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a financial blog for the not-so-nine-to-fiver

Updated: 2018-03-06T02:14:51.283-05:00


Pay Taxes and...



If you, like me, just filed your taxes in the nick of time you may have also been inspired to do a little financial fitness. Kind of like when you wash the dishes and decide to throw away the mold extravaganza growing in your fridge's to-go containers. Not always fun, but occasionally necessary.

But where to start? WNYC recently did a four part series titled Money U with Saving, Credit, Debt Collection, Banking 101.

I first saw Deyarina del Rio at The New School's Banking Under the Mattress: Financial Literacy and Unbanked New Yorkers and she is one smart cookie. She's the Associate Director for the Neighborhood Economic Development Advocacy Project, a great non-profit that works towards financial justice.

Honestly, if the only annual financial thing you do is hold yourself accountable to the IRS, then we need to revise that to-do list. Banking and credit report, how about that? Once a year evaluate your banking fees, if you spend more on banking fees than you do on Spanx, then you need to move on. In other words, NO FEES! I'll get to where to park your money in a later post. And get your FREE annual credit report while you're at it. Two things. Well, three, if you count pay your taxes. Trust me, they're easier than filing a 1040 and just as important. And let's face it-- multi-national banks don't need your hard earned money, and that cultural attaché from Nigeria who's been sending you emails about a fat inheritance really shouldn't have your social security number.

photo courtesy of thebrooklinelibrary via flickr

End of Hiatus


Well, after two years of sleep deprivation and the unhinged joy of parenting, I am back in the saddle. While I missed the great economic meltdown, I am sure you did not miss my commentary because, well, everyone was talking about it.

So, I will kick off with a low pressure post, nothing too fancy and nothing too serious. Freelancers Union is a free organization, a non-socialist non-state-budget-villain-of-the-year "union", if you will, that is open to freelancers in the United States. From health care to retirement, they offer competitive services for freelancers. Equally important, they are a community of freelancers who have a wealth of information that flows freely. So drink up.

They also have great educational events, and coming up on Wednesday, April 27th, is an educational webinar (no, I did not make up that word), Retirement Strategies Every Freelancer Needs to Know.

So check 'em out, and come back to PiggyBankBlues, where the not-so-nine-to-fivers build a nest egg, don't lose their shirts or their balls in the economic roller coaster, and learn about the nuts and bolts of financial planning with the over-use of the nifty hyphen. Welcome!

photo courtesy of charsplat Jeffrey Clement via flickr

The Urban Roots of the Fiscal Crisis


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David Harvey... a take on the current economic crisis that you won't see on CNBC....

Ladies Night at the Car Wash


You know I've crossed the frugal freak line when I wash my car on Wednesdays only. Two bucks off for the ladies, why that's almost a gallon of gas...

Top Ten List of Reasons Why You Know These Times are A-Changing


As President Obama gears up for his first State of the Union Address, I was going through the gazillion (appropriately enough, not a real number) economic and financial issues at hand. I don't even know where to begin, and after not blogging for a while this is one helluva time to just jump in. So I'll start with something easy. Top Ten Reasons You Know Times are A-Changing1. American Express offers some credit card holders a$300 pre-paid card to pay off their balances in full and close their accounts. Funny, it was just a short while ago credit card companies were happily feasting off those who carried a balance from month to month.2. Housing prices fell 18.5% this past year, a record breaking rate of downward return. I won't rub lemon juice in a paper cut, but we all know what the housing market used to be like...3. Joining the ranks of the unemployed, Harvard's endowment management team will layoff a quarter of its staff, after losing 20%. Harvard's endowment returns made Warren Buffet look like Joe Shmoe. Well, not really, but they have been jaw dropping until recently.4. Speaking of Warren Buffet, Berkshire Hathaway slumped on Friday to a 5 1/2 year low, kind of like everyone else's accounts. (Okay, maybe everyone else is at a 30 year low).5. The nationalization of US Banks is an actual debate.6. A US President calls for a fiscal responsibility summit. Americans owe $35k each towards the federal debt, and with entitlements like Social Security and Medicare- all just plain old not funded at all- that obligation per person balloons to $135k. I think we're so late on the fiscal responsibility summit that it would be a joke if not for the fact that we're in such dire straights we need to reverse the course of stupidity. So while I can be like oh, I don't really owe the Feds $135k so who cares!- I shouldn't kid myself. That level of debt is not theoretical, it reflects how much needs to be made up for each of us in taxes or cuts.7. You know times are tough when a bill tries to waft its way to a state's Assembly floor-- proposing to tax marijuana! Oh, those silly Californians...8. eBay used to sell used books and clothes. In times of desperation, people will try to sell anything. $80,000 for 212-867-5301 is my personal fave. The antonymous auction would be the one involving losing one's virginity to the tune of $3.7 million. In a word, eww.9. Americans are saving more and spending less, a sharp contrast to saving nada and spending wildly beyond one's means. 10. And last but not least, change is definitely in the air when Manhattan's luxury real estate market is, of all things, on sale.And of course, it goes without saying, things are not quite the same old same old when a recession hits all classes, the US is in danger of having no American car company, banks are going belly up, the interest rate is near zero, and inventory- from cars to homes, exceeds not only demand, but access to financing for what little demand there is. The list is endless, and a top ten list could easily go on to a gazillion.[...]

A Baby!


After a many month long hiatus from blogging, I'm gearing up for a comeback. My utmost apologies, but M and I had a bouncing baby boy late November, and life has been, well, just a tad bit chaotic. An absolute joy, but the sleep deprivation has been biting into my blogging time. Until I start to sift through an attempt at understanding the economic carnage, I leave you with a recent article in the NY Daily News that declares it takes $123,322 a year to be middle class in NYC. Class is a wiggly beast, and while M and I fall far short of this article's vision of middle class, I think it would be unfair to exactly call us the working poor. So I'd like to declare myself part of the sub basement middle class...

Tracking November's Grocery Spending


(image) I just finished renovating our monthly budget, and under Groceries I have $400 per month (covers both M and I). I am going to hazard a guess and say that this is a nice blend of wishful thinking and total denial.

Since New Year's resolutions are right around the corner, I figured I might as well find out. So for the month of November I'm going to save all grocery/bodega/food co-op receipts and see what the final tally is. I figure that we should be able to eat in on $100 a week, so one of the interesting things about going through the receipts will be finding out what the budget breakers are. If I was a betting budgeter I'd place money on it being my obsessive purchase of blocks of cheese...

New York State's Budget Gap


New York Governor David Patterson was in Washington this week testifying before Congress regarding New York State's projected 3.5 year budget deficit of $47 billion dollars. Egads.New York State has long paid more in federal taxes than it gets back in aid from the Feds. While I agree in principle that the wealthier states should shoulder more of the financial burden than, say, Alabama, it is also ironic that it's the blue states who pick up the tab and are then held hostage by the red states' conservative politics. If pro-American is pro-rata, then Palin is on the wrong side of the fence. But I digress, which is understandable given that Tuesday is right around the corner. Thank god.Back to my home state's woes. In 2007 New York state sent the Federal government a nice big fat check for $86.9 billion. What we got back from the federal government in return was a lowly rank of 40th in the nation in federal funding per taxes received. Of course, New York State would do well to take note that New York City paid $11 billion more in state taxes than it got back in state aid, essentially making all of upstate New York our welfare ward. Again, in principle I support the idea of the big guy supporting the little guy, but New Yorkers (the five borough kind) are constantly held hostage by New Yorker's (the rest of the state kind), so my enthusiasm for fairness is tempered every time things like congestion pricing get shot down. Like Western New York even has a rush hour (don't mind me, I can say things like that since I grew up in Buffalo).All of which is to say, we have good reason to be freaked the frack out. Twenty percent of New York State's revenues come from Wall Street. Ditto for the city. And even the Wall Street Journal doubts Bloomberg is right for the self coronation job.So when Patterson says he doesn't want to raise taxes, it's because New Yorkers already pay more in state taxes than all other states except one (that would be New Jersey, believe it or not). It's not the taxes, it's the inane New York State Legislature's spending spree that goes unchecked year in year out. If they manage to come back after the election and actually suck it up and cut spending, it would be a miracle of near biblical proportions.Is there a way out? New York Magazine recently did a cover article on David Patterson that looks for some answers. None of which come easy.Fiscal irresponsibility from all levels of government and capitalism have put us at risk. So I would like to take a moment to point out the most obvious, something that someone with piggybank blues knows all too well. Your budget-making abilities suck donkey by Wayan Vota via flickr[...]

Credit Card Crunch


The NY Times article, As Economy Slows, Lenders Begin to Curb Credit Cards brings the credit crisis from Wall Street to, you know, your street. If you want a pretty decent primer on how to protect yourself, check out the San Diego Union-Tribune piece here.Either I have sucker written in halogen across my forehead, or my credit must be pretty good because the past few weeks I've seen an uptick in credit card offers stuffing my mailbox. That isn't exactly the norm right now, and the Times article lays out some basic ways that we'll start to feel the squeeze.First, the why:Lenders wrote off an estimated $21 billion in bad credit card loans in the first half of 2008 as more borrowers defaulted on their payments. With companies laying off tens of thousands of workers, the industry stands to lose at least another $55 billion over the next year and a half, analysts say. Currently, the total losses amount to 5.5 percent of credit card debt outstanding, and could surpass the 7.9 percent level reached after the technology bubble burst in 2001.After years of profiting off of us losing our shirts, lenders are now taking enormous losses. And make no mistake about it, even creditworthy consumers are going to feel the pinch, just like creditworthy mortgage seekers are having a hard time right now. If the financial and banking industry is broke enough to get bailout after bailout, then rest assured they're broke enough to extend any kind of credit to the likes of you and me. And that includes the plastic kind.The how:Big lenders — like American Express, Bank of America, Citigroup and even the retailer Target — have begun tightening standards for applicants and are culling their portfolios of the riskiest customers. Capital One, another big issuer, for example, has aggressively shut down inactive accounts and reduced customer credit lines by 4.5 percent in the second quarter from the previous period, according to regulatory filings.Lenders are shunning consumers already in debt and cutting credit limits for existing cardholders, especially those who live in areas ravaged by the housing crisis or who work in troubled industries. In some cases, lenders are even reining in credit lines after monitoring cardholders who shop at the same stores as other risky borrowers or who have mortgages from certain companies.While such changes protect lenders, some can come back to haunt consumers. The result can be a lower credit score, which forces a borrower to pay higher interest rates and makes it harder to obtain loans. A reduced line of credit can also make it harder for consumers to manage their budgets, because lenders have 30 days to notify their customers, and they often wait to do so after taking action.Some other notes from the article:* Even Amex is pushing some creditor's interest rates up 2 to 3 percentage points.* Rewards shmwards. That "free" flat screen went from a Sony to an Insignia.* Anticipating the regulation that's headed their way, credit card companies are pulling back on zero percent credit card offers to everyone under the sun, eliminating teaser rates, and chopping up the length of time a zero percent rate is good for.* Our mailbox will get 13 fewer pieces of junk mail a year. See above.All of which may inspire a how-dare-they-! kind of response. Aside from the fact they scrod the pooch when they were making bank off of crazy credit limits, high fees, and trap doors for the average Joe and Jane, they now have some pretty legitimate reasons why they're doing this. The credit crisis is trickling down. To summarize from the article:* The credit card market is shrinking. It's not like people are exactly banging on the door to get even more credit cards and the debt that goes along with it.* Credit card companies' profit margins are shrinking. Credit card companies have their own financing-- credit c[...]

Lewis Cho Sample Sale


Despite the fact that the economy has the moody blues, the season of holiday parties and other frivolity requiring a high alcohol tolerance and fashionable studs is fast approaching.

For the fashionistas on a strict budget, Lewis Cho is having a wharehouse sale with everything $50 or less. A wardrobe update with up to 80% off sounds pretty good right about now!

Sale is Tuesday, Oct 28th, Wednesday, Oct 29th and Thursday, Oct 30th from 11am - 8pm at:

Lewis Cho
225 W. 36th Street, Suite 701, between 7th & 8th Aves.

Support your favorite indie fashion designers!

Buy American


Warren Buffet's NY Times Op-Ed, Buy American. I Am. has a short two word per two sentence title. His advice, on his authority.

I couldn't possibly say it better, so I encourage you to click and read.

A preview:

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.

Finding Bottom


While the markets continue to walk the plank, I've been trying hard to think of ways not to completely lose my mind. I like to repeat the mantra, It's all about the number of shares, not the dollar amount, the number of shares... Does it work? Uh, not really.After the Dow cracked 8000 yesterday, I decided to buy in. Because after all, you buy low, right? Honestly, the best thing to do with your money right now is to buy stock. But that is much easier said than done. The problem with buying low these days is that you never know how low it can go. To make matters worse, to find the bottom of the market is much easier after the fact. Frankly, anyone who tells you they know when this market is hitting bottom has his/her pants on fire they're such a liar, liar. Nobody predicted this. While Buffet warned of the dangers ahead, I don't think that even he thought it would unravel quite like this.About a month ago I bought some stock that was near its 52 week low. The market at the time, as you may recall, was going apoplectic and I thought I was buying a good company at a bargain. Boy was I wrong. Because oil fell on its ass, the S&P fell on its ass, and today when I logged in to my Scottrade account I found out I too had fallen on my ass-- I lost 60% of my money on that stock in less than four weeks. So what did I do? I bought more. But not of that company. I was so spooked by that loss, even though I know it'll be okay in the end, that I bought an ETF of the S&P 500. If that's alphabet soup, I did a post a while back on index funds and ETFs here. To be honest, I was torn. I've been casting sidelong glances at blue chip companies like GE. This afternoon it was at $18 and change, smashing its 52 week low. It's now up to $21 and change as I type this. I could lose my lunch trying to pick the moment to strike. And then you have sparkly American companies like Apple and Google offering steep discounts. The risk is that you could find out later that this nice big blue chip is on the brink of bankruptcy, or that the floor of the Dow Jones Industrial Average just collapsed and took everybody with it. I work for a man who made his money as a successful investor. Today he shook his head and said, "The problem is, all the rumors so far have turned out to be true." So I steered clear of GE, even though I was tempted, and conservatively bought SPY. If you have some spare change lying around and you don't mind looking at it for at least five years, I'd suggest you buy an ETF with a wide net of diversity tracking an index you understand (in other words, the S&P 500 versus Brazilian small caps). Because it's not about finding the absolute bottom, it's about buying into the market at a much lower price than it will be five to ten years from now. Stocks haven't been this cheap since 1985! And because companies are dropping oops-we-lost-billions-of-dollars kind of surprises on us left and right, I'd really really encourage the average investor to stick with index funds/ETFs through a ROTH IRA. Also, don't go all in. For example, if you have $4,000 to invest, you could invest $1,000 a week for a month to spread your price risk. In the meantime, prepare for a rough ride. And remember, as long as a company doesn't go belly up, they can't take away how many shares you have. While that's been of little emotional comfort to me, it does keep my panic in check.[...]

Why We Need the Bailout


The past month has been dramatic, and certainly the past few days are no exception. With a whirlwind of controversy over the failed bailout plan, there seems to me to be some misplaced rage. Thomas Friedman's Op-Ed, Rescue the Rescue, hits the nail on the head. Count me in to tar and feather the brokers, who James Cramer lays blame to in a recent New York Magazine article:The unraveling started with brokers searching for new income streams after the post-dot-com collapse of equities. With the Federal Reserve taking interest rates down to 1 percent to jump-start the economy after 9/11, these firms’ clients were desperate for bonds that could give them a higher return than risk-free Treasury bonds. With low short-term rates available to tease borrowers, as well as what seemed to be endless home-price appreciation and a glut of global cash seeking a home, the brokers decided to package all sorts of arcane mortgages into bonds and sell them to institutions and hedge funds around the world. The whole scheme rested on the underlying value of those homes, which would never decline again—right?Count me also as first in line to spit on the shiny shoes of every top one percenter tax bracketeer whose greed got us in this mess to begin with, and surely aren't worried about how they're going to pay for their Metrocard this month--bailout or no bailout.And yes, as I've railed about before, it's we the little people who got snookered and we the little people who are now footing the bill. So the rage is real, but to be against the bailout is directing the anger to a place more akin to shooting yourself in the foot, when you were aiming for Richard Fuld.Look, when people are talking about a credit freeze that involves a $700 billion bailout, rest assured they're not talking about someone taking away one of your credit cards. While that is a real trickle down outcome of this mess, nobody is trying to spend $700 billion to help out your sorry ass. No, this is a business credit freeze. And while many people are like I give a flying duck, the fact of the matter is you should. Because our economy runs on credit- it literally fuels the engine that we all benefit from.For example, a few friends of mine are designers. As small business owners, they do things like make clothes from scratch and other things beyond my meager talents. So they design something and send it off to a factory, the factory bills them (ie credit) and they have X amount of days to pay. Then they sell their clothes to stores, and in turn bill the stores who have X amount of days to pay (ie credit). If somewhere along the line someone can no longer afford to extend X amount of days to pay, it is a chain reaction, and as we all know, you can't pay unless you got paid. It would simply not be possible to be a fashion designer, small potatoes or big kahuna, and pay everything up front. Another example-- take restaurants, a dime a dozen in NYC and our motherlode of small businesses. When a restaurant or bar buys liquor from a distributer they have an approved credit line. Liquor is expensive, especially in large volumes, so they get, say, 30 days to make money off it and then they're able to pay their bill. For a restaurant to pay up front for liquor, for restaurant supplies, for all food deliveries, etc., it would cripple the business and they would go under. Not because they were poorly run, necessarily, but because you need credit to take risk, to make a profit, to get paid. If the liquor distributer suddenly loses its own ability to buy on credit, whether because credit is frozen or the interest rates are raised too high, the subsequent effect on restaurants in the city would be none too pretty. And on a larger scale- you think H&[...]

What Just Happened? (and do I care?)


Talk about high drama on Wall Street. I don't even know where to begin. Normally when large established companies start to tank, they are gobbled up by healthier companies. They don't just fail.The Economist's Nightmare on Wall Street has a pretty succinct recap.EVEN by the standards of the worst financial crisis for at least a generation, the events of Sunday September 14th and the day before were extraordinary. The weekend began with hopes that a deal could be struck, with or without government backing, to save Lehman Brothers, America’s fourth-largest investment bank. Early Monday morning Lehman filed for Chapter 11 bankruptcy protection. It has more than $613 billion of debt.Other vulnerable financial giants scrambled to sell themselves or raise enough capital to stave off a similar fate. Merrill Lynch, the third-biggest investment bank, sold itself to Bank of America (BofA), an erstwhile Lehman suitor, in a $50 billion all-stock deal. American International Group (AIG) brought forward a potentially life-saving overhaul and went cap-in-hand to the Federal Reserve. But its shares also slumped on Monday.Then, of course, the Fed bailed out AIG with an $85 Billion Loan Rescue. I have read thousands of words this past week that relate to derivatives and credit default swaps, and I regret to inform you I still don't know what they are. Although the Globe and Mail did a decent job that my brain understood for a few seconds what was what, as does the NYT's The F.A.Q.’s of Lehman and A.I.G..So what's a person, a little person with piggybank blues, supposed to do? I'm not talking about desk jockeys on Wall Street (that's more like Fort Knox blues...), I'm talking about grad students, people who work for non-profits, freelancers, baby white collars, artists, the just-trying-to-get-by-ers: people who may or may not have even heard of AIG before Monday and couldn't tell a CDS from an MP3, but certainly understand that this is ass-backwards socialism and a free-marketeer f*ck up. Well, first things first, check the IRA!Morningstar has a nifty little list in Lehman, AIG, Merrill: Which Funds Are Most Affected?. Fidelity pops up a few times. Most of my Roth is with T. Rowe Price, so I called them. The lady was nice. My list was Lehman, AIG, and Merrill and she had the foresight to add Washington Mutual. So-called Lifecycle or Retirement Funds, a mutual fund that is a basket of funds whose allocation and risk are tied the year you want to retire (so my Roth is in a fund called Retirement 2040), probably have a little of one of those troubled companies. In my case a couple funds own less than 1% of AIG and WaMu. And here's where diversification actually works. Even if two of my funds own less than 1% of those sickly companies, that's two out of, say ten, mutual funds in the Retirement 2040 fund. Morningstar also has an article on Funds Exposed to Other Dangerous Financials. A few posts ago I said I was selling a fund and buying stock instead, well the fund was Oakmark Select and they're cited in the article as owning 3.47% of Morgan Stanley. So I say, call the toll free number of all your mutual funds and ask them just how much you own of Lehman, Merrill, AIG, and whatever major US company happens to be on the brink of failure that day. They've already heard the question a million times, and they'll be more than happy to tell you the answer. Some, such as TIAA-CREF's open letter to shareholders simply tell you what's what on their website.Another thing people are worried about are the "safe assets", like money market funds. Lots of money market funds buy things like the debt of a nice big cozy company called AIG. A money market fund is no savings account, even th[...]

When the $h*t Hits the Fan


You know it's bad when Greenspan says the economy is in a once-in-a-century crisis, because that time frame includes, um, the Great Depression for chrissakes!

I re-subscribed to the WSJ recently, and I've been online perusing the comment sections of the lead articles. Ninety percent of what's said I can't even repeat, but I have to say I learn more from the commenters than I do from the articles. Cursing aside, the workers on the Street are freaking out and doing so with great articulation and conviction. And after a little while I started to wonder, should I be freaking out too? Does it matter to me if an investment bank or two goes under? Right now, no, I'm getting ready to call it a night with the A/C, a propped pillow, and a nice book of fiction. In the morning there will be more news and I can figure out if the sky is falling on me, as well as on Lehman, Merrill, AIG, etc.

One interesting note on the WSJ article comments- many want to do unspeakable things to Bush, Greenspan, Paulson, and the Republican party in general. I can't quite figure out why, a lot of industry-speak and jargon thrown around. But there was also a lot of talk about the repeal of the Glass-Steagall Act, signed by none other than President Clinton. The act separated investment banking from commercial banking, and many say its repeal led to subprime mortgage stupidity. Along with Bush, Greenspan, Paulson, and the Republican party in general. PBS has a nice timeline of the Glass-Steagall act here, for those interested.

Back in the morning with, I'm sure, news so bad it makes you wish for a breadline. That Greenspan, he's such a joker.

Library Fodder: The Man Booker Prize Shortlist


They just announced the six finalists for the Man Booker Prize, that literary prize for novelists from the Commonwealth of Nations and the Republic of Ireland. Talk about the sun never setting.

Anyways, if you're itching to put a hold on a book at your local library and need some book ideas, check out the list:

Aravind Adiga The White Tiger
Sebastian Barry The Secret Scripture
Amitav Ghosh Sea of Poppies
Linda Grant The Clothes on Their Backs
Philip Hensher The Northern Clemency
Steve Toltz A Fraction of the Whole

You might notice the absence of Joseph O'Neill's Netherland and Salmon Rushdie's The Enchantress of Florence, so like all prizes, this shortlist won't be short on debate.

A Middle Finger to the American Savers


First, I would like to congratulate myself on two posts in two days. After a year of blogging, I realized that even my virtual free association on economic matters needs to take some time off every now and then. I sense that the blogging vacation is officially over, so back to work I go.Business Week's article, Why American Savers Have Drawn the Short Straw tells us what we already know; sucks to be us. And by us I mean the savers, today's white unicorn. Presumably right about now it's the savers who should be rewarded. We lived within our means and ignored the white noise of those big bad institutions who were trying to get us snookered into their own profit making scheme. We paid down/off credit card debt instead of punting it to the moon. We put a little away for retirement, for a rainy day, for a future purchase to be paid in full. And now when everything comes tumbling down, we should be basking in our glory, the proud but silent collective I told you so! Fat chance. Even with a current account deficit that, starved of domestic savings, requires $2 billion a day in foreign financing, economic policymakers are fixated on propping up credit and giving the participants in the housing bubble second chances. In order to do so, they are stripping the hides off of net savers.Since August of last year, the Federal Reserve has slashed interest rates from 5.25% to 2.00%—wielding a blunt instrument that was swung enough to bend the yield curve in favor of suffering banks. You know, the institutions that screwed up but were too big and important to be deprived of an inalienable right to cheap deposits that they can loan out at several points higher. My ING savings accounts are certainly not keeping up with inflation. I've tapered off what I save to the bare bones because things like groceries and gas are taking a noticeably bigger bite out of my monthly budget. And my Roth IRA is losing money as fast as I'm putting it in. So when I read this morning's WSJ headline announcing that the Federal government is taking over Fannie and Freddie, I'm having an apoplectic seizure in front of my laptop. Sure, I'm a just little guy (or gal, as it would be), my piddling savings isn't propping up nearly half of the outstanding mortgages in this country (like Fannie and Freddie, in case you were wondering why they get the bailout). But seriously. Moral Hazard anyone? Moral Hazard is a term economists like to banter about; it basically means that if you don't hold companies in check, they think they can do whatever the heck they want. And they do. And the bailout of Fannie and Freddie, and previously Bear Stearns, pretty much fits the bill of creating a moral hazard. Joseph Stiglitz did an outstanding job of breaking down Fannie and Freddie's moral hazard in a recent article for the Financial Times.Defenders of the bail-out argue that these institutions are too big to be allowed to fail. If that is the case, the government had a responsibility to regulate them so that they would not fail. No insurance company would provide fire insurance without demanding adequate sprinklers; none would leave it to “self-regulation”. But that is what we have done with the financial system.Even if they are too big to fail, they are not too big to be reorganised. In effect, the administration is indeed proposing a form of financial reorganisation, but one that does not meet the basic tenets of what should constitute such a publicly sponsored scheme.First, it should be fully transparent, with taxpayers knowing the risks they have assumed and how much has been given to the shareholders and bondholders being bail[...]

B of A $75 offer


I've been a lazy poster lately. Here, I'll make it up to you and hand over seventy five bucks...

Bank of America, with its newly ubiquitous ATM storefronts, enticed me to open up an online checking account. The offer of $75 is good for new online banking customers. I just opened up their online checking account, with no account minimums or fees. I did deposit $25, you need to deposit the twenty five bucks within thirty days to get the $75 bonus (deposited within 90 days). I figure I'll close it after a few months and take my money and run. Probably to ING, my long neglected piggy bank.

A 200% return on my money, now there's something unheard of in, oh, say, ten years...

What to do, What to do...


So I've clearly been on vacation for this whole summer. Maybe not a physical vacation, but certainly a mental vacation. And now that September looms and I'm coming back to earth, I realize that my finances are in disarray. Mental disarray, that is.

While I was away, the price of gas went down. Considering we drove 3,000 miles in our trusty Chevy Prizm (ie Toyota Corolla), it was a welcome reprieve from the oil madness. And while our economy is floating about as well at the Titanic, there's positive and negative sides to the drama, never mind the economic debate about are we or aren't we in a recession. So while all this was going on, what did I do? I ate Maine lobster. And lots of it.

Thank god for autopilot. Every month our checking account is drained for our Roth IRAs and our ING accounts (travel, Christmas, gym membership, car, emergency fund). It's not a lot of money, really, but over the course of a year it adds up to a softer cushion than a crash landing. And so not much changed. Well, except for the drooping value of my IRA, and the fact the car fund and travel fund got drained.

So I realized when I got back that I like to have my head actively wrapped around my finances. Autopilot or not. And that part of all that sitting around dreaming up goals and ways to meet them is the planning part of financial planning. After looking at my Roth IRA mutual funds, I decided to sell off one of the losers (I know I'm not supposed to do that but whatever) and transferred it to my online brokerage account. Why? Because I'm convinced that the iPhone will propel Apple farther than the S&P average.

However, I'm sure there's an actual, like, method to picking stocks that involves math and other values of sound judgment. So over the next few days I'll dig up some dusty econ book and figure out just how a person looks at a stock and assesses whether it is a good buy or not. And since I'm feeling like a delinquent poster, I'll post my trials and tribulations as an amateur stock picker here.

I'm excited about my project, but a little worried. While I can appreciate the crack-like epidemic that is sweeping iPhoners, it is, after all, my retirement we're talking about here.

Concisely Painful Economic Forecast


I'm sure it'll be blogged to death, but the NY Times' Uncomfortable Answers to Questions on the Economy is really, really good. And not in its positive outlook, but in its format. Simple questions, concise yet broad answers. What the average person really wants to know about what the hell is going on out there, but was afraid to ask.

Is This a Recession? Who knew some private institution was the semantic god of the big "R" word, no wonder economists are arguing over are we or aren't we ad nauseum. So the Economic Bureau of Economic Research says no, most others say yes. The article breaks down why.

How Bad is Housing? The article is fantastic when it talks about housing. They break it down, and the gravitational free fall isn't over yet. Economists expect another 10-15% drop in housing prices, and there's currently enough homes on the market to satisfy 2+ years of demand, without ever having to build another. I'm no real estate guru, but that sucks tailpipe.

When Will Banks Revive? $300 billion in write offs with an expected ceiling of $1 trillion. Those numbers are so off the charts they mean nothing to me. Other than someone made a $h*tload of money f@ck*ng up. Again, the article does a short and sweet breakdown, but you read stuff like that and you just want to go out and kick some banker butt.

Is My Job Safe? It aint over 'til the fat lady sings, and she's not even warming up yet. We're workers in an economic Jenga, and pile that on with wallet busting gas prices, 5% overall inflation, lower wages-- it's a bleak picture. That said, "only" a few hundred thousand more workers will lose their jobs. “In every dimension, people are worse off than they were,” said Mr. Roubini, the New York University economist. In a market of millions, cross your fingers and hope your job has nothing to do with the housing market.

Are Consumers Done? and the last question, an American favorite, Who's to Blame? This is the part that's horrifying. Consumer spending counts for nearly 70% of all economic activity. Are ya kidding me?? My take is, you can't have your cake and eat it too. I don't care where you got your MBA from. You can't feed the American consumer indigestible food, watch them puke it up, and blame them for the mess. Look, obviously as a PF blogger I have my issues with those who spend beyond their means. But get real. The blame goes high and low, and pretty much nobody is unscathed. And that's the part of the article most painful. Yes, we all did this to ourselves, but we sure had some help along the way.

What I'm Not Cutting


Inspired by a CNN/Money article Where Americans Will (and Won't) Cut Back, I decided to take a look at what's on my chopping block.

Consumer confidence is in the gutter, inflation is on the rise and the economy is struggling. But even as consumers cut back on spending, there are some things they refuse to give up.

Nine out of 10 Americans said they are cutting back expenses or discretionary spending at least somewhat because of the current economic conditions; according to a recent study from market research firm GfK Roper Consulting.

And moi? Well, I guess since I'm in the upper coast of Maine, vacation is one category that's not getting cut. But to be fair, M and I save a little every month to be able to go away once a year or so. But flying to dollar depressed countries (ie anywhere in Europe) is going to be put off for a while.

Eating out also isn't on the chopping block, though like eating through the pantry it's one of those theoretical eliminations that never seem to become reality. The reality is that I eat out for less money. No more spontaneous meals at Al di La, it's more like the local taqueria.

Some things are on the chopping block. Driving for the hell of it. Buying new clothes. Buying gadgets. Buying lots of books (though I still buy some, I'm not blowing $100 at the Strand- I'm setting one book limits which for the first time I actually adhere to). And saving.

Yes, saving more money is on the chopping block. Even though I would love to save even more pennies than I already do, and pretty much every year I try to increase it a little, this year I wasn't able to increase it as much as I would have liked to.

And what I'm not doing? I'm not one of the 50% of Americans buying a new HD/flat screen TV within the next year. Other things the article sited as things Americans are loathe to cut right now are cable/satellite TV subscriptions, vacationing and travel. It's alright, I never thought I'd see the day Americans would be conscious of fuel efficiency. Then again, I was just a kid during the last energy crisis.

The Oh $h*t Fund


Sometimes things happen that make me think thank god I have a savings account, that if I didn't have a cushion, no matter how small it may seem, the most insignificant fall could have ended up breaking a bone. Instead, I just got a good internet workout with my ING account.

Saturday morning M and I left Brooklyn for a three week vacation (!!). I won't bore you with the details, but essentially a large purchase for M's work went on our credit card right before the card's monthly statement ended. This meant that the check reimbursement from work would not come until a few weeks after the payment was due. While we were away on vacation. On top of that, my freelance check would also come in-- you guessed it-- while we were on vacation. I guess the old me would have paid some smidgen over the minimum payment on the credit card, canceled the automatic IRA investment that happens on the 15th of every month, and just gone into a rationalized debt for the sake of a few weeks of summer vacation.

Okay, maybe this doesn't count as an emergency. But sometimes calling something an Emergency Fund is a little more alarming in name than what life throws at us. So I transferred some money from our aptly labeled ING Vacation Fund and Emergency Fund into our respective accounts and will enjoy vacation free from the stress of what is going on in our bank accounts. When we get back and deposit our checks I'll just transfer the money back into the ING accounts. Because you never know when the next oh $h*t moment will happen.

And that's just one way I avoided 7 Surefire Ways to Stay Poor

Back From The Hiatus with Endless Random Thoughts


Wow, it's been a while since I've really posted. Thanks for all the kind words, things worked out in the end. M's great uncle got sick and things took a rapid and surprising turn for the worse. He passed away, but it was for the better if such things could even be possible. I guess modern medicine makes it possible, with the opportunity to live longer there's always a question of quality of life. On a selfish level I may wish the old guy was still here so I could kick his ass in cards, but honestly he was more than ready, and openly said so. I lived a good life, quote unquote. I hope that when the day comes for me I can say the same.

Then I went home to Buffalo for a while to visit my family, and I had a talk with my mom about her impending death, which she seems to bring up repeatedly despite being in fine health and a hair above a youthful sixty years old. I also moved my sister into a new apartment, and her money woes frankly just make my head hurt.

Being away from the city and my day to day life these past few weeks made me think a lot about money. I know I obsessively save, not in large amounts but with a certain consistency, and I read a lot of bloggers' paths to the long road to retirement as well. But from the struggle to get M's great uncle proper medical care, to my mom's sincere freak out over the gyrations of the stock market and her own retirement right around the corner, financial planning is no joke. There is a very real end of the road, and a reason why we do these things to begin with; live below our means, save, plan for retirement.

Sure, I'd love to have a Prius. I can even rationalize that to have a short car loan will boost my credit score. And driving around for a thousand miles before I fill the gas tank sure sounds like more fun than pouring money into my Roth IRA that keeps on sinking like the damn Titanic, but this choice is a privilege. How so?

Take my childhood, for example. Working class family below the poverty line before Reagan bumped it up. Not consumers, by any stretch of the imagination, there simply was no money. Also, not savers, no 401k, etc. Fast forward into my adulthood, when my mom finally gets a retirement plan from work, into which she diligently saves. But there's a lot of lost time that can't be made up, so I know that when she's watching the Dow she is really really worried, and I'm worried for her.

And me? I'm a consumer. I save, sure, but it comes from the money allocated for my consumerist ways (aka disposable income), and I could always save more, no matter what I say on this blog. That's the difference. Nowadays we are a nation of consumers, and we have thousands of dollars of credit line(s) to keep up the habit. So that privilege I was talking about before? The privilege is not in the decision to save, it's in the decision to spend.

In the end- nobody's perfect, I know I'm not exactly giving up my material goods for a higher cause any time too soon. But there has to be some middle ground, and if I never laid out what it took to retire like a normal person, then I might have never found that middle ground. Because I will always lust after things like a Prius...

Credit Card Myths


I've been dealing with some family stuff for a bit and I'm out of town, so this post will be short 'n sweet.

In the meantime, in my brief foray back into financial news I stumbled upon this, 9 Big Credit Card Myths-- among them, minimum credit card purchase. Good luck raising holy hell trying to get that bodega to comply.

Mapquesting Cheap Gas


Well, you might as well add Mapquest Gas Prices to your to-do list the next time you budget your commute or your summer road trip plans.

Type in a zip code, etc. and a map will pop up with local gas stations and their gas prices. While it doesn't alleviate the sticker shock, it's not such a bad idea to penny pinch at the pump whenever you can.

Speaking of which, I applied for a BP Visa card and got one. Actually two, since M and I share the car. It's 10% cash back for the first 60 days, which will cover our summer travel, and then 5% thereafter. Unfortunately, at non-BP stations it's only 2%, but anything to get me close/under $4 per gallon. Of course, there's a million BP stations near me, and none in Maine or Cape Cod...

Other gas station price sites (not quite as intuitive to navigate, IMO):