Don't beat yourself up

With all the news headlines talking about the latest budget proposals, stimulus updates, and bank nationalization scenarios, it's hard not to think about what should or should not be done to help get our country out of this nasty recession. Many people who have seen losses to their paychecks and retirement accounts have been working on their own family budgets to see how to stretch their shrinking dollars. For the vast majority of people, you've done nothing wrong. As Curly from the Three Stooges used to say, "I'm a victim of circumstance!" So is it smart to find ways to trim expenses from your budget? Yes! But you do not need to go from one extreme to another. For example, you don't need to go from eating lunch at a restaurant to packing your lunch with PB J's every day. If you normally eat lunch out every day, consider brown bagging it once or twice a week instead. If your family likes to go out to dinner twice a week, cut it down to once a week. If you stop by Starbucks every morning for a Latte, maybe skip a couple of days or check out the coffee at Dun kin Donuts or McDonald's. Small savings add up over time. Just write down what you spend in a week on lunches, coffees, and restaurants and multiply that by 52. You'll get a pretty big number. Even if you cut out something like sodas, it will add up. I have not had a soda now for 58 straight days. I probably averaged 2 sodas a day, so I have saved probably close to $100 so far! My oldest son hasn't had a haircut since last August so he's probably saved me at least $50. Get creative and have fun saving money, but don't make it into something that it doesn't have to be.

Escape from reality

The other day, a friend of mine on facebook (Tammy, a high school friend that I reconnected with after 28 years!) posted an interesting status update: Tammy is recovering from reality! I told her to let me know how and when she does it because it would make a good topic for my blog. Her is what she wrote back to me:

"How to recover from reality. Well, I don't think I've quite recovered, but this is what I did/have been doing:

I try to make a plan. When life gets out of control, I try to control what I can. I revisit my budget, try to pay off some debt, do something productive. Sometimes this means something very simple, like cleaning the house. I may not be able to control the economy and what it's doing to my life, but I can control my immediate environment.

I push myself on a workout. I'll try to run faster or longer. Today I road hills with a group and tried to work hard enough that no one passed me. It's exhausting and makes me think about other things. Like how much my quads hurt.

I road on the back of my husband's motorcycle with him running errands, put a big scarf on and pretended to be Amelia Earhart or Isadora Duncan or the Red Baron.

I took a nap, watched mindless TV and will probably go to the movies tonight.

And I took lots of Extra Strength Excedrin."

Well, that really sums it up and it makes a lot of sense that everyone could use a bit of in these tough times. Instead of dwelling on how bad things are or seem to be, why not make a plan and do something about it. You can't solve all your problems right away, but you can take little steps to improve the situation you find yourself in. 1. Keep saving and investing, the markets will eventually come back and you'll be buying low along the way. 2. Pay down debt, you'll get a real return on your money when you get rid of those costly and annoying finance charges. 3. Take care of yourself. Get involved in exercise and/or recreational activities with your family and friends. I can't wait to get back on my motorcycle. In fact, it's suppose to hit 60 degrees today, so I'm taking my bike to work! 4. Get some sleep. Go to bed earlier. 5. Relax. You need some downtime. Nothing wrong with watching a little TV or movies. 24 is back and American Idol is down to the final 36 (now 27) contestants. 6. If nothing else, take an aspirin, or perhaps enjoy an adult beverage! Thanks for the insight, Tammy!

Oscar "highlights"

Ok, so I watched the Oscars last night in the comfort of my own home. My wife and I were invited to an Academy Awards party, but we couldn't swing a babysitter. The Oscars traditionally is a late night show, known for going over the time limit and being on a Sunday evening with work the next day, sometimes you just say "why bother"? But last night's show really did not produce any highlights to speak of. For one thing, all the major awards went to the projected and predicted winners. There were no upsets. And the rest of the program was kind of lame in my opinion. The musical numbers, the bad jokes, the boring acceptance speeches. Unlike year's past, there were no real surprises. Nothing that made people gasp or shout with glee. Where was the one armed push ups? The streakers? The wardrobe malfunctions? The speeches that had to be edited by the censors? For me, the best part of the show was Ben Stiller's impersonation of Joaquin Phoenix when he came out to present an award with Natalie Portman. It was hilarious! For those of you who did not see Joaquin Phoenix when he was on the David Letterman show recently, you owe it to yourself to find the clip. Now that's comedy! I guess my only other disappointment was that I haven't seen Slumdog Millionaire yet. But with 5 kids in the house, I'll probably have to wait until it comes out on DVD!

Most affordable city?

An interesting article out yesterday, titled "Most affordable city in the nation" got me thinking. OK, so Indianapolis is the most affordable city, so what? Does that mean I want to move there? Hardly. How many people would actually decide to move to Indianapolis because of this article? If anything, it's merely a dubious honor for that fair city in Indiana. The article also mentions that New York City is the most expensive city in America. Alright, I might have guessed that, or perhaps San Francisco. But I would expect more people might be inclined to move to New York or San Francisco before they would consider Indianapolis. But really, I think that the most affordable city in the nation is the one you already live in. Why? Because, you are already in a house and know the area. Unless you are one of the unfortunate 9 million people that President Obama is trying to help out with his Homeowner Affordability and Stability Plan, then your best bet is to stay in your current home. Now for sure there are lots of reasons to move. If you need more space because of a growing family. Or if you get transferred to a new town because of your job. Perhaps you are retiring and want to downsize. But for most people, with the state of the real estate market right now, maybe a home remodel or a new addition are better and more affordable options than moving out of your house and into a new home. While there are plenty of good deals available out there for purchase, you still would have to sell your home too. With more and more people underwater in their mortgages (meaning their home is worth less than what they owe on it), you better find a really, really good deal on your new house to make up for the loss on your current house. This tends to work out better for people trading up but not for those downsizing. So my point is, decide for yourself what you need to do and don't let the media influence your decision either way. The only reason I would want to go to Indianapolis is to see the Indy 500.

Are you saving enough?

I recently (as in the past week) read an article about saving for retirement. The article gave some basic rules of thumb for people of various age groups. For example, it said that people in their 20's and 30's should be saving at least 10% of their income for retirement, and people in their 40's (my age group) and 50's should be saving at least 15% of their income. Most articles these days about investing point out what types of investments should be in one's portfolio. I even wrote a blog about this topic last month (What's your plan?). Last year's stock market disaster pointed out (to most people's chagrin) that even when you have a well diversified portfolio, you can lose money in your account. The basic plan for diversifying one's portfolio are to have a proper mix of stocks, bonds, and cash. In recent years, people have further diversified their accounts by also adding real estate and commodities to the mix. But last year, all of these investment asset classes lost money (except US Treasuries, if you were lucky enough to get in early). So what to do? Put all your money in cash? Bury it in a coffee can in your backyard? For starters, make sure you're saving enough. The real key to having money to spend in retirement is to save money for retirement. The average U.S. personal savings rate is less than 3%! At that rate, most people will not even keep up with inflation. So yes, it's important to periodically re-balance your portfolio, but it's critical that you save more than the average. Do what it takes to save that extra 7-12% needed to get back on track for your retirement. Unless, you see yourself wearing a spiffy blue vest and telling people, "Welcome to Walmart!"

You're Fired!

Yesterday, it was reported that Donald Trump's business, Trump Entertainment Resorts, the casino operating group, filed for Chapter 11 bankruptcy protection, according to court documents filed in Camden, N.J. Locally, in St. Louis, we heard last week about a similar filing for Charter Communications, our only cable TV operator. The fact that businesses are filing for bankruptcy should not be surprising, given the state of the economy amidst our current recession. What I find interesting about the Donald Trump case is this, here's a guy who has a hit TV show called The Apprentice, where he comes out every week and tells people (and now celebrities in the newer celebrity version) what they did wrong, why they did not make good business decisions, and why they are being fired. And now, he, Mr. Trump, was basically fired by the bondholders of his own company. He and his daughter later said that they were quitting, but it was the bondholders and the board that made the first move. So a guy that's supposed to be so smart, so savvy, and possessing so much business acumen, could not run his company successfully enough to meet the interest payments due on his bond holdings. Even more amazing is that this is now the third time "The Donald" has filed for bankruptcy protection. Not quite the sterling endorsement I would want if I was picking a mentor. I wonder how The Apprentice will do in the ratings? Maybe NBC will fire Donald Trump, too!

Deja Vu

"It's like deja-vu, all over again." This is one of the most famous quotes by Yogi Berra, Hall of Fame, catcher for the New York Yankees, and St. Louis native. I reference this quote because today I want to re-post my blog from yesterday, however in a slightly different way. As I mentioned recently, I am a relatively new member of the St. Louis Bloggers Guild and as a member, I have the opportunity to write posts for their website. This keeps the site fresh and allows people to hear from members who's blogs are linked on the member section of their homepage. Yesterday, my blog titled, Digital Daze was posted. Guild member and website content editor, Kelli Stuart, who has her own blog, Three Times the Love added a brief introductory paragraph to set up my blog topic for the post. My post was categorized under Events, Media, and News. Other frequent topics discussed are Bloggers' Rights, Parent Blogging, and Blogging in general. So again, if you have not done it already, check out the St. Louis Bloggers Guild and see what you can learn. If nothing else, you'll find a few new blogs to check out. There are 40 great ones to chose from!

Digital Daze

Well, in case you haven't heard (because you live in a van down by the river), the DTV conversion from analog TV to digital TV which was to happen on Feb. 17th., has been officially delayed by four months until June 12th. On Wed. Feb 11th President Obama said, "During these challenging economic times, the needs of American consumers are a top priority of my administration." Now, I do not want to criticize the new President, but here are 2 reasons why I do not like this change. First, we have all heard about this upcoming event for most of this past year. I wrote about it on my blog on Nov. 17th (92 Days), when at the time, we still had 92 days to go. Every local TV station has included either a PSA or scroll during each newscast, to let everyone know how to prepare for this change. So now, just because only 6 million people (or 2% of the population) has not done anything to get ready for this switch, we (the 98% who have) must endure 4 more months of tired warnings and infomercials on how to get your converter box or what to do with your government rebate card. Second, June 12th is my birthday, so now I will be haunted by this non-event on a day when everyone should be celebrating my 46th birthday! In my opinion, the only way to get these 6 million people to get their act together on this issue, and either get a converter box, buy a new TV, or switch to cable or satellite, is to pull the plug on their analog TV service. There is nothing like a TV with no signal, to get a person out of their LazyBoy lounge chair and over to BestBuy in a hurry! Their motto is, "Why do today what can be put off to tomorrow!" Well, President Obama just gave you 4 more months. I wonder how many people will be ready on June 12th?

St. Louis Bloggers Guild

In January of this year, I joined the St. Louis Bloggers Guild, with hopes that I could learn from the group of veteran bloggers that are a part of their membership roll. In addition, I was excited to begin attending their monthly meetings to meet these bloggers in person and find out about upcoming events. I was interested to hear about the quarterly workshops and business opportunities that they plan throughout the year as well. Of course, I figured that being a part of their website could increase the chances that people would find my blog too. So if you are new to blogging or have been blogging for years, you owe it to yourself to check out the St. Louis Bloggers Guild and come to one of their meetings. You'll be glad you did!

Friday the 13th

I don't have to tell you that today is Friday the 13th. On this day that is feared by those that are superstitious, men across America have to finalize their plans on what to do, purchase, or both, for their sweethearts. For many men, Valentine's Day is a feared "holiday" because of the enormous pressure and expectations put on them by the media, Hallmark, and women who want to feel special. In a classic episode of the hit TV show, The Office, this was played out well as Phyllis received flowers and gifts all day long from her boyfriend, while the other women in the office stewed because they received nothing from their "lovers". Nobody wants to be showed up! Why does this "holiday" exist? To make men and women feel insecure? To spur the florist, candy, and greeting card industries? Actually, it goes back a long way. A little research finds that Valentine's Day has roots going back to ancient days.

"The lovers' holiday traces its roots to raucous annual Roman festivals where men stripped naked, grabbed goat- or dog-skin whips, and spanked young maidens in hopes of increasing their fertility", said classics professor Noel Lenski of the University of Colorado at Boulder.

"The annual pagan celebration, called Lupercalia, was held every year on February 15 and remained wildly popular well into the fifth century A.D.—at least 150 years after Constantine made Christianity the official religion of the Roman Empire."

"The early church pegged the festival to the legend of St. Valentine. According to the story, in the third century A.D. Roman Emperor Claudius II, seeking to bolster his army, forbade young men to marry. Valentine, it is said, flouted the ban, performing marriages in secret. For his defiance, Valentine was executed in A.D. 270—on February 14, the story goes. While it's not known whether the legend is true", Lenski said, "it may be a convenient explanation for a Christian version of what happened at Lupercalia."

So don't walk under any ladders today, and avoid black cats at all costs, but be sure you get that card, chocolate, and flowers for your lady...she'll be expecting it!

Do as I say, not as I do!

So the big, humongous government stimulus package plan has finally made it through the House and Senate and has been edited with compromises on both sides. A final version is expected to be on President Obama's desk by Monday morning for him to sign into law. I saw a few curious things that were cut from the final draft. The big tax cut stimulus money for everyday Americans was cut from $500 to $400 per person. Remember this money is not going to come to you in the form of a check (like last year's stimulus), but through payroll tax deductions. So now, instead of getting an extra $20 per week, you will get an extra $13. Enough to buy that 6-pack or maybe a combo meal for two at your local McDonald's! It is surely money that will be spent instead of saved, and that's why you will get your take this way instead of the $400 check. You see, the government learned, after last year, that only 17% of people who received their $600 check actually spent it on something to stimulate the economy. The rest used the money to pay down debt or put it in their savings accounts. Now the big question is, how much will these little $13 weekly spending sprees actually help the economy? I think it may help the fast food and quick trip business, perhaps Starbucks may get a few more takers. Only time will tell. Another item that didn't make the final draft was the new car purchase provision of allowing interest on new car payments to be deductible on your income taxes. They did allow for a sales tax exemption but that's it. Talk about throwing a bone to the auto industry. How many people will rush out to buy a new car on this news? It's all on the Big 3 (actually just GM and Chrysler) to sharpen their pencils and show their new business plans to President Obama by March 1st. The clock is ticking. Americans are buying things, although just not as much as before this recession started. I read where spending on Valentine's Day (future blog) is down an average of $20 or so from last year. So sweethearts across this land will still get flowers and chocolates, just not as nice as last year! The point today is this, the government wants us to spend money to help get us out of this recession, but they are going to give us less money to do it. And although it's good for you as an individual to spend less and save more, it's not good for all Americans to do the same! Hey that reminds me, I need to stop by Walgreen's and pick up a card for my wife today!

TARP-2, Part 2

So it seems the long awaited TARP-2, unveiled yesterday by Treasury Secretary Timothy Geithner, was not a hit with Wall Street (and perhaps most Americans). The problem for Wall Street was that there were few details given about the specifics of the plan. What Wall Street and the stock markets hate more than anything is uncertainty. There are 2 things that can cause the markets to have a bad day (and yesterday was a VERY bad day), unexpected bad news and uncertainty. So even though Mr. Geithner announced the new TARP-2 plan and was briefed by Congress for about 3 hours. Somehow he failed to disclose enough details on exactly how the plan would work to give everyone listening a warm and fuzzy feeling. Today should be equally interesting, as a parade of Big Bank CEO's come to Washington (not by private jet) to give their take on the bailout and proposed stimulus package. The Congress and Senate still have to work out their compromise of their stimulus packages so that a final bill can go to President Obama for his signature. Maybe we should rename TARP for what it really is. Currently it's called the Troubled Asset Relief Program, or TARP for short. But I think it should be called TLBP, or the Terrible Liability Buyback Program. Because these bad mortgages aren't troubled, they're terrible. They aren't really assets, they're liabilities. They won't bring relief to taxpayers, it's a buyback for the banks. And it still is a government program which makes everyone nervous. President Obama is putting all his cards on the table on this one!

TARP-2

Today is Timothy Geithner's day. He gets to unveil the "new" TARP program "overhaul" in a much anticipated press conference this morning. According to CNNMoney.com:

"Treasury Secretary Tim Geithner is scheduled to detail a financial system rescue plan on Tuesday in an 11 a.m. speech in Washington, D.C. Details are still not certain. But in a press conference Monday night, President Obama promised that Geithner would provide "very clear and specific plans" for loosening up credit markets. "That means having some transparency and oversight in the system," the President said. "It means that we correct some of the mistakes with TARP that were made earlier, the lack of consistency, the lack of clarity." The Troubled Asset Relief Program, or TARP, was created last fall to shore up the deteriorating finances of the nation's banks."

Americans are getting antsy about these government "programs" that are intended to help the economy and help U.S. workers, but so far, have not shown much promise. I got a call yesterday from one of my clients, who was very angry that his portfolio is still going down 3 months after last years stock market collapse. The promises of the new administration may be genuine, but most people seem disappointed that there has not been a more noticeable improvement in the markets year to date. To be sure, most "investors" need to remind themselves about the time frame of their investments (future blog). The problem I have with TARP-2 is that there will probably be a TARP-3 and a TARP-4. While Americans desperately want to see this recession come to an end, they do not want to saddle their children and grandchildren with so much debt, that their futures will be as uncertain as the winner of this year's Kentucky Derby.
Well, time to check the stock market futures and see how they're handicapping today's press conference.

Think Positive

There are many types of people in this world, and many ways to describe them. Those that are optimists and those that are pessimists. Some see the glass half full, others see it half empty. Some focus on the future, while others dwell on the past. Some are positive, others are negative. You get the picture. People generally like to be around positive people. Here are some examples of what people are saying these days, that are negative:

"We are heading into a depression!"
"This is the worst market since the 1930's!"
"My account is going to zero!"
"My 401k is now a 201k!"
"I will never invest in stocks again!"
"This is a terrible time to buy a house!"
"This is a terrible time to sell a house!"
"Winter will last 6 more weeks!"
"I will never be able to retire!"

Have you heard any or all of these? Now of course things are not good, but they are not as bad as the media and talking heads on TV make it out to be. There have been many bad markets and recessions before, and there will be many more to come. Newspapers are in the business to sell papers and they sell more papers on bad news than they do with good news. The editors twist the headlines to grab your attention and they will turn a positive into a negative. I once heard a speech from a senior market economist who gave a great example. He had a particular distain for the USA Today newspaper, and he said that if the USA Today had reporters alive 2000 years ago when Jesus walked on water, the headline the next day would have been: JESUS CAN'T SWIM! See, that's turning a positive into a negative. In the coming months we will hear about savvy investors who bought stock in October and November of 2008 and made millions, or of people who stuck to their retirement savings plans and decided to put MORE money into it to take advantage of the opportunity that the market has given us. You can (and should) think positive in all aspects of life. Today, is Feb. 6th and it is still winter, but I am riding to work on my motorcycle today! I am thinking positive. I smell a rally on Wall Street!

Spring Training

Reports out of Pennsylvania earlier this week predicted another 6 weeks of winter. Here in Missouri, most people have had enough. A colder winter than we've grown accustomed to over the past several years, has been coupled with a terrible epidemic of stomach flu and sore throats hitting just about every family in the metro area to some degree or another. So who wants to rough it out for another six weeks? March 20th, come on! Spring Training begins in 9 days! Yes, that's when pitchers and catchers report to Florida and Arizona for baseball's annual rite of passage. Close your eyes...imagine nice plush green grass, can you smell it? 80 degrees, t-shirts, shorts, flip-flops. The first spring training game for the St. Louis Cardinals is on Feb. 25th. That's only 20 days away! Not even 3 weeks! Take that, Punxsutawney Phil. It's time to start checking flight schedules and hotel deals. This winter can take a hike! Even the weather report for Friday calls for 60 degrees here in St. Louis. Guess we'll have to break out the motorcycle, too (future blog). OK, there's no time to waste. Start making your plans now. There's still plenty of time to do my taxes! I wonder if my wife is up for a road trip with me and 5 kids?

Obama admits mistake

So yesterday, President Obama admitted, in an interview with Fox News, that he made a "mistake" in the recommendation of Tom Daschle's Cabinet nomination. In case you missed the story, Mr. Daschle caught flak for revelations that he had failed to pay more than $130,000 in taxes. He is the latest in a series of Cabinet nominees that seem to have trouble in paying their taxes according to the IRS guidelines. "I consider this a mistake on my part, one that I intend to fix and correct and make sure that we're not screwing up again," Obama said. "So this is a mistake -- probably not the first one I'm going to be making in this office, but what I'm absolutely committed to doing is fixing it," he said. So here's what I like about President Obama so far. He wants his presidency to be transparent. He admits his mistakes. And he vows to learn from his mistakes to make sure he doesn't do them again in the future. What I also liked about the Tom Daschle incident pertaining to taxes is this statement: "We can't send a message to the American people that we've got two sets of rules -- one for prominent people and one for ordinary people," Obama said, defending his administration's standards. So this begs the question. If these very smart, very prominent, very high profile people like Daschle, Geithner, and others, have problems paying their taxes, what about the rest of us? Did they not pay because they just thought they could get away with it? Or did they not get good tax advice? We can assume that they did not take their taxes to H & R Block, or do them their selves on TurboTax, so what's the deal? Isn't it time that the IRS was told to make the preparation of personal income taxes easier for everyone? There are of course, many alternate tax proposals out there, from the flat tax to a national sales tax, to the European value-added tax system, and on and on. I think if we could get everyone to be able to do a 1040 EZ style form, that would be great. So I do hope President Obama learns from this mistake and uses it to give us real tax reform, easier income tax filing for all Americans. He better hurry, April 15th is right around the corner!

$9,718.49

$9,718.49! How would you like to get a check for this amount? That would be nice, huh? This is the amount that you would be entitled to, if the government sent your portion of the bailout money to you. How did I come up with this figure? From the CNN/Money website. CNNMoney.com took the total of the bank bailout, $700 billion, and added that to the proposed stimulus spending in the House of Representatives bill, $819 billion. That totals $1.519 trillion. They then divided that number by 156.3 million, which was the total number of U.S. filers in 2008.

So: $1.519 trillion divided by 156.3 million equals $9,718.49 per U.S. taxpayer.

Pretty sweet, right? Well, don't expect a check like that anytime soon. The reason why the government is sending bailout money to banks and other financial institutions and not to you, is because most people (not all) would save the money or use it to pay down debt. Saving and not spending does not stimulate the economy. But saving more and spending less is good right? Yes, for individuals and families, this is a wise move. And more people are doing just that in these tough economic times. But again, while it's good for your budget and future, it's not helpful to the local and national economy in the short run. This was proven last year when most Americans received checks in the mail for $600 per individual ($1200 per couple and $300 per child). Only 17% of the recipients actually spent the money on something. The rest put it in the bank or sent it to their credit card companies. A new proposal that is being weighed right now, is to give every taxpayer $500 in the form of a reduction in payroll taxes. This would get the money in your hands in smaller increments. Your weekly paycheck would increase by nearly $10. Doesn't sound like much right? Well, you're right, but the idea is that you will be much more inclined to spend the extra $10 than save it. Thus, your $500 will go into the economy instead of into your bank account. Well see if it actually happens that way. It sure would be nice to get that check for 10 large though!

Groundhog Day

Groundhog Day has always been one of my favorite holidays. Not for any particular reason, I just always thought it was interesting that this tradition actually carried on from year to year, especially now that with today's weather forecasting technology, while not as precise as most people would want, is still much more accurate than that of a groundhog. You may be surprised that Groundhog Day goes back way before America was even settled. According to Tamim Ansary, in his column, "The Secret Truth Behind Groundhog Day", he discloses that Groundhog Day started in Europe, but it wasn't called Groundhog Day then. The holiday was Candlemas, a Christian holiday. The legend about the animal and its shadow was part of Candlemas, but the animal in question was the hedgehog. The Pilgrims brought the tradition to America but couldn't find a hedgehog here, so they seized upon the next best thing. So this facination with Punxsutawny Phil, the world's most famous groundhog, has some historical basis to it, going way back several centuries. Still, this day has basically become a tourist and travel promotion for Punxsutawney, Pennsylvania, and nothing more. The real problem with Groundhog Day is the notion that if the groundhog sees his shadow, winter will last for 6 more weeks, but if he doesn't, then spring is right around the corner. My calendar says that spring begins on March 20th which is more than 6 weeks away! But even if we accept the "Groundhog Day" theory, how often is it actually correct? A Canadian researcher did a study that found out that Punxsutawney Phil only gets it right 37% of the time! That may be a good baseball average, but it's not good for anything else. So enjoy the day, watch the movie with Bill Murray, but don't make any travel plans just yet. Breaking News: Punxsutawney Phil saw his shadow, winter will last longer!