Beware of Scams!

As a service to my friends and loyal readers, I'd like to pass along a website that I have discovered quite by accident. If you have some spare time and not much spare change, so you're looking for ways to make some money working from home, be very, very careful. ALMOST every offer you see online is just a scam designed to make money for someone else. YOUR money. So look before you leap by subscribing to the free newsletter offer you will find at
http://www.mrworkathome.com/ The research has already been done for you, the scams identified, and recommended sites are listed for you to consider. So far I've been very happy with what I've learned here. If you use this site I would really appreciate your feedback here, good or bad.
It is possible to make money online, working from home in your underwear. Just don't fall for the millions in a month offers. It takes work and persistence and patience. Oh, and it might take months before you begin to see any success at all. After that, well, that is up to you. Most people either sign up for the wrong oportunities, or they quit just before the success window begins to open.

Help Reduce Consumerism!!

(Whatever THAT means!)
Who can deny that those of us in North America tend to buy too much "stuff" we don't really need? Then we tire of it very quickly and go buy some more "stuff". George Carlin got a lot of laughs by pointing that out, but it is a sad situation really. Here's one very easy way you can help counter-balance this, and it is totally FREE. In your web browser type the words
freecycle network. Then join a group in your general area. I even found one in Victor Harbor, Australia (I have some friends there). Once you join, read the rules. Basically, everything you OFFER must be FREE. Before you can list something you WANT, you must OFFER something.
The site will be moderated. Instead of throwing away something you no longer want or need, offer it to someone else who might get some use out of it. It's very simple. I passed along a box of books and a few other items and I'm still looking for a few things we need, like an old (but working) sewing machine. Try it out. And then come back here and let us know what you think.

New Link - Try it out!

Here's a link to a handy wage calculator, and you can use it for US currency or UK. On the left side you can click on whether you want to enter an hourly wage to base your calculations on or calculate your take home pay based on an annual salary. Enter your filing status and deductions and you can quickly see a good estimate of what taxes you will have withheld and what your daily, weekly, monthly take home will be. I have added this link to the "favorite links" at the bottom of the blog so you can come back and use it any time. Let me know if you have other links we might all find useful.

http://us.thesalarycalculator.co.uk/hourly.php

Why are gas prices so high?

Well, once again, the same tired e-mail is circulating telling us how we can supposedly force the gas stations to lower their prices at the pump. Ridiculous!!! Think about it. why would gas prices be any different than any other commodity? If there is plenty of...milk, and you don't like the price at store A, you drive to store B, check the price and, if it is lower, you buy your milk there. Now, if enough people discover that store B can save them money on milk, store A might possibly be forced to either lower their price on milk to compete, or settle for selling less milk, right? Simple theory. Fundamental example of a free market economy. Now, it is unlikely that one person switching stores would have any impact at all, but this person tells all his or her friends where to buy cheap milk, and together, they all spread the word, so that soon, store B is having trouble keeping up with the demand. To slow the demand, and perhaps to take advantage of the increased flow of customers, store B raises their price on milk. Meanwhile, store A realizes that they have lost business, and to some extent, they lower their milk price. Now both stores are selling some milk, and customers are happy. That is what happens when there is plentiful supply and sufficient demand. But let's look for just a minute at the gas situation. We have, on a global scale, finally crossed the line between a supply driven gas price to a demand driven price structure. Why? That's very simple. We now have more demand than supply. With China soon moving from a few million vehicles to hundreds of millions, that demand is not likely to drop, is it? Here is a whole new demand source for a constantly dwindling supply of fossil fuel, and the supply that remains is increasingly more difficult, and expensive, to get to. So, boycott whatever company you want to for however long you like, the supply won't grow a bit, and the demand will still have grown tremendously. You may SHIFT the demand from one company to another, but you won't shrink that demand. So it is well past time to quit sending this silly e-mail around the world, and focus instead on how to shift a significant part of the demand to some other fuel source, like hydrogen, solar power, etc. We have now produced something over a trillion barrels of oil so far, and some "experts" believe that there is still about 2 trillion more barrels in the earth...somewhere. Much of it might be under very deep water, and we're exploiting that already. Much of it is in oil shale, and technology is making that more practical to get too. But if you believe anything about the oil crisis, believe this. IT WILL NOT BE ENOUGH.

Now, that is just my opinion, based on all that I've read on the subject, and on what I recall of a very well researched lecture I saw on TV several months ago in the wee hours. I'd be happy to hear your opinion, or to try to field your questions. I'm no expert, so your input can only help.

Not in a recession yet, but this may be worse than you think

Interesting information. At present, with the decline in housing values at around 8.4% nationally, 13.5% of homeowners now owe more than their homes are worth. But this is happening with only with an 8.4% fall in the housing market. What happens with a 15% or 30% fall? Goldman-Sachs, now praised for avoiding the pitfalls of sub-prime lending, projects that this won't bottom out until we reach 15% or even 30%. First American Finance (NYSE:FAF) calculated the effect on homeowners if housing prices started falling, using data from December 2006 (and they certainly have started falling, haven't they?) Brace yourself! These numbers can be shocking. Already at 8.4%, what would happen if the prices drop to 15%? At that po8int about 21% of homeowners would be "upside down" in their mortgages. And to satisfy those who believe it could continue to a 30% decline in home prices - that would leave 39% of homeowners owing more than their homes are worth. Now, you may think that this will not affect you because you have built a lot of equity in your home. Or perhaps your mortgage is paid off. Good for you! Maybe you don't have a Adjustable Rate Mortgage. Good for you again!! But, you will still be hit with the effects of this crunch in one way or another. You see, what frankly scares a lot of lenders at this point is that it might become more attractive, and even financially less damaging, for some of these folks caught up in the squeeze to simply walk away from their mortgages. When and if this happens is large numbers, credit of any kind for anyone will become far more difficult to obtain, and prices of everything could go thru the roof. In addition, the impact on your home value, when so many homes are being seized in foreclosures, may shock you and alter your own financial planning significantly. It has already become far less attractive for many people to own a home. In fact, the new reality maybe that home ownership is not going to be the American dream that it once was. So watch the news, keep your powder dry, and stay flexible. None of us will escape the effects of this trend, recession or not. That's my opinion. What's yours?

Today's Recession Update

How can you protect your retirement finances?
If you are concerned about your 401K or IRA or other investments you hope to use to finance your retirement, now would be an appropriate time for concern, but not for panic.
After the sudden emergency ¾ point rate cut by the fed yesterday, Asian markets recovered nicely, though early news from the European markets was not so upbeat. The Korean market rose nearly 11%, Japan recovered about 2%, Hong Kong eked out a point or two and Australia rose 4 ½ % after the fed announced the unexpected cuts. Will that be enough to stop the decline? I doubt it, but it may be enough to slow it down so that we have a softer landing and a shorter recession period. As I wrote yesterday, just the news headlines seem to trigger panicky investment moves by pension and hedge fund managers and individual investors alike. Cartoonist Bob Englehart had a cartoon in the Hartford Courant on January 17th with the following caption: “DESPITE THE MEDIA'S CONSTANT ATTEMPTS TO BRING ABOUT A RECESSION, EXPERTS SAY THE ECONOMY IS STILL STRONG.” Perhaps it is not so strong, but certainly the media is pouring gasoline on the burning building and shouting for someone to call the fire department. At what point does the media cross the line between reporting the news and creating the news? Or is there a line anymore?

On the flip side, there are a number of economists and fund managers who believe that any major moves from stocks to bonds might be something to regret later. In 1987 those who basically sold their stocks at the bottom failed to benefit from the recovery when stocks later soared. To a lesser extent the same thing happened in 2002. So your protection strategy should be based on just what your retirement timeline is, not headlines. If you plan to retire in 5 to 10 years, it might be best to simply ride this cycle out, because you likely have time to recover any losses, assuming that your present portfolio is reasonably diversified. If you plan to retire in less than 5 years, it might be wise to shift some portion of your holdings into bonds. Some analysts are predicting bond yields in the “high single digits” before the markets shift back to equities. The fact is, no one can say for certain what tomorrow will bring. One thing is certain though.
The is more unstable footing ahead for perhaps the next 5 or 6 quarters, maybe longer, so if you have a longer time till retirement the question is whether you can ignore all the headlines and immunize yourself from the panic while this cycle runs it’s course. One economist I spoke with many years ago put it this way. If you can’t sleep at night, you have too much at risk. If you sleep all night without interruption, you don’t have enough at risk. Maybe that’s not the proper gage for you, but it illustrates my point. If you think you can stay calm amidst all the hysteria, maybe you should just leave your 401K alone for now. Reassess every quarter, re-balance as needed, but stay with your plan. If that causes you too much heartburn, then move a portion of your holdings into bonds and then watch closely. At some point you will want to get back to your “pre-panic” balance. Likely you will miss some of the trends upward before you know it, but I don’t think that will be next week or next month, maybe not even next year. If you find yourself watching your balance every day and wringing your hands, then the next several quarters will be difficult for you.
Tomorrow we’ll talk more about how this whole scenario developed

Recession - What's Happening?

What is the trigger?

There can be no doubt that we are in the midst of some very troublesome economic times. The meltdown of the housing industry in the wake of all the greedy sub-prime lending coupled with $100 a barrel oil have put the U.S. economy in a real tizzy. Worldwide, markets are being affected by the weakening of the U.S. dollar, and there is no shortage of headlines to stir up public emotions in every major city. The problem is serious enough without the chicken little “sky is falling” headlines. But when I read the leading article headers on three online news sources before 6am this morning and they all were trumpeting the drop of every major foreign market over the three-day weekend, they seemed to me to be a sort of guarantee of panic among investors here as well, as soon as the markets opened today. Investing is so sensitive to emotion that national economies are vulnerable to such media hype. Today was a disaster for the markets in China, and that will have a serious effect on our markets on Wednesday, no doubt. People have their narrow little comfort zone and it doesn’t take much to discomfort them. But it seems clear to me that too much of what drives us is fear, not facts. Headlines, not hard evidence. You see, when the headlines around the world hammer on the topic of the housing crunch, foreign investors get jittery. When they get jittery they steer investments away from the U.S. markets, the balance of trade becomes further unbalanced, and the dollar weakens. The weakened dollar causes a whole cascade of other problems including the impact on American tourists abroad paying more than they imagined for their vacations, and that results in less foreign travel. We really do now have a global economy and just like a mobile, if you touch one part of it, the whole thing moves. What is a little scarey is that in recent times it seems that you only have to look like you might touch it, and the whole thing starts to move.

We know that it is the institutional investor that drives the markets, right? Not the individual trying to eke out another point or two from his IRA or his 401K. But I’m beginning to believe that panic stirred up by “worst case scenario” reporting can galvanize a large body of private investors and they can become a force in the financial markets too. I don’t believe that a single pension fund manager or other institutional investor with a portfolio of $500 million to manipulate is going to have much more influence on market trends than 50,000 individuals all moving around their $10,000, or 20,000 trying to decide where to put their $25,000 401K funds. The point is that if enough momentum develops based on panic created by headlines, $500 million dollars can create a pretty good shift, and I think that is what we are beginning to see repeated over and over, day after day. Abroad, the media is telling foreign investors that the U.S. is headed for a serious recession and they better protect themselves. Not too unlike my whole generation sitting in the hallways of our elementary schools with our heads covered by our arms because we were all sure that at any moment a nuclear bomb was going to land on our heads. Now, I’m not the brightest bulb in the chandelier, but I do know that sitting on the floor with my hands over my ears is not going to offer much protection from a nuclear blast. But since we seem to now have a very large herd of panicky investors pushing us to the brink of recession, we do need to have a plan for protecting our retirement finances. Tomorrow we’ll talk about how to protect your 401K, or at least how to reduce your losses in these turbulent times.

Wealth and Happiness

As a young person I thought that if I could ever accumulate a lot of wealth I would surely be very happy. From what I observe today, there are still a lot of folks who believe that. They work so hard and devote so much of their time and energy to the accumulation of wealth and the acquisition of "stuff" that they have very little time left for anything that truly matters. I have known wealthy people. I have known happy people. In some few cases I have known wealthy people who were also very happy. But the interesting thing is that the ones who were both wealthy and happy were happy long before they achieved any wealth at all. When they were poor or just making their way like the vast majority of us, they really valued their relationships with friends and family above all else. For a few, they placed their spiritual well-being above wealth, but seemed to have financial success anyway. They worked hard for it, but kept such work in perspective and kept their lives in balance. Once they became wealthy, they had no hesitation in using their wealth to benefit others, to help others in need, to share their time and their wealth. But without exception, they told me they were no more or less happy being wealthy than they were at any other point in their lives. And the few wealthy folks I knew who did not have their lives in balance or their egos in check, were miserable, unpleasant to be around, and obsessed with themselves and their supposed importance. But money alone does not grant happiness or status, at least not among those who know the value of more important things.

Ross Perot found this out firsthand. "Right after my company got successful, as a young man I met some of the wealthiest people in the world. I found that they were such unhappy, lonely people... I learned that money and happiness are unrelated." So, if you are unhappy today, it would be wise to look further than your bank balance for the source of your troubles. There is no doubt that having money makes many things easier, and I recall one very wealthy person saying that "I've been rich and I've been poor. Given a choice I would choose rich." But what if you don't have that choice? Happiness is not something you can buy at any price, nor is it something that another can take from you if you truly possess it. We must learn to love what we have, and not pine for what we do not have, and choose to be happy. Appreciate what we have, reach out to help others, and happiness will find us.

Recession - Will it affect you?

Many of the folks I know and work with seem to be totally unconcerned about all the recession talk. It is not the most frequent topic of conversation. In fact, many are not even all that sure what a recession really is. Wikipedia provides this information: In macroeconomics, a recession is a decline in any country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. However, in the United States the official designation of recessions is done by the business-cycle dating committee of the National Bureau of Economic Research (Feldstein, 2007). That Bureau defines a recession more ambiguously as "a significant decline in economic activity spread across the economy, lasting more than a few months."

Like the law of gravity though, you do not need to understand it to be affected by it. The fact is, if we do indeed continue toward a recession, it will affect everyone in our society in some way, though some far more than others. The phenomenon that interests me most though is the way that the media frenzy over certain things seems to push us in the direction of our fears. The mere mention of recession seems to create in us a tendency to take steps that will make a true recession even more likely, like some self-fulfilling prophecy. Many other factors are at play here, of course, but our own fears must certainly take a significant chunk of the blame for the general direction of the economy. It is not at all unusual for the herd to head in some general direction based on some murmurings and grumblings, without any clear vision of just where they are going...or why. (I also happen to believe that the tendency of the workforce to demand more pay and benefits for less and less production pushes us further from stability and closer to recession, but let's save that for another day)

To reduce or minimize the effect that any cycle of the economy might have on you, it would be wise to avoid the herd altogether. The herd of baby boomers have some things in common that are not at all to our advantage. For example, the herd has not planned well for retirement. The herd does not have the reputation for saving. The herd has not typically learned to deny themselves any instant gratification that the media pushes at them. No, as a group, we have not invested in 401K plans or Keoghs or IRA's to the extent we probably should have. We indulged ourselves with bigger and better and newer and more conspicuous "stuff", instead of fixing up what we have or making do with what we have and realizing that we don't necessarily NEED all the things we WANT. As a result, as a herd, baby boomers might be hit pretty hard by a recession, right at a time when they are least prepared to handle it. What about you? Do you have access to liquid assets to cover 3 to 6 months of basic living expenses? Have you made most of your major purchases with cash rather than plastic? Have you learned to identify what you need, and resist at least some of your wants? Are you impressed by all the "bling", or do you still have an appreciation for the simple but elegant things that are designed to serve us well and last a long time?

My wife and I were talking this morning about a new phone being advertised that has a GPS feature. We agreed that it was a really neat idea and that we would like to have one. Then we both quickly realized that the cell phone with a camera in it also seemed like such an important thing to have, that when our phones were due to upgrade, we both got camera phones. The camera feature seemed like such a great idea, but we both quickly found that the novelty didn't last and we rarely have had any reason to use it. To me, that was just one recent example of how the media helped us to waste money on something we at first knew nothing about. Constant advertising helped to create in us a want for this new technology, and then in time we allowed the constant bombardment to change that want into a need. The passage of time, and very little time at that, turned that into "I have no idea why I thought I needed this thing." And it is not just cellphones, it's everything new that is flying at us from every direction.

Will the recession, if there is one, affect you? You bet it will. but how much it will affect you has a lot to do with how you are living your life from day to day. There is a certain protection in simplicity.