Dual Income No Kids

Money Saving Tip of the Day

2008-05-14T17:32:00.003-05:00

Todays Money Saving Tip is:

Buy generic instead of name brand. Generic products like groceries, prescription medication, etc. are often of the same quality as name brand products. More importantly, generic products are usually significantly cheaper than name brand.

Best,

James

Online Banking

2008-05-14T16:00:00.001-05:00

Sometimes we don't appreciate what we have until we explore our options. This would certainly be the case with my recent experiences with PNC Bank.

I initially came into the world of online banking with Washington Mutual. While regularly readers will know that we've faced a myriad of issues with WaMu's Home Loans, I had a relatively excellent experience when looking strictly at online banking.

I was stubborn and kept my WaMu account for my first couple of years in DC, holding on to a piece of the Pacific Northwest. I finally converted after looking at all the options in DC very carefully: Chevy Chase, Bank of America, Riggs. I ended up going with Riggs since James was already on their accounts and the whole point was to simplify. I switched over and nearly fell over with how completely inept their online banking was. I couldn't hack it for more than a couple of months and ended up switching everything back to WaMu again. The lesser of evils at the time.

When ING came out with their Orange Electric Checking I jumped at the opportunity and love nearly everything about their online banking. Oh let me count the ways...

Anyway, Riggs was converted a couple of years ago to PNC. Just as I was moving to Afghanistan I went in to close an account under my old name, one of the last hold outs, and got lured in. They had several account perks because of my employer, including no international transaction fees. I asked about the online banking, telling them that I hate hated the Riggs platform, and they had assured me of how excellent PNC's was. Considering that this would be a gain of 1% international transaction fee on all of my overseas spending, and that James still keeps his accounts there, I thought it would be worth having an account there. I also figured that giving James an account with a local branch might make it easier for him to help with managing my accounts.

Since then it has been nothing but a headache. I've been charged international bank fees, as I was not supposed to, and I even got charged to have a wire from my employer deposited. The whole point was that they were giving me special perks because of my employer.

Anyway, I was finally fed up with it all a couple of months ago and decided to start shutting down my account. I canceled the automatic deposit I had going into the account from my employer, and that went well enough.

Then I tried to cancel my automatic payments that had been going to our second mortgage. I canceled the online payment and it worked for one payment and then came back another two weeks later. I canceled it again, and the same. Finally I canceled the whole bill pay system, and it still deducted again - this time causing an over draft. It failed to tell me that a check had already been cut the day before I canceled everything (even though it didn't show that the payment was going out until another week), and thus the payment went through even though everything was canceled from every indication online.

I had to call six times today, with dropped calls and all, to sort out the issue. Now this means that I have to wait for a payment to come over from ING before I can close out the account. Additionally this has meant that $1,600 has gone towards our first mortgage when we would have rather had it goes towards our goal of paying off the second.

I will be so happy to say goodbye to PNC for good.

Lessons of the day: If you have a system that works. Stay with it. If you have a system that doesn't work, demand more. Lastly, simplification is your friend.

Miel

Privatize DCs Parks

2008-05-14T10:35:00.001-05:00

Yesterday afternoon I was jogging through Malcolm X Park here in DC. The park is a wonderful example of neoclassical architecture with a fantastic layout reminiscent of a French palatial garden. Despite its wonderful layout, the place is a total dump.

On my jog through I counted four homeless people hanging out. In the past I've also seen sketchy guys looking for man on man sex, discarded drug paraphernalia, broken beer bottles and the occasional used condom. Not only that, the grass has been in the processes of being reseeded...for nine months. Much of the cement work is crumbling and the fountains are decrepit. In short, its in bad shape.

This illustrates a classic problem with public spaces: the tragedy of the commons. The tragedy of the commons is an economic phenomenon whereby everyone benefits from the use of the common space, but nobody has an incentive to take care of it, thus causing long term degradation. Often times, governments are supposed to manage common spaces. However in the case of DC's parks the municipal government has historically not done a good job with the city's greenspaces (1).

The more I think about it, the more it seems like the best solution is privatization. Since the park is a common resource it would seem sensible to turn it over to a particular individual or organization who will have an economic incentive to properly care for the park. While privatization is no panacea, in this case the model could work well. A private organization would be able to charge a modest admission, thus providing a basis for maintaining the park and keeping it free of crime and unsightly litter. Finally also the maintenance would likely generate modest job growth and admissions fees might provide some tax benefit. In short, with privatization, everybody wins.

If you want to think more about this, click here and here.

Best,

James

P.s. my wife Miel disagrees with me entirely on this point.

Money Saving Tip of the Day

2008-05-13T10:15:00.006-05:00

Todays money saving tip is:

Buy a home video game console or games for your PC. Why? Over the long run, your investment will pay off in fun nights at home rather than expensive evenings out on the town.

Best,

James

Return Policies Are Your Friend!

2008-05-13T07:56:00.001-05:00

We all know that consumer purchases aren't the way to build wealth. At the same time, they are part of life. My opinion is that you get the most out of your money by shopping wisely. One way to do this is to be conscious of the return policies at the places you shop, and don't be afraid to use this when you need to.

This week has been one of running errands, as I'm about to depart on an overseas business trip. Here are a few examples of places I've saved money by using the the return policies:

REI - They have have a FABULOUS return policy. You are much better off buying outdoor equipment here, just based on the fact that you can return it for just about any reason. I received a pair of sandals this summer for my Birthday from my mom and could never keep them on my feet. I returned these and found a perfect pair on sale for $35 off the full price and got a new pair of sandals for my trip for $4.99.
Victoria Secret - I made a purchase several months ago and accidentally got one pair that was the wrong style. I could have just said whatever and worn them anyway, and they would end up at the back of the drawer. Instead, I put this aside for returns and finally made it back to the mall to take care of it.
Banana Republic - I found our bridesmaids' dresses last year in Hawaii and wasn't sure about the sizes for two of the ladies who were currently pregnant and would be breast feeding at our wedding. The sales woman let me know that it was in my best interest to buy extra dresses and return the ones that didn't work, since they were seasonal dresses. This worked great, as we didn't know until the last minute which dresses would work. They've just reduced their return time, but it is still a long period of time.
Ann Taylor Loft - I bought two pairs of tights and realized that one was the wrong size and returned this right away. Plus, I by then I figured I only needed one pair.
Bed Bath & Beyond - a good one to keep in mind for great return policies
Nordstrom's - a given for great returns.
Target - A big pain! You're lucky to get store credit!
Speciality items - We bought my wedding ring at an antique store in Portland, Oregon and the side baguette fell out only two month's later. I had remembered that there was a no return policy, but when I called to let them know what the situation was, they were happy to fix it. Considering that I've had estimates where the lowest price was $750, that was my best value this week!

The point is, don't just keep something because you bought it. One of the great things about the American way is that you can return things. You might as well use this to make sure you are getting the most for your money. The same goes for gifts you don't love or need!

Happy returns!

Miel

Thoughts on Tapping Home Equity

2008-05-12T10:00:00.001-05:00

Hello All,

This posting is a bit of departure from our usual fare of interviews and pithy quotes. As frequent readers of our blog know, we DINKs have an investment apartment. Since 2003 its value has appreciated substantially and we now have $75,000 in equity. However, since the market has slowed, we are now challenged with the problem of making this money grow.

So far, our options look like the following:

1) Borrow and Invest in Income Stocks. For this one, the numbers do not look too appealing. According to bankrate.com, we could probably borrow $30,000 at 6% while maintaining the 80% loan to value ratio required by many lenders. On those numbers, the most we would get on a monthly basis after paying Uncle Sam and the bank would be about $90. That's not so hot, but we could keep the apartment.

2) Sell and Reinvest the Equity. After paying taxes and transaction costs, the investable equity would likely be $48,720. Assuming we could find a stock yielding 12%, the monthly payout for this option would be $389.76 - a lot more than the first choice. We would get more money on a monthly basis, but would have to sacrifice owning the property.

3) Do nothing. Sometimes this is the best option. However the return on equity on the apartment is something like 1%, not very good at all.

So, if you have any experience with tapping equity and investing it profitably for current income please feel free to email us. We would love to hear from you.

Thanks,

James

How To Avoid Tricky Credit Card Fees

2008-05-12T05:49:00.002-05:00

No matter how good you are with managing your credit cards, you've likely been charged aggressive fees at least once by your lender. Even if you are good at managing them now, chances are that you've learned your lesson the hard way some time in the past.

Here are some tips of tricks that credit card companies like to play. Of course not all companies have the same policies, but these are some to be aware of:

* They are allowed to move your due date without notice. Right, so every once in a while they might move your due date up by a couple of days to try to trick you up. If you are used to having your bill due on the 10th for a long time and then suddenly it is due on the 8th this can mess up the most organized of money managers.

* Sometimes they will cancel your auto-payment if they have received an additional payment in the same month. They say that this is to "protect" you, assuming that you wouldn't want to pay more than once a month. In my opinion this is just to make sure you aren't paying off as fast.

* They will also not allow you to make consecutive payments; making you wait 5-14 days between payments. This adds to their bottom line and makes it more difficult to manage payments.

* They make it hard to set up auto-pay, in hopes that you will not be able to manage it yourself.

* They hike up the rate at any opportunity (late payment, bounced payment, just for the heck of it!)

* Setting bill due times at noon, so even if you pay on your due day you are already late. For this reason it is a better practice to schedule payments for the day before the bill says that it is due. Also make sure that if the due date falls on the weekend, pay on Friday instead of Monday to be on the safe side.

* Applying payments to the lowest interest first. So, if you were to take out a cash advance on a card that already had a balance, you'd have to pay the full balance before funds would be applied to the cash advance funds.

* Making cash advance interest effect from the day you borrow. Thats right folks, no grace period. Be careful about this!

Readers: If you have additional tricks of the trade that you'd like to help folks avoid, please leave us a comment.

Cheers,

Miel

Joan Didion on Money

2008-05-11T11:31:00.000-05:00

"The secret point of money and power in America is neither the things that money can buy nor power for power's sake but absolute personal freedom, mobility, privacy."

-Joan Didion

Credit Card Auto Pay

2008-05-10T06:05:00.000-05:00

Hi Folks,

I wanted to follow up on the dialog about paying off our second mortgage that we recently put on a zero percent credit card.

Since the card has 0% interest for a year, our initial approach was to to put our money regularly into our ING money market account, and just pay off the minimum balance monthly with auto pay. We'd then pay it all off before the year was up and make a bit more on interest. Folks had mixed comments, but generally tending towards the side of not being worth the risk.

At it turns out, when I tried to put the card on auto pay it was not possible to do through the internet. Citibank's process takes 4-6 weeks to set up through snail mail. Note that even their question and answer section of their website says that this is possible to do online. My thought is that they don't have that option available for those on a 0% credit card, hoping that they will mess up.

Upon learning about the snail mail option (even more difficult from Afghanistan!) Citibank got an earful about being in the dark ages and having no consideration for the time of their customers or the resources used in the mail process for such an archaic system.

The end result is that I'm annoyed with the whole process and just want to screw them as they try to screw us. While part of me wants to keep their money as long as possible to take this money away from them, we'll choose to screw them by paying off as soon as possible and canceling the card on the way out.

Best,

Miel

Suze Orman on Women and Money

2008-05-10T01:30:00.002-05:00

"I can't put it any more simply or emphatically: How we behave toward our money, how we treat our money, speaks volumes about how we perceive and value ourselves. If we aren't powerful with money, we aren't powerful period".

Suze Orman
Women and Money

Portrait of a Day Trader

2008-05-09T13:54:00.002-05:00

Of all the cast of characters on Wall Street, day traders are perhaps the least well understood. Most people understand the role of CEOs, financial planners and mutual fund managers, but fewer people understand day traders. Most media stories suggest that day trading is a fast track to bankruptcy, so the public is often left with a dim view of the strategy.

Properly speaking, day traders are individuals who buy and sell financial instruments within the same trading day. Of course, few trade exclusively on such a short term timeline, but the term is also often used more generally to refer to people who trade frequently with a short term time horizon. Many have lost gobs of money in short term trading, but others - notably William O'Neil of Investors Business Daily - have made large fortunes using this strategy.

Since we don't trade often we asked Jefferson Krull, a web publicist and active trader, to share his personal experiences with you. Jefferson was kind enough to complete a Q&A with the DINKs, which has just gone live. The interview reflects Jefferson's irreverent style but does give you one traders views on personal finance and offers some insight into how active traders conduct their business.

Click the gif below for the interview.

or go here.

Enjoy!

James

Slim Wallet

2008-05-09T07:32:00.003-05:00

As frequent readers of our blog know, I'm all for the "less is more" way of being.

Generally I'm the total minimalist when it comes to the purse/wallet category. Recently I've experienced an uncomfortable bulking of the wallet.

Not only do I have to carry multiple currencies, often in small denominations, I also live where I am. Aside from my snits in Kabul, I'm often living out of my suitcase or hotel.

This means that I've been prone to also carrying multiple frequent flyer cards (as you never know which airline you might end up on). Then of course there are a couple of credit cards to use for personal, business, and emergency situations.

All of this adds up for a very bulky wallet.

As I prepared to go on the trip I'm on at the moment, in Saigon for a month, I decided that slimming down was necessary.

Not only was it necessary, it was also liberating. I've now written down all of the pertinent info for frequent flyer miles in my date book. Now this leaves my passport, driver's license, debit card, personal credit card, business credit card, insurance card, and United Gold Member (I just can't give up that one!)

While writing all of these down it still seems like a lot, I can't just go home for anything I've left.

Your personal situation may be different than mine, but I still believe that slimming down your wallet helps to simplify your life and your finances.

While you are at it, consider if there is anything that you have that could be canceled or is no longer in use. That helps even further.

Now that I've slimmed down my wallet I can highly recommend it. Even one or two cards less will make a difference!

Try it, you'll like it!

Miel

Karbo on Riches and Luck

2008-05-08T19:11:00.002-05:00

"Never again will you look at a particularly successful person and sigh, 'How lucky he is.' Because you will know that 'luck' or 'fate' has absolutely nothing to do with success or failure. What we call 'luck' is, in fact, a direct result of the correct or incorrect application of natural laws anyone can use effectively if he knows how".

Joe Karbo
The Lazy Man's Way To Riches

The Drawbacks of Mutual Funds

2008-05-07T23:40:00.008-05:00

Conventional wisdom holds that investors should avoid individual stocks and instead purchase mutual or index funds. While the reasons for owning mutual funds can be quite compelling, - greater diversification and improved return - investing in this type of asset present several disadvantages that most investors are not aware of, especially when compared to direct ownership of stocks.

Fees and Return:

A typical mutual fund can charge you upwards of two to three percent in management, distribution (12-b) and operating fees. In addition, many mutual funds also charge a sales fee or load. Even some no-load funds have sales fees or incentives for brokerage houses to push their fund, so even with so called "no load" funds there are implicit fee structures built into their prices.

Provided the funds management is good, fees are not necessarily a bad thing. However, it is important to recognize the impact that fees have on your profit. Lets say you invest $10,000 and it gives you a 9% return. At the end of 10 years you'd have $23,673.64. But, assuming you are charged a 2% annual fee, then you would only have $19,671.51 ten years later. Your 2% fee would have cost you a bit more than $4,000. Four grand is rather a lot to pay for management.

On the other hand, to purchase shares of stock, you'd pay roughly $0-100 per trade.

Unclear Valuation:

A second disadvantage to mutual funds is unclear valuation. The mathematics surrounding the calculation of pricing for mutual funds - known as Net Asset Value (NAV) is complicated. This suggests that a specialized set of knowledge is required to understand the value of your investment. This is a problem because when you purchase mutual funds you are essentially reliant on your funds management staff to determine the value of your investment. Valuation methods are less of a problem with exchange trades funds, and it is probably safe to assume that the mutual funds management is honest, but shouldn't you be able to easily determine how much your investment is actually worth?

On the other hand, if you own a stock, its value is easy to determine, just check the quote online.

Management Challenges:

Mutual funds managers vary in their quality. Some are good, some are bad, but most are just average. A bad manager can really ruin your investment. This is a lesson I learned the hard way. Back when I was starting to invest in 2000, I put a couple of grand into a Smith Barney Mutual fund. The fund lost promptly lost 20% of its value and Smith Barney was later sued for management improprieties related to their mutual funds.

Assuming however, that you manage to avoid a bad mutual fund manager, there are still significant challenges relating to management. First, it is very difficult for even good fund managers to consistently beat major stock market indexes. Second, many good money managers are no longer in retail mutual funds. Post 2003 there has been a "brain drain" from mutual into hedge funds. Hedge funds offer greater flexibility, higher profits and less regulation than mutual funds. Accordingly, many of the best financial minds left the retail mutual fund industry. On top of these challenges, you've got to pay the fees. So, why pay for what will probably be mediocre performance?

On the other hand, if you directly own stock you have can always improve the performance of your own manager - you!

Finally, we should disclose that we do invest in mutual funds. James has shares in the Vanguard S&P 500 index and Miel owns units in the ING Direct Real Estate Class O fund. So, while this asset class does have some drawbacks, we are both heavily invested in it.

Best,

James

P.s. Click here for the SEC's explanation of fund fees.

Preventing Family Conflict Over Inheritance

2008-05-07T18:28:00.002-05:00

Hi All,

This was an article we did last year, but its good so I'm reposting it to give you all something to read. It is on the topic of preventing family conflict over inheritance.

Sometimes when a parent passes away, his children fight over the assets the parent has left behind. I have some personal experience with this. My grandparents lived in Davis, California and were both lifetime cigarette smokers. At the tail end of their golden years, my grandparents developed lung cancer and passed away after a long, lingering and ultimately unsuccessful battle with the disease.

My aunt, who lived across town from my grandparents, took responsibility for caring for then during their dying process. She paid their bills, managed their care givers, visited them and made sure their house was in good repair. When they finally passed on, my aunt made much of the funeral arrangements as well.

Being that she lived in the same town as my grandparents, by default she was responsible for taking care of their assets, including the house. Unfortunately, my aunt was cheated by the contractor who was hired to renovate the house for sale and ultimately she had to sue the contractor.

The lawsuit ignited a number of long simmering disagreements between my aunt, my mother and my uncle. Unhappy with how things were being handled by my aunt, my mother and uncle drove to Davis to "get things moving". This ment withdrawing the lawsuit, seizing control of the house and finally putting it on the market. This has complicated their already precarious relationship and now all three of them are hardly on speaking terms.

Now, what are the implications of this for personal finance? Generally speaking finance related conflict between siblings surrounding the death of parents is about much more than the actual money itself. It likely involves a complicated set of psychological factors related to history of the family. However, regardless of the deeper reasons for fighting, two things are clear.

1) An independent executor of the will should be established. This should be someone who is NOT a member of the family. Ideally a trusted attorney should fulfill this role.

Why someone independent? Because, the experience of death and disposing of assets leaves many with judgment subject to the whims of emotion. Also an independent executor can act as a scapegoat in case something goes amiss. For example, my family's case, an independent executor would have allowed my family to direct their disagreement toward someone other than each other.

2) A will should be established before the death of the parent. This should spell out precisely what the parent's wishes are prior to the parents death. The executor should merely execute the parent’s wishes as stated in the will.

Not effectively planning to manage inheritance disbursement simply leaves too much potential for trouble.

Best,

James

Pilzer on Wealth

2008-05-07T10:17:00.002-05:00

"The incorrect supposition that we live in a world of scarce resources has done more than preclude the most individuals from achieving economic success. Over the centuries, this zero- sum-game view of the world has been responsible for wars, revolutions, political strategies, and human suffering of unfathomable proportions".

Paul Zane Pilzer
God Wants You To Be Rich

$800 Down the Drain...

2008-05-07T01:54:00.003-05:00

As in all areas of life, financial lessons are often learned the hard way.

My most recent lesson was to keep your eye on the funds at all times and trust no one.

I'll spare you all of the boring details, but I basically got shamed out of $800 in my work's finance office. I counted out funds twice in front of one of the finance folks to return an advance. I then turned to deal with clearing another advance in local currency, with a second finance person.

The next thing I know, the first finance person counted out $800 less than I had just counted out in front of her. (It was a large sum, in case you are wondering how the count could be off by that much.)

I had been shammed. Right in front of me. In my own office.

After all of my travels and all the precautions I take to not get taken advantage of, I felt cheated.

In the end my office ruled that I should have had her do the cross check right away (even though she had been present through both counts). If it were a matter of a hundred dollars it wouldn't be that big of a deal and I would have just blamed it on myself. It's another thing when $800 disappears before your very eyes.

I believe this is by far the biggest money mistake I've made in the sense of being stolen from. I've had a camera taken in Peru and $20 souvenir in the form of a counterfeit bill, but never anything to this degree.

There goes $800.

I guess I can tell myself that I'm contributing to an Afghan family by having just doubled the finance person's salary. I can't say that I need it more than they do, but it would have felt better to have it happen voluntarily. I would feel very differently about giving that much rather than having it taken in such a way.

Unfortunately it is experiences like these that make us travelers a bit more guarded, and often jaded. I'm now in Vietnam, as I was headed to the airport when the incident happened, and find myself being much more conservative with my trust of others. While I know it is good to keep my guard up, I also prefer not to have an inherent lack of trust either. We are all just people in the end.

This brings to mind a lengthy discussion at a recent expat dinner party. The discussion basically debated whether it was better to trust cleaners, cooks, etc. Or whether it was better not to provide any temptation (i.e. don't leave a dollar on the table or money in your pockets going to the laundry). The debate was long and engaging where no one had a lack of an opinion or experience related to the situation.

I guess my lesson would have me fall on the side of not allowing for opportunities to be ripped off. Like James often says, crime happens only when the opportunity presents itself.

Lesson learned.

Miel

We Want Your Feedback

2008-05-06T22:17:00.002-05:00

Hi All,

Just wanted to post this quickly. If there is anything you would like us to write about, or if there is something you think we should improve, please don't hesitate to let us know.

Our contact email is:

dinksfinanceblog@yahoo.com

Any feedback, good or bad, would be most appreciated.

Thanks,

James

How Rich Are You Really?

2008-05-06T10:16:00.001-05:00

Americans are fascinated with wealth. We love TV shows like "Who wants to be a millionaire" or modern day Horatio Alger stories like Will Smith's portrayal of Chris Garner in "The Pursuit of Happiness". However, for people who are serious about measuring their wealth, its sometimes difficult to know precisely where you stand.

Since measuring your net worth is a very important part of personal finance, we wanted to let you know about a few links that can help compare your dollar worth to everyone else.

The best thing to do is compare your level of riches to scientifically valid measures of Americans overall population. There are two recent government reports that might be good for you to check out. These are from the Census Bureau and the Federal Reserve (here and here). Both of these are based on the most up to date social science techniques and therefore you can have some confidence their numbers are in fact true.

Survey reports aren't exactly a barrel of laughs, so here are some links that are both useful and fun. CNN money has a handy interactive net worth calculator. Also, the New York Times was running a great series of articles on inequality in America that lets you compare your level of wealth, education and profession against everyone else in the country (here). The issue with these sources is, *I think*, they use data from 2001. - Wealth distributions are constantly in flux, so I'm not sure how helpful values from 2001 are.

NetworthIQ, which is a delightful little website, has some statistics on networth. One thing to keep in mind about NetworthIQ is that the data there is self reported. So, you'll be measuring your wealth against that of people who like to post their net worth on the internet, not a scientifically representative sample like that in the Census and Federal reserve reports.

Happy comparing!

Best,

James

High Prices Hit Home

2008-05-05T23:00:00.004-05:00

Hi All,

I just saw a great article on the AP wire. Evidently more Americans are selling their stuff on-line. Why? - The article says the main reason is that high gas and food prices are obliging more people to drum up extra money to make ends meet. The websites they are using are craigslist.com, ebay.com, Livedeal.com and auctionpal.com.

For what its worth, I'm feeling the pinch a bit also. The price of a pound of ground beef at Safeway today was $6.60. Last year it was about half of that. Yipes! Some of my DVDs may be going on the auction block soon as well!

Click here for the AP story.

Best,

James

Graph Your Net Worth

2008-05-05T16:30:00.002-05:00

Hello All,

As you probably know, outlining your net worth can be an useful way of tracking your overall financial picture. A couple of years ago we decided to make a simple chart showing our overall level of net worth. It is shown here because it illustrates a couple of important points about personal finance. So, briefly:

1) Keeping Track Makes The Process Real: As you can tell from the chart below, our financial growth has been about $50,000 a year. While this is not a lot, it does indicate that saving and investing in real estate and stocks is an effective method of building wealth. This is important because it is quite one thing to read about money in a book and another to see it working in real life for you personally. Graphing makes the saving and investing processes real because you can see your wealth increase or decrease.

2) Keeping Track Helps To Determine What Works: You cannot tell from the graph below, but the DINKs bottom line growth has been due partly to stocks and good debt management. For example at the end of 2007, the graph was flat lining so we started putting money into income stocks and maxing out Miel's 401k. Interestingly enough, August of 06' was the time we realized our adjustable rate mortgages were impacting us. By adding up the new worth figures we knew that Washington Mutual's monthly $50-100 increase in ARM payments was eating our lunch. While these may seem like common sense, the processes of doing the net worth calculations greatly illustrated what was helping or hindering the wealth building processes.

Pump and Dump Stock Scams

2008-05-05T00:49:00.007-05:00

Thank goodness for Kiplinger! This posting is a quick video from Kiplinger's personal finance on "Pump and Dump" stock schemes. The video is a brief but thorough explanation of how the stock scam works. It also provides a good discussion of the legality of the scam and how the scheme manifests itself today.

If you are into stocks but want to avoid getting ripped off, definitely watch the video.

For tips on avoiding pump and dump scams, surf on over to the SEC's webpage.

Best,

James

T. Harv Eker On Money

2008-05-03T18:40:00.004-05:00

"Let me put it bluntly: anyone who says money isn't important doesn't have any! Rich people understand the importance of money and the place it has in our society...poor people validate their financial ineptitude by using irrelevant comparisons. They'll argue 'Well, money isn't as important as love'...What's more important, your arm or your leg? Maybe they're both important".

T. Harv Ecker
Secrets of the Millionaire Mind

May 2008 Net Worth

2008-05-03T13:05:00.004-05:00

Hi All,

Well, we sat down and did our semi-regular update of our net worth. After we totaled up everything that we have and owe, our current net worth is $393,000, just south of 400k. This is a gain of approximately $30,000 since February or a 5% growth in our wealth overall.

A few comments. First, some of our assets are doing better than others. The overall gain is mostly driven by growth in our self managed stock accounts, by Miel's contributions to her retirement and by paying off our second mortgage. It was partially offset by our taking out an additional - and hopefully last - student loan of $8,500. Savings bonds and precious metals continue to be our portfolio losers.

Second, 393k is just a stones throw away from 400k. While 400k isn't as much as some people have, it is higher than the national average of people in our age bracket (299k) and its 10% of the way towards our net worth goal of $4 million. But more importantly it feels like we are nearing an important milestone and helps to affirm that all our planning and saving has been worthwhile.

Best,

James

You Know You Have A Debt Problem When...

2008-05-02T14:53:00.002-05:00

Hello All,

I was just browsing through a summary of Jerrold Mudis' How to Get out of Debt and I came across a handy checklist of warning signs telling you when you have a problem. Many of these rung true for me back in 2002 when I racked up $11,000 due on credit cards. If you have a friend who has a debt problem, or maybe you are running into trouble, a 'yes' answer on some of these could help clarify things.

So, here is the list:

1) You are constantly juggling payments
2) You miss payment-due demands
3) Mail remains unopened because you don't don't want to deal
4) You can't make more than the minimum payments on your debt
5) When buying things on credit, you choose the longest payback terms possible
6) You're psyched when the card company increases your limit
7) Budgeting isn't something you do often
8) You have little or no savings or investments
9) When making payments, you used to use cash, but now use store credit cards.

Back in 02' when I was racking up my debt, I could have said yes to most of those. So, from my standpoint they are pretty valid problem indicators.

The list is from Tom Butler-Bowdin's 50 Prosperity Classics, an excellent collection of summaries of influential books on building wealth.

Best,

James