMB or $4.37. So, we may have lived in China for two years, but life here remains unpredictable and incredibly interesting!
Ha! I guess like anywhere there are some good deals and bad deals to be had in China. ;-)
In the August issue of Money magazine, they list gift cards as being potentially the worst gift ever (if you get one from a place where you don't shop.) They also cite the following stats about gift cards:
We currently have several unused gift cards as follows:
I have a list of the cards we haven't used and I make sure we do eventually do use them, but it requires some diligence. I can see where others who aren't quite as organized could lose track of them.
The Money piece suggests people resell their cards at PlasticJungle.com if they'd rather have the cash. Anyone used this site (or one like it)? Thoughts?
How about you -- are you currently holding on to any gift cards?
What do you think are the most difficult purchases we make as consumers? Here are a few that I think are very difficult as well as the reasons I feel this way:
Those are the three that come to the top of my mind for now. Do you have any difficult purchases to add to this list?
Kiplinger's piece on the Dollar Tree got me to thinking about "dollar" stores in general. You know, those places where "everything is one dollar." Here's my question on them:
Are they great money savers or simply places full of trashy trinkets?
We hardly ever shop at dollar stores, but on some occasions they do come in handy. A few examples where dollar stores saved us some money:
But other than that, we don't really frequent dollar stores since our thoughts are they are usually full of junk (and who needs more "stuff" around the house?)
What's your take on the issue? Do you like dollar stores or not?
I saw an ad for the Pickens Plan last night on TV. For those of you in the know, T. Boone Pickens has made a fortune in business, a good amount of it in the oil business. Well, now he's touting his plan to get America off its dependence on foreign oil. Basically, he's suggesting we use wind power and natural gas. You can read all the details here, but here are some of the facts that stood out to me. First of all -- the problem:
In 1970, we imported 24% of our oil. Today it's nearly 70% and growing.
As imports grow and world prices rise, the amount of money we send to foreign nations every year is soaring. At current oil prices, we will send $700 billion dollars out of the country this year alone — that's four times the annual cost of the Iraq war.
Projected over the next 10 years the cost will be $10 trillion — it will be the greatest transfer of wealth in the history of mankind.
World oil production peaked in 2005. Despite growing demand and an unprecedented increase in prices, oil production has fallen over the last three years. Oil is getting more expensive to produce, harder to find and there just isn't enough of it to keep up with demand. The simple truth is that cheap and easy oil is gone.
One part of the solution -- wind power:
What's the good news? The United States is the Saudi Arabia of wind power.
Studies from around the world show that the Great Plains states are home to the greatest wind energy potential in the world — by far.The Department of Energy reports that 20% of America's electricity can come from wind. North Dakota alone has the potential to provide power for more than a quarter of the country.
A 2005 Stanford University study found that there is enough wind power worldwide to satisfy global demand 7 times over — even if only 20% of wind power could be captured.
Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States at a cost of $1 trillion. It would take another $200 billion to build the capacity to transmit that energy to cities and towns.
That's a lot of money, but it's a one-time cost. And compared to the $700 billion we spend on foreign oil every year, it's a bargain.
An unexpected benefit from building wind power facilities:
Developing wind power is an investment in rural America.
To witness the economic promise of wind energy, look no further than Sweetwater, Texas.
Sweetwater was typical of many small towns in middle-America. With a shortage of good jobs, the youth of Sweetwater were leaving in search of greater opportunities. And the town's population dropped from 12,000 to under 10,000.
When a large wind power facility was built outside of town, Sweetwater experienced a revival. New economic opportunity brought the town back to life and the population has grown back up to 12,000.
In addition to creating new construction and maintenance jobs, thousands of Americans will be employed to manufacture the turbines and blades. These are high skill jobs that pay on a scale comparable to aerospace jobs.
Plus, wind turbines don't interfere with farming and grazing, so they don't threaten food production or existing local economies.
How we can run our cars:
Natural gas and bio-fuels are the only domestic energy sources used for transportation.
Natural gas is the cleanest transportation fuel available today. According to the California Energy Commission, critical greenhouse gas emissions from natural gas are 23% lower than diesel and 30% lower than gasoline. Natural gas is significantly less expensive than gasoline or diesel. In places like Utah and Oklahoma, prices are less than $1 a gallon.
Natural gas is our country's second largest energy resource and a vital component of our energy supply. 98% of the natural gas used in the United States is from North America. But 70% of our oil is purchased from foreign nations.
We currently use natural gas to produce 22% of our electricity. Harnessing the power of wind to generate electricity will give us the flexibility to shift natural gas away from electricity generation and put it to use as a transportation fuel — reducing our dependence on foreign oil by more than one-third.
Their plan:
Building new wind generation facilities and better utilizing our natural gas resources can replace more than one-third of our foreign oil imports in 10 years. But it will take leadership.
On January 20th, 2009, a new President will take office.
We're organizing behind the Pickens Plan now to ensure our voices will be heard by the next administration.
I've said before that I'm interested in the potential of wind power, so this plan seems at least a start in the right direction to me. What do you think? I'm sure many of you know a good amount about this issue, so I'm very interested in hearing your take on this issue.
Ran into these two pieces this morning -- both dealing with the issues raised by the IndyMac Bancorp failure recently. The first says that more banks will end up failing:
But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.
The second offers solutions on how to keep your money safe from a bank closing -- assuming you have more than $100k to sock away:
First, you could deposit $100,000 in one bank and then walk across the road and deposit another $100,000 in a second bank. And so on.
Second, you can take part in a program known as CDARS run by Promontory Interfinancial. Details are here. This allows you to deposit your money in one bank, which will then parcel it out in federally-insured $100,000 lots to various other banks. Net result: The whole thing is insured.
As the piece notes, I'm not sure why anyone would keep more than $100k in cash in a bank, but I guess you never know.
For those of you concerned about ATM security:
An ATM's safety depends on where it is. If it's at a bank, an ATM is somewhat safer than it is in a public place, such as a ballpark, a train station or a convenience store.
"You should never use ATM machines at convenience stores if you can help it because those are much more susceptible to tampering," added Avivah Litan, a security analyst with the Gartner research firm.
I haven't used an ATM in years. I get cash from the bank when I'm there on other business. It's on my way home (and close to the grocery store) and only a few blocks from my house, so stopping by is very easy.
Here's a reader's counter-point to this weekend's piece on inflation.
Marotta’s argument for inflation being chronically underreported by the CPI is founded on the time-honored principle of selectively presenting data in order to reach a predetermined conclusion. In this case, the predetermined conclusion is to support the almost taken-for-granted conclusion in past articles that inflation has been either double digits or close to it for some period of time, while the CPI and other inflation indicators, as well as all serious economists, disagree with that assessment.
In past articles, one of Marotta’s tactics used to convince readers of his theory was to conflate the concepts of inflation and currency exchange rates – treating them as one, when in fact they are not. Marotta has used the US Dollar’s exchange rate movements against the Euro as a proxy for inflation. It seems this approach is no longer as valid to him as it once was, because the dollar has been essentially flat against the Euro for the last 4 months. This is the first instance of “cherrypicking” the data – when the USD/EUR rate supports the conclusion, pretend that it is a reliable indicator of inflation. When the USD/EUR rate does not support the conclusion, ignore it.
The second example of cherrypicking data in Marotta’s article is this gem:
“Take 2007 as an example. Bread price rose 7.4%, gasoline 8.2%, health insurance 10.1%, whole milk 13.1%, eggs 29.2%, but according to the CPI, somehow inflation was only calculated as 4.1%.”
Marotta chooses to cite five individual prices, all of which had higher than average inflation, in order to imply that the CPI’s assessment of 4.1% inflation was far lower than the inflation of real individual goods. However, this is clearly not the case. To make this clear, let’s look at the food subcategory. Marotta cites bread prices increasing 7.4%, whole milk at 13.1%, and eggs at 29.2%. However, he fails to mention that the “food and beverages” category experienced only 3.9% inflation overall, actually LOWER than the overall CPI! If Marotta was not trying to deceive you by only presenting data that fits his predetermined conclusion, he might have mentioned that inflation in beef was just 4.4%, pork was 2.0%, poultry was 5.1%, and fish was 4.6%. Fresh vegetables experienced 3.2% inflation, and fresh fruit experienced 4.5% inflation. Processed fruits and veggies had just 3.6% inflation. “Other food at home”, the category that includes everything from peanut butter and soup to sugar, butter, seasonings, and spices, experienced 2.2% inflation. If the reader had all the information, he might conclude that Marotta had intentionally misrepresented inflation by selectively noting three of the highest-inflation food items, while ignoring meats, fruits, vegetables, and more. Incidentally, restaurant food inflation was 3.6%.
What about the big picture for inflation? Am I selectively citing the food category because that’s the only place I can tell the story I want to tell. Certainly not. The cost of housing only increased 3.1% during 2007, less than the overall rate of inflation. Most people spend a hefty portion of their paycheck in this category. Clothing actually got cheaper. Drugs and other medical care commodities experienced only 1.4% inflation. Recreation? 0.5% inflation – that’s for everything from DVDs and iPods to concerts and baseball tickets. Communications costs? From telephones to the internet, -0.9% inflation (or should I say deflation?).
Marotta is also selective in his treatment of hedonic adjustments. It is certainly true that you can’t buy a 1970s car now because of government regulations. But even ignoring the fact that this is a problem with government regulations rather than a problem with the calculation of an inflation index, and aside from the fact that even without government regulations there really is extra value in things like seatbelts, this example is not representative of the whole. What about household appliances like washers and dryers that are more energy efficient than ever? Or computers that constantly improve in capability without increasing in price? Well, Marotta does mention computers, but if he REALLY thinks that you need to buy a new computer every single year or it will be impossible to run any software, maybe that explains why life seems so expensive to him! The fact is that in the vast majority of items where hedonic adjustments are used, the old alternatives are either still available (and cheaper than they were several years ago), or have fallen completely out of favor due to the superiority of a new product. Today’s iPod might be more expensive than a walkman was in 1990, but that’s not really inflation. Your flatscreen TV is more expensive than a top-of-the-line tube TV from the 70s, but it’s obviously nicer too, or else you could have gone to target and gotten a TV more similar to the 1970s standard. Is your cable package more expensive than it was 30 years ago? Maybe that’s because you’re getting about 200 more channels.
Where Marotta chose not to distort the data, you start to see the holes in his argument.
“With food, the government adjustments are a little more imaginative. They assume if the price of beef goes up, you will eat less beef and more chicken.”
Is this supposed to sound odd? Because it sounds like a fact of life to me! Also if I buy my groceries from Kroger, and then Kroger prices go up faster than Costco, I might switch to Costco.
“According to their logic, what we called a car in 1970 doesn't even qualify to be called a car today. It wasn't fuel efficient. It had no airbags, no power windows, no power door locks, no heated seats, no tilted steering wheel and no CD player.”
I think things like fuel efficiency, CD players, power steering, anti-lock brakes, seatbelts, airbags, and yes even power windows and door locks are worth something! Does Mr. Marotta disagree?
In conclusion, if you have just one takeaway from this post, look back up at the numbers for inflation in 2007. Or go to http://www.bls.gov/cpi/cpid07av.pdf yourself to see the inflation of anything you want. Curious what inflation was for airline fares or prescription eyeglasses? 1.7% and 2.0% respectively. Look at any piece of the data that interests you and see what really makes up inflation. It might feel tougher at the pump or in the dairy aisle of the supermarket, but that’s not the only place you spend money. The CPI represents AVERAGE inflation over a wide variety of goods and services that people spend money on, and there is a great deal of transparency on the BLS website for those who want to see how the components are weighted and how the calculations take place. The good news for the American consumer is that in 2007, most things didn’t go up in price as fast as gasoline, eggs, and health insurance!
Here's an interesting piece from MSN Money. It asks if now is the time to buy an SUV, but the question can be expanded to all vehicles with low gas mileage. Here's their rationale:
Manufacturers are offering discounts of $2,000 to $5,000 on once strong-selling models like the Ford Explorer and Chevrolet Suburban, and dealers say there's plenty of negotiating room after that.
Discounts are even bigger on many used vehicles, with some selling at roughly one-third the price they would have fetched new four years ago.
The bottom line is that, for people who don't drive much, today's deeply discounted SUVs may actually make financial sense.
"It is the ultimate buyer's market," says John Casesa, managing partner at Casesa Shapiro Group, a New York advisory firm that owns some dealerships.
I've been seeing a ton of ads for Ford trucks that have both "employee pricing" and HUGE cash-back incentives (In the $4k to $6k range, I believe.) If you need the room, power, four-wheel-drive, etc., even if you have to drive a decent amount, it seems like now is the time to buy one of these vehicles since they're practically giving them away.
Anyone else thought of this issue?
Ice cream, chips, mayonnaise, cereal, etc. have all shrunk their packages but kept prices the same. Then today I found this piece that says cereal makers are doing it again:
Kellogg Co. is using smaller packaging while charging the same prices for five of its cereals sold in the United States, effectively raising their prices for the second time this year. The company started shipping the new boxes to stores in early June.
Boxes were reduced by an average of 2.4 ounces for 14 items sold under the Apple Jacks, Cocoa Krispies, Corn Pops, Froot Loops and Honey Smacks brands, said Kellogg spokeswoman Susanne Norwitz.
Why do companies do this? Because it's a way of taking a price increase that consumers often don't notice. With commodity prices increasing so much, most manufacturers HAVE to take price increase of some sort and this is the easiest way of doing it. As someone who's been in marketing for almost 20 years, I can tell you that it works from a business standpoint. Not saying it's right to do, just saying it works.
According to the annual Yahoo! HotJobs vacation survey, 51% of respondents said they plan to skip taking a vacation this year, opting to save money instead.
They don't say what the "normal" level is (for all I know, the average over the past 10 years has been 51%) but the implication in the article is that more people than usual are skipping vacations because of the poor economy. The article also lists how to spend less on vacations in case you're interested.
We went to Disney last year, so that was our "once every other year or so big trip." This year we're doing more of what I'd consider a "normal" set of vacations for us -- traveling to see family in Ohio and Pennsylvania and going to Chicago for a few days in the early fall. Both are driving trips for us and while they will be more expensive than prior years because of gas prices, we never considered giving them up to save money. We have a good distance between what we make and what we spend, so we have the flexibility to do what we'd like even though prices are up a bit.
How about you? Anyone out there eliminating (or at least cutting back) on their vacation because you'd prefer to save the money instead?
The following is an excerpt from from Financial Infidelity: Seven Steps to Conquering the #1 Relationship Wrecker
At some point or another, almost all of us have used magical thinking to give us the confidence to go on when a relationship hits a rough patch. Most people are able to move through this stage by taking risks to confront their partners. They realize that heated discussions, arguments, even passionate fights are part of the process of negotiating the differences between two individuals. They are able to set aside the fear of abandonment and be courageous instead of comfortable, proactive instead of defensive. They realize that when two people become entrenched in a behavior pattern, one of them must change in order to break the pattern. There are no “magical solutions” (except for those people still in the honeymoon stage).
When it comes to money, most adults pride themselves on their practical approach to handling their own finances. But when it comes to cooperatively managing shared resources in an intimate relationship, I have seen even the most savvy financial managers—individuals who handle negotiations, investments, and expenditures of huge sums of money in their careers—engage in magical thinking, rather than initiate discussions about money with their partners.
To find out if you practice magical thinking to ease concerns about money, ask yourself the following questions:
Choosing to ignore the plain facts about the ways in which you avoid the topics of debt, spending, and saving can be just as detrimental to a relationship as engaging in magical thinking in order to deny or ignore emotional or physical red flags.
MSN Money has a list of items you should never rent, some that are borderline, and when you should rent. We'll start with the five things they say you should never rent:
Personally, I hate renting and I certainly don't rent any of the items above. So far, so good.
Here's the list of items they list as borderline rent-ables:
I have very little need for a tux, and when I have used one I rented it. I'll pass comment on renting a handbag. ;-)
Here's the list of when to rent:
The "anything you use once a year or less" includes the items I think of when I think of renting -- power washer, chipper, aerator, etc. Basically any sort of low-use big equipment that you'd find at Home Depot or Lowe's.
By the way, the "next car you will buy" means to rent the car you're thinking of buying and test drive it. The suggestion DOESN'T mean to lease it.
I can't think of many items we rent on a regular basis. we did rent a condo last year when we went to Disney and we do "rent" DVDs from the library.
How about you? What do you rent?
The following is an excerpt from from Financial Infidelity: Seven Steps to Conquering the #1 Relationship Wrecker
When I am talking to some of the couples I counsel about their feelings when beginning an affair, they often use descriptions like “sexual chemistry” and “irresistible attraction.” Some even compare their craving for their lover to an addiction. They can’t get enough. They feel high. Their descriptions verge on sounding like passages from a romance novel. And yet, there’s some validity to their clichés. In fact, studies have shown that certain repetitive or addictive behaviors both are caused by and contribute to fluctuations in the mood-stimulating neurotransmitters in our brains.
The neurotransmitters we talk about above—dopamine, serotonin, norepinephrine, and epinephrine—and hormones such as oxytocin and vasopressin are associated with depression and euphoria. If the levels of these important brain chemicals are imbalanced, an individual is likely to feel depressed, and may behave in ways to stimulate—or simulate—the feelings induced naturally by the release of these neurotransmitters in the brain. Patients I counsel are often seeking to duplicate the euphoric feelings of “falling in love.” They are trying to re-create their feelings with adulterous affairs, out-of-control shopping, or risk-taking behaviors like gambling. The satisfaction they feel from this “quick fix” can set them up for unrealistic expectations for an ongoing state of energy, arousal, and euphoria.
In counseling couples where one individual seems compelled to seek out hurtful affairs or commit financial infidelity, even as they express remorse over the effect their behavior is having on their relationship, I will often explore whether, for them, the thrill of pursuit, conquest, and the fulfillment of their fantasies is actually indicative of an addiction. In these cases, or in those where there is a family history of addictive behavior such as alcoholism or drug abuse, adultery, or gambling, analyzing the levels of the key neurotransmitter associated with depression and addiction can give me insight into their situation. Many patients I see have a constellation of these addictive behaviors. They may drink and gamble and engage in extramarital affairs. They often tell me that they have tried to stop all of these behaviors on their own, but find themselves slipping back into them or even adding new damaging behaviors. I tell these patients that because it is very difficult to exhibit self-control when dealing with addictive-type behaviors, it is important that they do not take on more than one self-control challenge at a time. And in the meantime we can manipulate, even balance their neurotransmitter levels (which are initially determined by heredity) through supplements, medication, biofeedback, or talk therapy.
Just as an individual may turn to an illicit love affair to provide the biochemical feelings of connection and experience the thrill of a new romance, over and over again, so, too, they may turn to risky financial behavior for stimulation. Even if they stop the love affair, they may not have the self-control to stop the risky financial behavior.
The reason is that the behaviors that stimulate these feelings can easily become addictive. For instance, for any addict, the choice to self-medicate in any number of ways—with alchohol, medications, sex, or money—can begin with a desire to relieve stress or mute depression. The addiction then progresses to a preoccupation with where their next “fix” will come from, and often involves a strong desire to create rituals around obtaining the “high.” This preoccupation becomes a compulsion—to use drugs or alcohol, or to have sex, or to shop—followed by depression and despair as the effects wear off, leading to the start of the cycle all over again.
Joseph Frascella, director of the Division of Clinical Neuroscience at the National Institute on Drug Abuse (NIDA), defines addiction as “repetitive behaviors in the face of negative consequences, the desire to continue something you know is bad for you.” The three most common types of “habits” that can slide into “addictive behavior” that I see in relation to financial infidelity are gambling, binge spending, and hoarding.
Two million adults are thought to be pathological gamblers. Another four to eight million are considered “problem” gamblers. A Stanford University study identifies one in twenty Americans as compulsive shoppers. The individuals that are prone to gambling and binge spending may also seek to take risks in a socially appropriate way by working in a high-stress, thrill-intensive job such as a Wall Street trader, a surgeon, or a courtroom attorney. The buzz from their victories is usually immediately followed by a new stressful situation and a chance to professionally “gamble” so that they can triumph yet again.
Other people may exhibit financial infidelity as a result of transference. In psychological terms, transference refers to the redirection of feelings, fears, or emotions onto a new object or situation.
An interesting series of thoughts from CNN Money on how prices change over time. One thing to note: the $6 million man would now cost $26 million (at best) to build. ;-)
I was just sent this piece/press release by someone at Consumer Reports on the best and worst store credit cards. I thought it made a good follow-up to our store credit card discussion earlier this morning. Personally, I have my own list of favorite credit cards (non-store cards), but some of you may see something below that you like.
ShopSmart Investigates 17 Retailers’ Credit Card Programs
“Would You Like to Apply For a Store Credit Card and Receive 15% Off Your Purchase Today?”
YONKERS, NY – After you plop an armload of goodies at the register, what usually comes next is the pitch to save 10 or 15 percent on your purchase if you apply for the store’s credit card. According to a report featured in the July 2008 issue of ShopSmart, from the publisher of Consumer Reports, consumers should read the fine print before signing up. After decoding 17 retailers’ credit card programs, ShopSmart found big differences—some cards included bonuses like cash-back rebates while others had high interest rates and no rewards programs at all.
“The promise to save immediately when you open a store credit card account is tempting, but big interest payments can easily exceed rewards,” said Lisa Lee Freeman, editor-in-chief, ShopSmart. “Store credit cards make sense only if you pay off your bill each month and only when the program fits your individual spending habits.”
Best for Cash Back. Costco and Wal-Mart give the option of a cash-back reward to be spent wherever you want, and neither caps the amount that can be earned.
Best for Loyal Customers. If you love these stores and shop in them frequently, their cards give decent rewards, mostly as gift certificates or discount coupons, and they generally let you shop in-store or online.
Best for Racking Up Points Fast. These retailers offer rewards in conjunction with other stores, so you can build your reward point total more quickly.
Best for Big Spenders. The high-end stores below offer more lavish rewards. But only big-spenders get the coolest perks, such as a three-night stay in Prague from Neiman Marcus for 1,000,000 points.
Skip These. Abercrombie & Fitch (APR: 24.8%), Crate & Barrel (APR: 19.8%), and Lowe’s (APR: 21.99%) offer no rewards program. Pay for purchases at these stores with another rewards card.
Store Card Dos and Don’ts
Here are a couple money related pieces I ran into today that I thought you'd be interested in. The first talks about many people that once would never face homelessness are now finding themselves on the streets:
Barbara Harvey climbs into the back of her small Honda sport utility vehicle and snuggles with her two golden retrievers, her head nestled on a pillow propped against the driver's seat.
A former loan processor, the 67-year-old mother of three grown children said she never thought she'd spend her golden years sleeping in her car in a parking lot.Harvey was forced into homelessness earlier this year after being laid off. She said that three-quarters of her income went to paying rent in Santa Barbara, where the median house in the scenic, oceanfront city costs more than $1 million. She lost her condo two months ago and had little savings as backup.
"It went to hell in a handbasket," she said. "I didn't think this would happen to me. It's just something that I don't think that people think is going to happen to them is what it amounts to. It happens very quickly, too."
Harvey now works part time for $8 an hour, and she draws Social Security to help make ends meet. But she still cannot afford an apartment, and so every night she pulls into a gated parking lot to sleep in her car, along with other women who find themselves in a similar predicament.
Just a couple quick thoughts here:
1. This is why we all work to save, grow our incomes, spend less than we earn, etc. -- so we won't ever find ourselves at age 67 with no money at all.
2. Why doesn't this lady simply move to a lower-cost-of-living city? Is living in a car in Santa Barbara better than living in a decent home in Cincinnati? (or Kansas City? or Indianapolis?) It sure isn't to me.
The second piece talks about how Americans are getting "donor fatigue" from all the needs in the world:
The numbers are almost too large to fathom, so many stop trying. As bodies pile up in disaster after global disaster, even the most sympathetic souls can turn away.
Charities know this as "donor fatigue," but it might be more accurately described as disaster fatigue — the sense that these events are never-ending, uncontrollable and overwhelming. Experts say it is one reason Americans have contributed relatively little so far to victims of the Myanmar cyclone and China's earthquake.
Ironically, the more bad news there is, the less likely people may be to give.
I'm not sure this is the case why people aren't giving to aid Myanmar and China. My take is that giving to Myanmar is low because the government there is either taking the aid or not letting it in. And for China, I think many people see China as a big/wealthy enough country to handle its own problems.
Congrats to this guy:
A construction company owner who lost two homes in Hurricane Katrina claimed a $97 million Powerball prize, a jackpot won off a ticket he bought at a convenience store where he stopped to buy his wife a gallon of milk.
When he turned in the winning ticket, Carl Hunter became the largest Powerball winner in Louisiana's history. He won the jackpot in January, but the 73-year-old small businessman waited nearly four months to claim the prize.
I hope it works out for him better than it did for these people.
Consider this my public service announcement of the day. There's a stimulus-related email scam going around. I'm sure this is just one of many. Be warned.
Freebies are next Thursday. Click here for details.
Maybe I just didn't notice last time I was in a theater. Or maybe it's been too long since I've been out to see a movie.
Anyway, I recently found out that my theater is selling more than just movies and snacks.
My wife and I went out on a rare "us only" trip to see a movie. Once we paid and got past the ticket taker, I noticed a whole section (still in the lobby) of movie cardboard cutouts -- you know, those life-size (or close to it) standing figurines used to promote movies. They had a big collection of them from movies like Pirates of the Caribbean, Star Wars, and the like. Then I looked closer and saw that each one had a price tag on it. They were selling these for $20-$50 (depending on the size, popularity, etc.). Wow, selling advertising pieces. I had to applaud them for their capitalistic initiative, but I wondered who would really pay those prices for such things. Never mind telling me, I KNOW someone will.
So here's my question: are any of you seeing this sort of thing in your theaters as well or is this just some sort of random Michigan thing?
A sharp rise in food prices has developed into a global crisis, U.N. Secretary-General Ban Ki-moon said Friday.
Ban said the U.N. and all members of the international community are very concerned, and immediate action is needed.
Ban’s statement came a day after the World Food Program appealed for hundreds of millions of dollars to cope with rising food prices that have sparked protests and food riots and led to bans on food exports in dozens of countries.
Josette Sheeran, the WFP’s executive director, said the U.N. agency is facing a 40 percent increase in the cost of food and requests for food aid from countries unable to cope with the rising prices.
And the Wall Street Journal says that buying and storing food may be a good investment move:
Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax.
Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.
And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.
Check this out -- your car's odometer may be costing you money. The details:
A recent lawsuit settlement has revealed that all odometers are not created equal. Some may cause you to lose your factory or extended warranty sooner than necessary.
While it might not seem like a big deal, consider this: You have a 36,000-mile comprehensive warranty and something that normally would be covered goes bad at 37,000 miles.
If your odometer is off by 5 percent or more, you could actually be within the warranty period even if the odometer indicates otherwise. A manufacturer could take a hard-line approach and not cover the repair.
For warranties that extend to 100,000 miles, the mileage difference becomes more significant, as does the likelihood of an expensive repair.
What a rip! Who would have ever thought of this? And not only is it a warranty issue, but when you go to sell you car, you'll get less as higher mileage cars sell for less than the exact same car with lower miles.
So what can you do? Here's what Bankrate suggests:
Drivers curious about whether their vehicles are accurately calculating miles traveled should find a stretch of highway where the state or federal government has installed mile markers -- which often are posted every tenth of a mile -- and compare what their odometer says versus the measured course.
Drivers who discover their odometer is off by 5 percent or more should bring it to the attention of the dealer's service department to see if the odometer can be adjusted -- most are computer-controlled. If the dealer can't or won't fix it, write the dealer and the manufacturer to point out the problem and how it may negatively impact your warranty.
Such documentation may help if you have to file a warranty claim when the vehicle is just a few miles over the limit.
Anyone had any sort of problems like this?
The following is excerpted with permission from How to Become a Better Negotiator, Second Edition by Richard A. Luecke and James G. Patterson (AMACOM 2008). Since negotiating is important to success in personal finance (for saving on purchases, asking for a raise and so forth), I thought this piece on how to handle conflict in a negotiation was worthwhile.
Left alone, serious conflict will fester. Someone has to step up to it and move it toward resolution. Consider the following six approaches.
#1: Confront Gently
This technique calls for openly confronting the situation, but in a diplomatic manner. You'll know that you are being successful at gentle confrontation if you can answer yes to all three of these questions:
Here's how to prepare for gentle confrontation:
There are six elements to constructive assertive but gentle confrontation. These are widely taught to new supervisors and managers but can be applied to negotiating situations in which the behavior of the other side is getting in the way of a good outcome:
1. Objectively describe the undesirable behavior you're trying to change. Do not be subjective; do not be personal.
2. Identify the specific and negative tangible effects of the behavior. Don't attack the person—that will only put him or her on the defensive. Instead, attack the problem. For example, don't say, "Your frequent tardiness tells me that you don't think our meetings are important." Instead say, "Your coming late makes it impossible for the other people on this panel to get their work done."
3. Don't lecture. Nothing turns people off more than being talked down to, lecture style.
4. Listen to the other person's response; don't be tempted to interrupt.
5. Describe your future expectations in specific terms.
6. Gain commitment or agreement from the other person. Either you can ask him if he agrees, or you can say, "This seems like a reasonable request, doesn't it?" While you're saying this, look the other person in the eye, and look for agreement.
Most people want to be reasonable. Getting the other side to agree that you are being reasonable can be a powerful tool in resolving conflict—with either a problem employee or a difficult negotiating counterpart. It can move the other side to show reasonableness as well, and that may mean a bigger concession to you in the future.
Most people want to be reasonable.
With that advice in mind, how would you tackle the following situation:
Your team is negotiating to buy a large allotment of jet fuel. Jerry, one of the sellers, has raised and lowered the price of the fuel several times without explanation. How can you handle this situation using the assertive confrontation model?
Hint: Be polite. Be specific. Describe the effects of those erratic price changes on your business—and your ability to remain a customer. Then ask for something specific. Ask for commitment.
#2: Say No Assertively
One test of assertiveness is the ability to say no. Do you often find yourself saying yes to requests when you really want to say no? Are people always asking you for many small concessions because you're a pushover? If so, you need to be assertive—to stand up for your interests and say no. Using the principles of assertive confrontation, how would you say no in the following cases?
Hint: First, explain that your boss would never agree to such a demand. Second, offer an alternative (people are more likely to agree with you if you offer them an alternative). Perhaps you could extend such an unprecedented warranty if the other side locks in to a longer-term contract. Third, ask for commitment and understanding. The wrong way to respond is to say, "I said no. What part of no don't you understand?" Put yourself on the receiving end of that message. How would it make you feel? Keep in mind that you want to say no but at the same time preserve the relationship.
Hint: State, "I understand that the proposal is important. As you know, I've stayed late three nights in a row to work on this. But tonight I have important family business I must attend to. However, I'd be glad to come in a half hour early tomorrow to work on the project. Doesn't that seem fair to you?"
#3: Disarm the Opposition
Sometimes the other person has a legitimate beef. If you deny that reality, the other person will be angry and the problem will get worse. By acknowledging that the other person is right, you will have taken an important step toward diffusing the crisis. Let's assume that a police officer pulls you over for speeding (yes, you were driving too fast).
Usual Defensive Approach
You: What's the problem? I wasn't speeding. My friend sitting right here will vouch for me.
Police officer: Don't tell me that. My speedometer doesn't lie.
Hint: Surprise the officer. He expects you to deny that you were speeding. Admit it. You can use the same technique while negotiating. Just don't overdo it; if you get predictable, you'll lose effectiveness.
#4: Handle Your Anger
Tough negotiations often generate friction, which easily takes the form of anger. Anger in turn makes what might have been a win-win negotiation a win-lose contest, which isn't good for either side—particularly for the one with the weakest negotiating hand. So do whatever you can to diffuse anger. Never tell another person, "Don't be angry." Instead, encourage the person to tell you what's angering her.
There are some things to do with an angry person:
But the other side isn't always the angry party. You may be the angry one. If you feel you're in danger of really exploding in anger, consider these suggestions:
What should you do if the rational approach doesn't work and the other side is dismissive of whatever is upsetting you? Sometimes a good old-fashioned temper tantrum on your part will focus people's attention on a problem. This works best if you have a reputation for being a rational, cool customer. Do it only to get people's attention on a problem; be selective about using this drastic measure (if you overuse it, you'll just be seen as a hothead). Even then don't make it personal. Direct your anger at the situation, not at the other person.
Consider the following situation. You must straighten out a problem with somebody from the other negotiating team, and you're sure that dealing with that person will make you angry. And your anger will make matters worse. What should you do?
Hint: Let the person know you're angry. Be specific about describing what you think is wrong. Stick to talking about actions and behaviors, not about attitudes or motivations. Listen. Look for solutions to the problem so that everybody wins. You can influence and persuade others by not yelling and by remaining in control.
#5: Appeal to a Powerful Third Party
Sometimes a gentle approach to a problem won't work. The other person may not want to compromise; he may not be interested in finding a win-win solution to the conflict. He may want to use power to solve the conflict. In that case, you may have to do the same—by appealing to a more powerful third party. Use this tactic only when winning is very important, because it will certainly create ill will. Here are two examples of appealing to a third party:
1. Your company is involved in a labor dispute that, after being stonewalled by the local union, you take to the state labor board. This third party will impose a settlement that may please neither side.
2. You have reached an impasse with the person with whom you are negotiating a supplier contract. As a longtime supplier, you've always enjoyed an amiable relationship with this company, and its contracts have always benefited both parties. But the new purchasing manager seems cut from different cloth. He is being extremely unreasonable, pressing you so severely on price that you will be unable to make any money on your sales to his company. You wonder if this newcomer is trying to impress his boss with his negotiating toughness at your expense. So you take a drastic step: You contact his superior and ask, "as a longtime and reliable supplier to your corporation," that you be allowed to bring in someone else to negotiate with you.
#6: Trade Places with Your Antagonist
One of the most effective ways of diffusing conflict is to get each party to walk a mile or two in the other person's shoes. You can do this through a role-playing exercise in which each party adopts the other person's perspective and interests. If done well, this exercise sensitizes each of the parties to the other's concerns and helps each understand the source of conflict.
To use this strategy, ask the other person to (a) write down her side of the dispute, and (b) write a paragraph in which she describes your viewpoint—as she understands it. Then, you do the same. Now, exchange the written information and discuss the differences. Once you've done that, trade places, with you arguing her point of view and she arguing yours. This is a powerful exercise when both parties take it seriously and do their best to represent the views of the other side.
If you think your investment portfolio has taken a beating due to the market's rapid decline, check out what has happened to these guys:
British billionaire Joseph Lewis made his fortune gambling on currencies. His recent investment in Bear Stearns has turned out to be a disastrous bet. The elusive septuagenarian is one the biggest losers from the New York investment bank's problems. In just a few months, he has lost almost all of the $1.1 billion he spent building up his roughly 9.6% stake in Bear, which agreed last night to be acquired by JPMorgan Chase for just $2 a share.
Among the stakeholders: James Barrow, a Dallas money manager who runs the firm Barrow, Hanley, Mewhinney & Strauss, is the single biggest investor, with a 9.95% stake, according to recent regulatory filings. Bear Stearns Chairman James Cayne, who stepped down as chief executive in January amid criticisms from some investors that he was too hands-off when the mortgage mess unfolded, holds a stake just under 5%. So does activist investor Bruce Sherman, CEO of Naples, Fla., money manager Private Capital Management, a unit of Legg Mason, recent regulatory filings show.
And finally, another reason not to have a large part of your investment portfolio in your the company you work for:
Employees lost an estimated $5.2 billion on the sale of the company.
Not only will their investments take a hit, but many of these people will likely lose their jobs -- a double whammy. Hence the reason for not having much (if any) of your portfolio in your company's stock -- you already have a lot invested with them (your career.)
The good news -- The U.S. Is Poised to Hit a New Oil Gusher:
A new black gold rush is under way, this time in North Dakota. The potential payoff is huge -- up to 100 billion barrels of oil. That’s twice the size of Alaska’s reserves and potentially enough to meet all U.S. oil needs for two decades.
The bad news -- Bear Stearns: Tip of the Iceberg:
We expect more bank meltdowns as the subprime mortgage mess continues to play out.
From CNN -- subprime mortgages take down Bear Stearns:
JPMorgan Chase & Co. said Sunday that it would acquire troubled Wall Street firm Bear Stearns for a mere fraction of what it was once worth amid deepening fears about further erosion of the world's financial markets.
The all-stock deal values Bear Stearns at $236 million, or just $2 a share. The company's stock had closed at $30 on Friday, down a staggering 47% for the day.
Over the past three days, roughly 200 JPMorgan staffers were working on the deal, assessing the strengths of Bear Stearns' different businesses and its exposure to toxic mortgage securities, JPMorgan executives said during a conference call held Sunday night.
They noted that the offering price, which comes at a steep discount to Bear Stearns book value price of $84 per share, was to provide a cushion to protect JPMorgan in turbulent times and would provide the company "margin for error."
The fire-sale price raises questions about the value of other investment banks.
The danger for JPMorgan will be its potential exposure to lawsuits from Bear Stearns' subprime mortgage division and risks from its derivatives business.
Shares of Bear Stearns opened last week at $69.75 and traded as high as $159 last year, before the firm's bad bets on subprime mortgages blew up two of its hedge funds last summer.
Wow. Who would have believed this even a few days ago. Now the question is -- are other banks in the same spot?
We're approaching the 100 inches of snow level this year. Whenever you have that much snow, you obviously have a lot of plowing during the season. And whenever you have that much plowing, you're going to have a lot of potholes. And we do have a lot of them. It was so bad, in fact, that they had to close one lane of a major highway because it's a hazard to drivers.
On top of this, I found a piece that says there's a pretty good expense associated with bad roads. The details:
[A new report] shows a quarter of the nation's roads are in poor condition and it's costing you hundreds of dollars. The rough roads and pothole situation are a daily battle.
The new study by TRIP, a transportation research group, looked at a number of urban areas and shows drivers in Grand Rapids pay $443 a year in additional costs due to vehicle deterioration, maintenance and increased fuel consumption.
$400 bucks a year, huh? Well, I know I'll need some sort of wheel/tire work after this season is over (winter ends here sometime the middle of April) and I'm sure I've lost a ton in wear and tear on my car. Just another "benefit" of living in the tundra. Oh well, at least I'll never need a new paint job because of too much sun damage. ;-)
I'd never heard of the term "wardrobing" until I saw this piece telling how retailers are cracking down on it. The details:
Jimmy Deignan's first time was with a $500 portable DVD player.
He bought it a few years ago at Best Buy for a Boston-to-Los Angeles flight, knowing he would return it for a full refund when he got back. More recently, in November, rather than spending $600 to rent a LCD projector for a business presentation, the Holden resident purchased one at Staples, then returned it a few days later and got his money back.
The way Deignan sees it, he is just a smart shopper: He gets the things he needs, uses them for as long as he wants, and saves money. But to retailers, this is wardrobing, a practice they say is unethical, damaging to their bottom line, and increasingly common.
Nearly two-thirds of merchants had items wardrobed in 2007, up from 56 percent the year before, the first year the National Retail Federation started tracking the trend. Merchants blame tough economic times and a "customer-is-always right" mentality gone too far. They say a growing number of shoppers feel entitled to return used items they no longer want, and probably could not afford in the first place - from costly cocktail dresses for big events to pricey plasma televisions bought exclusively to watch the Super Bowl. So, they are striking back, instituting more restrictive return policies, imposing restocking fees, and keeping a blacklist of serial wardrobers.
I have several thoughts on this issue:
1. I feel like this is dishonest -- buying something with the intent to use it and then return it.
2. Now if you buy something with the intent to keep it but you just don't like it, it doesn't work like you thought it would, etc., that's a different matter. You should have the right to return it. If the store won't let you, start shopping somewhere else.
3. I'm afraid the people that wardrobe are going to ruin return policies for those of us with legitimate return concerns. Then again, maybe competition will make sure stores always have decent return policies.
4. When I was young, my mom wardrobed a few times (maybe she was a trendsetter!) We were poor (no excuse, I know) and sometimes she'd "buy" something, use it, and return it. Most often it was a piece of clothing. I never really thought of it until I saw this article.
5. I have NEVER wardrobed and neither has my wife and to do so would be teaching our kids the wrong principles in my opinion.
What do you think of wardrobing? Have you ever done it?
Most of you reading will likely find this post to be interesting/amusing. The rest of us will be able to identify with it all too well.
If you live in a state/area that gets lots of snow, you know that you have several options for snow removal each year. The rest of you will probably learn something new (like I did when I found out that people actually pay others in Michigan to shovel the roofs of their homes -- but that's a different post.)
Here are the options we have for snow removal:
Now while some of you in low-snow states may wonder what the big deal is -- why don't we just shovel the stuff -- I'm talking about lots of snow. As of this writing, Grand Rapids has had 87 inches of snow so far this year (and still a few weeks of winter left) thanks to being north and to the east of Lake Michigan.
So let's look at the "plow" option. If you decide to have someone plow your drive, here's how it works financially:
1. You pick a snow removal company. You usually select based on price as well as terms (how often/under what conditions they'll plow your drive.)
2. Once you pick a company, you pay them for the full year upfront. I always found this to be interesting since 1) you don't know if you'll even need the service -- what if it doesn't snow much? and 2) you're paying them to render a service and you're not yet sure they'll render it. That's why I would never hire a firm without a solid recommendation from someone I trust.
3. The payment depends on the size/shape of your driveway. Ours is a standard, short, flat, two-car drive and I've seen quotes in the $250 to $300 range. We're about in the lowest price bracket there is -- and it can go way up from here.
4. This financial arrangement is a bet by both parties. The client is betting it will be a bad winter and he'll get his money's worth. The company is betting it won't be so bad that they'll lose money on driver pay, gas, salt, etc. during the year.
5. A friend who owns a snow removal company told me that the breakeven point is 25 trips. If he makes fewer than 25 trips to a location each year, he'll make money. If it's more than 25 trips, he loses money.
6. How many trips are needed depends on the agreement (my friend's company plows anytime it snows at least two inches), the amount of snow (of course) and when the snow falls (better during the day, on weekends, and all at once.)
Personally, we use a combination approach of shoveling and a snowblower. As I've said, we have a small drive and not a huge amount of sidewalk space, so it's manageable. And since my son is 11-years-old, I'm now entering the "good years" where I have a helper in cleaning off the drive. ;-)
What about you? How do you get the snow off your driveway and how much does it cost?
Just saw this on high-priced toilets. A few thoughts:
1. Wow, high-end (no pun intended) toilets can do a LOT these days, huh?
2. $6k seems a bit over-the-top for a toilet, doesn't it?
3. That said, if if helps the re-sale value, then maybe it's worth it.
4. Remote control? In the bathroom? Add a TV and a microwave and I'd be in heaven!!!!! ;-)
Holy cow, where have I been to miss this? Turns out people can create checks on your bank account and pay themselves -- and this is a legal method (though some/many use it illegally, without permission.) Here's the summary of the situation:
Did you know that your bank can pay someone from your checking account because that person says you authorized it - even though you never signed a check?
Telemarketers tap into consumers’ checking accounts using an obscure, out of date method called the “demand draft” or “remotely created check.”
Here is how it works: Step One: You authorize a payment by phone, or a telemarketer falsely claims that you authorized a payment by phone, from your checking account. Step Two: The person you authorized, or the person who is out to steal from you, makes up a check on your account and sends it through the banking system. Wait a minute – someone can create a check on your account and use that check even though you never signed it? Yes.
Yikes! Double yikes!
So, what can you do about it? A suggestion:
Read your bank statements carefully and report and dispute any error, no matter how small. Thieves sometimes put through a small charge first, and if that works, try again with a larger charge, or put the same charge through to your account every month. If you aren’t happy with how your bank responds, file a complaint. For more information on where to complain, depending on where you bank, see this page.
Anyone had this happen to you?
Think these two are related?
From the Stanford Daily:
Stanford’s endowment grew nearly 22 percent last year to $17.1 billion. This massive quantity of tax-free money has attracted the attention of members of Congress, who want the wealthiest universities to do more to reduce tuition costs.
From I Will Teach You to Be Rich:
Tomorrow, Stanford will announce significant changes in its financial aid program that will make undergraduate education more affordable for families receiving aid. We want you, our alumni, to be among the first to hear this news.
Stanford University today announced the largest increase in its history for its financial aid program for undergraduates.
Under the new program, parents with incomes of less than $100,000 will no longer pay tuition. Parents with incomes of less than $60,000 will not be expected to pay tuition or contribute to the costs of room, board and other expenses.
The program also eliminates the need for student loans.
Ha!
Good news for smart kids (and their parents) who make less than $100k. Even better if you make under $60k.
Here's a quick fact from Bankrate that says depreciation on new cars can be quite steep:
New vehicles usually fall as much as 20 percent to 25 percent after they are sold. In the case of SUVs in this era of high gas prices, depreciation can be even more.
I usually buy new cars, but I drive them forever, which is really the only way buying a new car makes sense to me. Most personal finance advisors will suggest buying used, but I'm just not that sort of buyer. I'd rather research a vehicle (via Consumer Reports) to make sure I'm getting a reliable car, buy it new (for cash), and keep it until repair bills start to come due. Then it's time for a new model (which for me is about eight years.)
I don't see how people who buy a new car every few years can make much financial headway -- they're losing too much in depreciation.
How about you? What's your car-buying philosophy?
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