Kirby on Finance

60 Minutes “Derivatives” from 1995

Kirby — Tue, 28 Oct 2008 13:02:14 +0000

Unfortunately I didn’t catch this 60 Minutes clip from 1995 in which Steve Croft covers the topic of Derivatives. It’s worth watching, if just to see how obvious our current financial mess should have been.

Please share:

The Daily Financial Challenge Jeffrey over at Personal Finance Advice has come up with...
What is your Financial DNA? In a conference call earlier today, Steve Jobs said, "What...
Emotional investing doesn’t work! Last week a few stocks that I owned began to...

Faith Groups Fight Banks on Foreclosures

Kirby — Mon, 27 Oct 2008 18:07:03 +0000

With recent data stating that U.S. foreclosure filings surged 71 percent in the third quarter from a year earlier, to the highest on record, it’s clear that we have yet to hit the bottom of the nation’s housing troubles. With daily headlines letting us know that the government is bailing out another company for billions it’s easy to forget that there are REAL people out there who are, rightly or wrongly, losing their homes.

I was reading an article in Bloomberg and you might be a bit stunned as I was by a quote they included in the article:

“Every time I call them they say they can’t help,” said Flores, 31, a graphic designer and bartender in Contra Costa County, California, where one in every 146 homes is in foreclosure. “They tell you the solution is that they take Visa or MasterCard.”

What a loaded sentence! First off, Flores works two jobs, so I naturally want to root for him to be able to keep his home. But that wasn’t the real grabber in that paragraph - look at what the bank told him when he asked for help - “They tell you the solution is they take Visa or MasterCard.” Really? That’s akin to asking an alcoholic to buy each of you a shot of liquor because you bought him a shot a couple weeks ago.

Don’t flame me for getting upset at a business that is just trying to get an individual to live up to their end of the bargain. I understand the necessity of making money and I understand that from the bank’s perspective, they just want to get paid - how they get paid isn’t their concern. What does bother me is the sheer lack of concern about the greater problem that many of these banks have created.

Naturally, most problems are created through a conspiracy of mistakes and dumb decisions. There’s a good chance Flores purchased a home that he probably couldn’t afford. But, I guarantee you there were a plethora of banks willing to make him a loan that they knew he couldn’t afford to capitalize on his mistake. They did so knowing that they could easily package the loan and sell it off to investors, therefore absolving themselves of the mistake they helped Flores made.

I keep asking myself, why did the banks fail to realize that while they are citizens of their community in addition to being citizens of their corporation? I know they chiefly owe a duty to their shareholders, but what about a sense of decency to their common man? While it’s obvious we can’t expect that from them, thankfully others are willing to help:

Now Flores has a new ally: the Antioch, California-based Contra Costa Interfaith Supporting Community Organization, one of a growing number of religious and community groups pushing lenders to renegotiate troubled loans so owners can stay in their homes.

Still, more homeowners are turning to groups such as the Contra Costa organization for help in the early stages of mortgage problems, before they result in foreclosures. An affiliated group called the PICO National Network, based in Oakland, California, says it is working with hundreds of families in Contra Costa County and plans to help as many as a million homeowners nationwide.

PICO, short for People Improving Their Communities Through Organizing, is kicking off a national tour tonight in Flores’s hometown of Antioch, where 500 clergy and community leaders are due to meet with representatives from Wells Fargo & Co., Bank of America Corp. and the Federal Deposit Insurance Corp.

The group says it will then move to Kansas City and three other cities before traveling to Washington for a meeting with House Financial Services Committee Chairman Barney Frank. Washington Mutual Inc., now part of JPMorgan Chase & Co., and Wachovia Corp. are other lenders the group is trying to sway.

“It’s a local issue in terms of impact on families and communities but this needs a national response,” said Tim Lilienthal, PICO’s communications coordinator. “We need to move from a case-by-case way of doing things to a more systematic approach.”

PICO has 20 local affiliates in California. Other faith- based groups like the Gold Cross of America in Deltona, Florida, are offering assistance to homeowners as they negotiate with mortgage companies.

I’m glad there are organizations like those who are willing to help homeowners but it’s a shame that they’re even necessary.

For more information:

California Faith Groups Fight Banks on Foreclosures [Bloomberg.com]

Please share:

Are you stupid for paying your mortgage? There's a famous line out there: "Nothing is as certain...
Gambling: How it’s costing us all! The Capitalist Blogger has a really great post about the...
We know what happens when we spend like this . . . Million Dollar Goal has a great post regarding the national...

What is your Financial DNA?

Kirby — Thu, 23 Oct 2008 16:57:53 +0000

In a conference call earlier today, Steve Jobs said, “What we want to do is deliver an increasing level of value to these customers, but there are some customers which we choose not to serve. We don’t know how to make a $500 computer that’s not a piece of junk; our DNA will not let us do that. We’ve seen great success by focusing on certain segments of the market and not trying to be everything to everybody, and you can expect us to stick with that winning strategy.”

I have always admired Steve Jobs. Not just because I use and love Mac’s but because he has an ability to seize the moment, grab our attention and inspire us to not only believe in what he’s doing at Apple, but what we can do for ourselves through the products he creates. As I kept thinking about that quote, I realized there’s a little something there for all of us – particularly with respect to our personal finances.

Think about what Steve Jobs said above, making inferior computers in order to reach a low price-point isn’t in Apple’s DNA. Essentially, the grounding principles of Apple won’t let them risk the trust of their customers by compromising their standards.

I’m sure you’ve heard of the Human Genome Project. Essentially, the project has mapped out the human genome by literally decoding our DNA in such a way that each of us are now able to have our personal genome decoded. This process will literally revolutionize the way doctor’s treat their patients, allowing them to predict what diseases or conditions the patient will ultimately develop and treat them before they even occur.

Just as Apple’s DNA won’t let it produce cheap computers at the risk of an inferior product, our own DNA has imbedded with it certain characteristics that increase or decrease the likelihood of some health related problem down the road.

All of this begs the question, what is your financial DNA? Does your financial DNA dictate that you won’t use credit cards because of the inherent risks they pose on your spending habits? Conversely, does your financial DNA show signs of potential spending problems down the road and warrant the need to “treat” the problem early and the need to develop ways to live more frugally?

It’s a shame we can’t send our financial DNA to a specialist and have them decode it for us like they can our actual DNA. However, with an honest look at the way we handle our finances, we can get awfully close.

Please share:

My Current Financial Situation (January Edition) Since January is over, I felt it appropriate to update...
The Daily Financial Challenge Jeffrey over at Personal Finance Advice has come up with...
How to stop nickel and diming yourself into the poorhouse! When I made the decision to be more frugal with...

AOL Abuses Paid Subscribers

Kirby — Tue, 21 Oct 2008 19:46:57 +0000

I canceled my AOL service a long time ago, but I certainly do not mind being reminded of what I good decision that was. A recent class action lawsuit against AOL claims that the service inserted ads at the end of e-mail messages sent by members who paid for the service. Essentially, the plaintiffs argue that unlike members who use AOL’s service for free or similar services from AOL’s competitors such as Yahoo and Hotmail, they pay for the service and therefore shouldn’t have their e-mails used as ad delivery vehicles.

AOL Sued on Ads Put in Emails [Courthouse News Service]

Please share:

Can you pass the money test? Suze Orman has a really good money test for you...
Free file hosting services! When I need to transfer large files, I just use...
Click-Through Rebates The business of gaining new customers can be quite expensive....

Cheap World Series Tickets for Those Who Wait

Kirby — Tue, 21 Oct 2008 16:38:35 +0000

I’m not sure how many of you are baseball fans, but getting to see a World Series game probably has some appeal to most of us. As a Braves fan, I never had the chance to make it to any of their previous appearances in the World Series, but I was lucky enough to catch several of their playoff appearances (those were the days!). Normally, I’ll do a quick check on Ticketmaster to see if there are any tickets available and if not, I usually resolve to find a scalper (where legal, of course) or a friend that might have a ticket to spare.

Well, if you’re interesting in seeing a World Series game this year, don’t worry - it’s a good thing you haven’t bought a ticket yet. Andrew Sweeting did some ticket price analysis for a research paper and determined that ticket prices actually decrease as game-time draws near.

Sweeting has meticulously crunched the data on baseball ticket sales for 2007 on StubHub.com, and he cross-checked his analysis with data from another (anonymized) online source. He documents a rather striking fact: the prices of baseball tickets tend to fall through time.

So here’s my advice: If you are looking to buy World Series tickets, you should wait until a day or two before the game. In fact, as the graph below shows, this may yield savings of 25 percent, or more!

When to Buy World Series Tickets [Justin Wolfers/Freakonomics Blog]

Please share:

The Best Time to Buy Everything! I think it’s safe to say – we all love...
Board games are cheap entertainment! Think about how much money we spend on movies, TV,...
Investing your way to “cheaper” gas! This weekend I saw an article in the Wall-Street Journal...

10 Positives About Today’s Economy

Kirby — Mon, 20 Oct 2008 15:56:46 +0000

I know what you’re thinking - this economy stinks. While you’re absolutely right, it is certainly good to remember that few things in this world are all good or all bad. Perhaps this crappy economy follows that maxim as well. The jolly folks over at Klippinger’s came up with 10 positives of this current economic mess. Here’s my summary of their list:

It’s cheaper to fill up your car. Remember that it’s not just the U.S. economy that’s struggling, it’s the global economy too. “The national average for a gallon of gasoline is down to $3.00, from $4.11 in March, and should stay in the $3.00-$3.50 range through next year. Prices for home heating oil and natural gas are also headed lower this winter than last.”
Car makers are finally going green. In the past, the auto industry treated fuel efficient and electric cars as more of a gimmicky concept. Well, in today’s economy going green means business. As the average consumer remains conscious of the price at the pump and the cash in their wallet, the auto industry knows that they’ll need to entice you with a car that will save you money at the pump.
Cheap Real Estate. Every time you see a statistic about foreclosure rates being high, remember that it’s a buying opportunity for someone. I currently do not own a home, but as a potential homeowner this market is getting very appealing.
More cheap money! While cheap money has been part of the problem in creating this crappy economy, it remains part of the positives that remain if you’re able to properly take advantage of the relatively cheap mortgage loans.
Increased FDIC insurance. Recent legislation increased the limit of FDIC insurance on all of our bank accounts from $100,000 to a pretty snazzy $250,000. So, if you’re NOT like me and have hundreds of thousands of dollars sitting in your bank account, cheers to you!
Cheap stocks. If you’re able to stomach the volatile market, there are some pretty serious bargains out there. I’ve been tempted to take advantage of a few stocks that are trading at seemingly rock-bottom prices, but I just can’t help but feel that the risk of the market going lower has the potential to pull even the bargain stocks down alongside it.
Cheap Tech. With the slagging economy comes some great deals on items that are normally artificially marked up, like T.V.’s. I’m not really sure this is the time to drop $1,500 on a new T.V., but if you’re able to you’ll certainly get a nice bang for you buck.
Farm exports are up by 40%. You would think that the sagging economy and the recent hurricanes and tropical storms would pose a double whammy for farming, but that isn’t the case.
Change brings hope. Whomever is elected on Nov. 4th will offer an opportunity to turn the page on the past 8 years and the struggling economy too.
Insane Holiday Bargains. Stores normally deeply discount products and offer enticing sales to get you into the store to spend the money that you probably don’t already have - this year will be no exception. With less people spending money the don’t have - the stores will up the ante with even deeper discounts to get you in the door.

10 Things That are Going Right [Kipplinger.com]

Please share:

It’s a confusing time of the year for me. I hate weeks like these. There are so many reasons...
Are you stupid for paying your mortgage? There's a famous line out there: "Nothing is as certain...
Uncle Sam: Give me some money! It’s probably a safe bet to say that we all...

Are you stupid for paying your mortgage?

Kirby — Thu, 16 Oct 2008 14:56:40 +0000

There’s a famous line out there: “Nothing is as certain as death and taxes.” I’m not sure who said it, but I’d like to ask their permission to amend the line to read: “Nothing is as certain as death, taxes, and unintended consequences.”

It seems that whenever we attempt to tackle the problems we face, either personally or as a nation, we lack the ability to really look ahead and see the natural progression of the problem, our proposed solution, and the potential collateral damage that may ultimately result from that solution. Perhaps saying we lack the “ability” to do so is a bit cynical - we lack the desire to take the time to understand the issue.

We’ve become such a reactionary society - if something sounds like a good idea at the time, well, lets just do it! You don’t have to look any further than the last eight years for confirmation of this mindset. Sadly, our nation’s solutions to the current financial crisis are no different.

The most recent idea offered is to suspend the foreclosure process and allow homeowners to rework their mortgages so that the debt they owe on the property reflects the current value of the home rather than what they paid for the property. In fact, John McCain supports such an idea:

“I would order the secretary of the Treasury to immediately buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes — at the diminished values of those homes — and let people be able to make those payments and stay in their homes.”

Doesn’t sound too bad, right? Well, struggling homeowners, Peter Schiff has some advice for you:

If you are a mortgage holder who is either struggling with crushing payments, bitter for having overpaid for your home during the bubble, or who has extravagantly refinanced when prices were rising, the government’s landmark $700 billion bailout package has an important message for you: stop making your mortgage payments . . . immediately. Furthermore, if you believe that with some planning and sacrifice you may be able to meet your mortgage obligations, the government’s message is clear: relax, don’t bother.

Schiff sure sounds like he’s being cynical, but trust me he’s not. Think about the mindset that people have which causes them to live over their means and think for a second what the implications of this plan may have to those individuals.

To bolster your bargaining position it will help to be able to claim poverty. As a result, if you have any savings, spend it soon, before they call. Buy a bigger TV, a new wardrobe, or better yet, take a vacation. After the hardship of spending all of your refi cash, you probably deserve it. If you have any guilt just remember, Washington argues that consumer spending is the best way to stimulate the economy. Living beyond your means is a patriotic duty.

I don’t completely agree with Schiff’s viewpoint on McCain’s proposed plan, but I think his viewpoint does offer one truism - “Nothing is as certain as death, taxes, and unintended consequences.”

Please share:

Does buying a home make you a sucker? As many of you know, I love reading posts by...
We know what happens when we spend like this . . . Million Dollar Goal has a great post regarding the national...
Uncle Sam: Give me some money! It’s probably a safe bet to say that we all...

Frugal April Update - April 3, 2007

Kirby — Tue, 03 Apr 2007 16:53:32 +0000

As I’ve mentioned before, I’ve issued myself a personal challenge to live as frugally as possible for the month of April. Thankfully, I’ve been very busy with school work so I haven’t had the temptation to go out there and spend too much on entertainment.

One very positive development from trying to live frugally is that I’ve realized how much I’ve already spent that I have yet to take advantage of. For the first three days, I’ve been living off of food in my pantry and freezer that I had purchased a long time ago. I think it’s safe to say that I wouldn’t have even touched the stuff if I had gone to the grocery store Sunday.

I’m one of those people that stacks the new stuff in front of the old stuff and then lets the old stuff just collect dust. There’s value in those dusty packages! I think between the frozen chicken breasts I have in my freezer and the stuff in my pantry, I should be able to make it until Friday before going to the grocery store.

My goal at that point will be to have a set spending plan when I walk in the door. I’ll only buy things on my list and I’ll tailor that to what’s on sale using websites and promotional flyers that I get from the local grocery stores in the mail. I’ll be sure to update you guys then!

I’m taking an April spending challenge! [Kirby on Finance]

Please share:

I’m taking an April spending challenge! I decided to challenge myself a bit next month -...
Cutting out Grocery waste - one list at a time! As I mentioned in an earlier post, I’ve decided to...
Tax Deadline: April 17th? Just a note as tax day is looming on most...

Kirby on Finance Carnivals This Week

Kirby — Tue, 03 Apr 2007 13:33:48 +0000

Kirby on Finance had the joy of being included in several carnivals this week, here they are with links to the posts:

Festival of Frugality - The 5 Best Ways to Save Money at Starbucks (Note: Special thanks to Mapgirl for selecting my post as an editor’s pick!)

Carnival of Debt Reduction - Is Your Own Ego Your Own Worst Enemy? (Note: I’m honored to have this article chosen as an editor’s choice, thanks Money Walks!)

Carnival of Personal Finance - Is Your Own Ego Your Own Worst Enemy?

Be sure to go read the carnivals! There’s a ton of great information contained in those posts. As the other carnival’s come out, I’ll post updates.

Cash advanced fast cash into your account

Please share:

A Little Blog Post Collection! I’m constantly amazed at how many great personal finance bloggers...
HSBC raises rate to 4.80% A few weeks ago I decided to sign up for...
Regifted: Can you afford to be so frugal? As you can tell from some of my previous posts,...

Cheap Dating for the Rich at Heart!

Kirby — Thu, 29 Mar 2007 22:05:51 +0000

This is the first post in my series on cheap dating. I’ve titled the series “Cheap Dating for the Rich at Heart,” mainly because I love a cheesy title when it comes to something romantic. Every Friday I’ll post a cheap dating idea for you to use over the weekend and offer a small “guide” into making that dating idea a reality. If you put one of these ideas into practice, please let me know! Just use the “Contact Me” option on the right!

This week’s idea is a classic one for the guys out there - take your date on an unexpected picnic! Let’s just be honest here, if it’s completely unexpected, this will improve your standing with the “lucky lady” by leaps and bounds. You get the kudos of a nice meal at a fine restaurant and an unexpected bouquet of flowers for pennies on the dollar in terms of costs.

Other than food and beverages, here are some general things that you’ll want to bring:

Blankets and Pillows (Unless you’re using a bench or rock - figure this out BEFORE!!!)
Plates/Napkins/Utensiles/Cups
Condiments
Trash Bag
Music (optional)
Something to clean hands

The best part of a picnic is that you get to control all the costs because you pick the place and what’s being served. Since both are VERY crucial to making this frugal date work, let’s look at each individually:

Place:
Naturally, we’ll assume that you’ll try to pull this date off when the weather’s pleasant. The typical place would be a local park, but you might want to think outside the box a bit - if you met in high school, perhaps somewhere on the campus of the school? If you’re just going to goto a park, make sure to use Google Maps (http://maps.google.com) to best locate where you’re going to have the picnic. There’s no suave way to pull off driving around lost or asking for directions. You want this to go smoothly, so you might want to make sure you know of where the place is BEFORE the date.

What to serve:
Really you can serve just about anything! Here are a few websites that will offer ideas if you want to try and whip up something special for the date:

Easy Picnic Food [Cooks.com]
Picnic Recipes
Memorial Day BBQ Recipes [Razzle Dazzle Recipes]
If you decide to try this cheap date for the rich at heart, I hope it goes well! I’d love to hear your stories about this date, and any other frugal dates that you may have been on recently!

Please share:

Board games are cheap entertainment! Think about how much money we spend on movies, TV,...
I’m rich! Well, only if $530 makes me rich! After a few weeks of patient monitoring of my checking...
I’m taking an April spending challenge! I decided to challenge myself a bit next month -...