Thanksgiving

With the current difficult times and not much to look forward to in the coming year I can still be thankful to have a roof over head and food in the cupboard. I know the worst is yet to come but I am hopeful that hard times will not last forever. I am thankful that we'll have a new president who understands the suffering of those at the bottom and will do his best to steer things in the right direction. I am thankful that there is hope for without hope then there is no need to continue. There are better times coming and when they do let's not forget those who have lost hope. Let's give them something to be thankful for so that they may regain hope.

A little help for those in financial trouble

Thought I'd give a little help for those that are starting over and don't want to make the same mistakes. I'm not exactly sure how it is now with the banking collapse but in the past if you filed bankruptcy you would immediately get offers for credit cards in the mail. Why you might ask would they do something like that? Simple, once you file bankruptcy you can not file again for at least seven years. It seems like a stupid thing on the part of the banks but they know they'll have you on the hook for a lot of money including interest and fees if they can get you back on the debt treadmill.
First things first - Pay yourself first. The bills will always be there no matter what you do. So when you get paid put 10% of your take home pay in savings. In a just a few years you'll be amazed at how much you've saved.
Credit cards - I only use credit cards when absolutely necessary when it's the only means of payment accepted or as a temporary means of payment when I know I can find a better loan through a bank or credit union. Have only one credit card. It's through a credit union but even there you need to do your homework. Not all cards are the same even with credit unions so read the fine print.
Autos - Never buy a new car. Once you drive that new car off the lot it's value drops from between 10 and 20%. Even if the terms of the car loan are outstanding you'll never get out of that car with the shirt on your back. With the internet it's so much easier to narrow down the search for a decent used car and check prices against the Kelly blue book. If you finance do so for no more than three years. You want to get the car paid off before it will need major repairs. Never have your car repaired at a dealer unless it needs a part that the local repair shop can't get. Never take those extended warrantees. They add a lot to the price of the car and they always seem to have an escape clause when it comes time for pay out. If the salesman says the bank won't finance unless you get the extended warrantee then it's time to stand up and walk out. When you buy a used car buy a copy of the repair manual. You may never do a repair on the car but it will tell of the problems that will come up later and you will soon know when the repair guy is feeding you a line. Yeah lady your exhaust bushings need replaced and I'll need a left handed monkey wrench to do the job.
Housing - Rule of thumb is never buy a place that's more than two and a half times your gross yearly income. Try to find the least expensive place in the best part of a city that fits your needs. I live in the cheapest place in a very upscale area. The advantage is better schools and services as well as cheaper property taxes. I like a fixed rate mortgage over an adjustable because there's a consistency in payments that are easier to deal with and the only fluctuations are from property taxes. It's always a good idea to add $50 to $100 to the monthly payment thereby shortening the term and saving thousands in interest over the life of the mortgage. Never borrow against the equity of a home unless you're putting that in upgrades to the home. In short always put money into things that increase in value not depreciate. I realize that housing is going down but eventually it will stabilize. You'd be amazed at the amount of loans taken on equity to buy boats cars and vacations. Keep those loans separate.


More info from an older post

I hope this helps Lisa.

Credit, lending, and other contributing bits to our financial mess

A lot of people think that a bunch of greedy people were the cause of our present financial situation. That it was all caused by those people living way beyond their means. Well not exactly. It was the result of those at the top our fearless leaders who threw out all of the principles our parents tried to teach us having gone through the Great Depression. Having gone through the longest economic expansions in U.S. history they at the top were deluded into thinking that the good times would roll on forever. They created a climate ripe for disaster and not just for their fellow greedy friends but for the rest of us as well.

When I bought my place the interest rates were through the roof but I knew that this was the only opportunity I would have to own property. Back then the process was rather simple by today's standards. But even before I began looking for a place to call home I looked at what I could afford. The general rule for decades was you could not spend more than 2 1/2 times your annual income. That was the rule of thumb. With that bit of knowledge tucked away I went out and found a place at just under 2 times my annual income. It was the best of the bunch in terms size and price and I figured that would give me some leeway in terms of fluctuations in income. Fast forward to the last ten years. I managed to stay in my place through some pretty tough economic times and was finally able to refinance to a good interest rate on a 15 year fixed. By paying just an extra $100 a month to the principle I was able to pay off the mortgage in 7 years. When I did the refi was when banks were offering up to 125% loans on homes with no upfront fees and all. What had happened? Those at the top had removed all the old rules that we had been living by for the last 80 years. The common sense rules that would tell you that a person in the middle class can not afford to go out and buy a million dollar property. They couldn't afford the taxes much less the monthly payment. But I saw people doing this. Even one coworker last year bought a place for (gulp) $999,000. I'm sure he's long gone from that place unless he has some secret drug lab hidden on the property.

Now we get to credit cards those wonderful nasty necessary evils. A few years back the card companies must have paid Bush a visit or at least made a sizable contribution to his campaign because the next thing you know the bankruptcy laws are changed so that now if you have a major medical bill or job loss and must file as bankrupt you're still on the hook for your credit card bill and I'm sure they'll tack on extra fees just to add insult to injury. And this has nothing to do with people living beyond their means. I've seen people who pay their bills on time and have great credit get screwed. What I noticed was that a few years ago the payment period went from 30 days to 25 then to 20 and some as little as 14. A few even have no grace period at all. Interest accrues once the bill is received. The credit card lawyers must sit around and chuckle when they come up with new terms. I've also noticed that card offers are just now starting to trickle out in the mail but I tell you you wouldn't go for the terms if you were on your death bed because they'd want possession of your corpse and the sheets you're laying on.

So who got us into this mess? Bush and his band of thieves looking out for his interests with the help of his band of frat brother lawyers. You might notice that Obama and company are focused on the real problems for the benefit of all Americans and not just a select few. You remember Bush's base the "haves and the have mores".

Watching the collapse

A couple more banks took the big flush this week. Not making the regular financial channels I'm guessing info is now being let out after the markets close on Friday in hopes nobody will notice and forget about it before the Monday open. The banks were Downey Financial and PFF Savings and Loan. Then there's the issue of Citibank. At 3.77 a share it's looking a lot like Washington Mutual did right before it gave up the ghost. Should we bail out Citi? I say hell no. If you or I ran a business and it went bankrupt we wouldn't expect the government to bail us out. The assets would be sold and the liabilities paid and the business shut.

I have an idea. Why not take the money for bail outs and just set up a government owned bank. With a fresh start and more regulations we could pick up a bunch of laid off bank people and put them back to work. That would be excluding the idiots at the executive level who should have been fired years ago.

In other news just as I predicted Boeing will be laying off workers. With no contract on the Air Force tanker deal Boeing will be laying off people in Kansas, Pennsylvania, and California. Washington state is okay for the moment but as the economy sinks I'm sure the airlines will be putting a hold on their orders. We're beginning to see competition among airlines as business is falling off even though fuel prices are falling.

As for the auto industry I say we keep the workers and lay off the executives. I say we give a billion or two of that bail out money to companies like Tesla that are trying to make the new technology cars. There's a lot of great ideas out there but without the capital or production facilities they can't get off the ground. The "innovative" cars that GM and some of the others have come up with are overpriced garbage. I've looked at the tech specs on them and wouldn't give you two cents for one.

This guy just doesn't give up

Bush in a last ditch push to finish screwing up this nation has pushed for 53 regulation changes that are bad for the country. What did Bush ever do that was good for the country? In the changes are more oil drilling, lower standards for polution releases in our air and water just to name a few.

It wouldn't shock me if he doesn't strike a match to the white house when as he walks out the door.

Legacy of George W.

I can only hope that Obama undoes all of the signing statments and enacts more common sense rules when he takes office.

Hold on to your wallets

Now companies want to underfund their pensions and you know what that will lead to... more companies defaulting on their obligations to their retirees. You heard it here first. So when you go to cash that retirement check at the beginning of the month and it bounces you'll know why.

What's left to rob?

No soup for you

After reading this article about our wonderful Auto industry CEOs I wouldn't give them a plug nickel. All of them came to the meeting yesterday in their own private jets.

Greedy bastards

In other financial news the market took another dump today. Not that I really care at this point because I'm not in the market but I did hear a short time ago why it keeps going up a bit and then down by a bunch. It works like this (don't quote me though). People buy shorts which is a bet that the market or industry or company will go down in price. It's an attempt to cover downturns of a company something like insurance. So now we have people cashing in on their shorts. To add to this you have investors trying to find a bottom to the market. They are buying thinking that the bottom has been reached. Some stock prices are at historic lows but they could go lower or even bust leaving a trail of worthless paper. I had almost considered buying WaMu when it dropped to $2 to $3 a share. Glad I didn't as shares are now of TP value. I could have used it as Charmin in the bathroom. General feeling is that the market will continue to drop to the 7000 level and if it goes much lower than that then the whole economy will be at an end. Think of it this way. Right after 911 you could have rolled a bowling ball down the isle at any local mall and you wouldn't hit a customer.