Jeez, this video had me bent over. And you don't even have to be in the auto biz to appreciate it:

The Onion: Ford Unveils New Car for 2010: The 2003 Taurus (video)



No kidding! I know a couple of those people — except the government's "Cash for Clunkers" already got them to spend way more than $650. Oh well.

Labels: Automobiles

Oh, the tumult that's been going on in the credit-card world the last ten months or so!

Oh, the angst displayed by dubious cardholders as their precious credit limits have been slashed, their APRs inflated to orbit, and new annual fees instigated!

Yeah. Pardon me while I fire up another batch of buttered popcorn and enjoy the show.

I mean, the entertainment value here — all the verbal flailings and gnashing of teeth of revolving debtors, so loudly pronouncing their financial misfortunes minute-by-minute on TV and the 'net — is sky-high. (Not unlike those new APRs.)

Maybe you've noticed, too: 'Net message boards and chat rooms are absolutely ablaze with debtor diatribes lately.

"Citibank just raised my rate to 29.99 percent FOR NO REASON!" the postings typically go. "I pay all my bills on time! This is so unfair! It should be illegal!"

And so on.

Well, color me fulfilled. Why? Because I can now count myself amongst the great unwashed masses whom Citibank has deemed worthy of a 20+ percent APR on our plastic. (They rate-bumped me a year ago, too.)

Our "20 percenter" letter (PDF page 1 and PDF page 2) arrived just a couple of days ago.

Being a dedicated late-night reader of financial sites and blogs, I'd be fibbing if I said I hadn't been expecting the letter for a while.

It was anticlimactic, really. I knew it wouldn't matter.

Lisa and I haven't carried a balance (other than for card arbitrage purposes) since paying off our cards in 2004. So this APR increase, and all the other rate increases which accompany it (see PDF page 2 above), are of zero consequence to us. This particular Citi card is of the cash-back variety, which means we use it (and a similar card from Chase) for practically every purchase we can, and we pay off all balances in full each month.

This is one of the nice things about being almost-debt-free: Banks like Citi can jack your APR to 40 percent. Heck — make it 50 percent.

When you don't carry a balance, you don't care about the rate.

It's a non-event. A yawner.

You don't carry a balance. That rate means nothing. In fact, you're a predator of sorts.

It's a good place to be.

On the other hand, if you're Liz Jones, then you've got problems. Money school is in session, and the teacher just called you out.

Again I'd like to point out: The private-sector deleveraging that's going on is pretty stout. I'm happy to see it. Heck, I'm almost giddy.



With unemployment in double digits and credit lines disappearing faster than honey buns in Michael Moore's pantry, your neighborhood Debt-Laden Consumer is likely in a world o' hurt.

For a lot of folks, even those who aren't strictly paycheck to paycheck, life is dishing out a mighty painful lesson:

Debt is not your friend ... and neither is the bank who sold it to you.

For those readers who'd like to venture away from Citibank for a moment and scan the bigger picture, I offer the following, courtesy of the New York Times:

NY Times: Banks Squeeze Customers Ahead of New Rules

Enjoy ... and be on the lookout for your letter!

Labels: Credit Cards

Liz Jones.

Yeah.

I don't know who she is, either. Apparently, she's a social critic and columnist. Lives "across the pond," as they say.

But she sure appears to be a GDP-growth-worshipping economist's wet dream:

Dailymail: I'm £150,000 in Debt...

I'd say that it takes big courage for someone like her to come out and announce her debt situation. But really, the true courage comes when she proves that she's willing to actually work and pay it off ... rather than "Woe is me!" her way to more recognition and preferential treatment.



Ummm ... yeah. You, Liz, have racehorses, a farm with a "bat sanctuary," and you "holiday in Tuscany." You wear clothes made by designers whose names have far too many consonants. You spend all this money in some dear hope that others will either be jealous of you, or will see you for something you're not.

I'll give you this: You made me, a social peon (though a solvent one), laugh at you. You sure did that.



Nice. And there's more, of course — much more — in the article.

But don't hate her because she's so pathetic.

Hate her because she's still (I'm pretty sure) blaming her poor parents.

Labels: Debt, Spending

More news from the nightmare that is GMAC:

WSJ: GMAC Asks for Fresh Lifeline

Really. It Just. Never. Ends.

At least now I understand why the goldbug investors think the way they do.

And remember, folks: I noted back in April that the brainiacs at GMAC ramped up subprime auto lending again. FICO of 600? Sure! Let us put you in a new car!

Cash for Clunkers? You betcha! GMAC was feeding at the trough on that one, too.

Seriously: When is enough ... enough?



And as the article above notes, the FDIC's on the hook for GMAC, too. It's backing $4.5 billion of GMAC debt from earlier this year ... and is about to back another $2.9 billion of issued debt for this pathetic excuse for a company. (Good thing the FDIC is already in the red. At least this way, they sort of know how GMAC feels.)

These days, all roads truly do lead to the taxpayer.

No wonder fiat currencies have such a fabulous track record.

Labels: Automobiles, Bailouts, Banking

As I suggested back in a July post titled "Credit Card Charges Appearing," we'll now get to see what Bank of America and Citibank are willing to do to pry a few coins from the fingers of deadbeats:

WCBSTV.com: Charged for Perfect Credit?

("Deadbeats," if you're a card company, are those greedy, black-hearted souls like myself who pay off their balances in full each month. Interest-free. Like clockwork.)

The gist of the article? Bank of America and Citibank are going to "experiment" by tacking annual fees of $29 to $99 onto the cards held by some full-balance-paying convenience users.

Yeah. As if we couldn't see this coming.



How far will the big banks take this ploy? I don't know — but I have this wacky suspicion that at least one of my household's cash-back reward cards are going to end up as a "test case."



I'd really love to see this backfire on the suits at Citibank and BoA somehow. But really, since the taxpayer is effectively on the hook for whatever bad decisions grenade the balance sheets of the Too Big To Fail banks, we'll be paying for it one way or another.

So far this year, cash-back cards have netted my household just a tad under $306. Would we be willing to give up, say, $99 per year of that (as an annual fee) simply to keep (1) the convenience of use, and (2) our credit scores from suffering at the loss of aged accounts and credit lines?

Honestly, at just this moment, I'm not sure.

Hey, Citibank: Are you feeling lucky?

Labels: Credit Cards

In today's episode of "Can I Haz Bailout, Pleez?" we turn to David Lazarus, writing for the esteemed LA Times:

LA Times: How About a Student-Debtor Bailout?

Let me preface all this just a bit: I believe there is very little about student loan debt that is different from any other kind of debt: It too is a known claim against an unknown future.

It is not "good debt." It is not "bad debt." It is just debt.

Student loans are nefarious, though, in ways that other debts are not: Student-loan debt is typically issued so easily and in such large amounts that the people who take on its burden — young adults who, in the vast majority, have not yet created nor sustained a stream of reliable income — will find themselves facing five and six-digit liabilities at precisely the same time (no more Bank of Mom and Dad) that it is most important that they begin BUILDING SAVINGS.

No, I don't care about a college graduate's "earnings potential." Potential doesn't pay the electric bill. It isn't a PIN-based currency at Wal-Mart. Your landlord won't accept it as payment for rent. Those tens of thousands of dollars of racked-up student loan debt are certain, and inescapable. (Well, unless you're willing to flee the country.)

So here's how Lazarus' article begins:



I dunno. Because you were loaned over $80k on an uncollateralized basis, maybe?



They already "helped" you, Steve. They gave you $80k, no questions asked, with which you could pursue a higher education. All you had to do was sign your name. Presto! Eighty grand is yours!

What? Now that school's done, and you're out there in The Real World, you find that that repayment's a bitch? That the loan terms are "unfair?" That groups like mortgage bankers, real-estate pros, and Wall Street banks — groups with stuffed-pocket lobbyists, and groups who can effectively hold the economy hostage when their business plan puts them in the ditch — those guys get preferable deals?

Wow.

Sounds like you DID learn something after all! We're making progress!



Damn that easy credit, anyway. Who knew it would cause such problems?

Look: You want to put an end to those nasty annual tuition increases at State U? Here's how you do it:

Stop making student loans easily available to anyone with a pulse.

Complicated, I know.

Nix the "Just sign here!" loan programs. Stop presenting as a given that EVERYONE should be able to go to college, regardless of price and/or background. Cut off the "free money" for college, and see what happens to tuition, room and board, and all the other associated college expenses.

In the mid-2000s, we made mortgage money available to be borrowed by pretty much anyone who could write down at least twenty percent of our alphabet, and in no particular order. What happened? Home prices blew up, up, up.

We've long made college loans available on much the same basis. And yet people are surprised — nay, infuriated — when college tuition rises by double digits, year after year.

Huh. Weird.

The more money you make easily available for Product A, the more Product A's price will rise. This is basic economics. We just repeatedly ignore it. (And create newer, bigger government programs to "solve" it.)

Ah, but I digress. Back to the article:



Yes, Steve, I know. Paying back five-digit uncollateralized loans, at the terms to which you agreed, is so damn unfair. (Note to the gallery: See how we've become so addicted to "low rate" credit? How, after so many years of watching "free" money get handed out, we're all so entitled to more of it? Isn't Steve just a shining example of this?)

But there is a bright side — something that would maybe help Steve forget about those, uh, "predatory" loan rates. From what I see — and I'm just talking here! — he might be a fantastic candidate for the government-subsidized, FHA-backed, first-time homebuyer program! He should look into that!

Because, as we all know, more low-rate debt is the answer.

Always the answer.

Bring it on. Bailouts for everyone.

Labels: Bailouts

I'm beginning to see more and more anti-401k talk these days. I've covered this topic a few times in the last twelve months — the articles "401k Mess" and "401k Tax Break Under Microscope" are examples that come to mind.

Now we have a glossy mag of no less stature than Time joining the 401k punching party:

Time:Why It's Time to Retire the 401k

And it's a long article, too — something like five pages of bodyblows dealt to the 401k setup. You know it's gonna be good when you get this on page one:



One can sit back and pretty easily foretell what Time is going to harp on: They'll lament the disappearance of "guaranteed" employer pension plans. They'll point out that the 401k was never intended to be more than a tax-advantaged "executive perk."

And they'll posit that the answer to all this JUST MIGHT BE (of course) a NEW GOVERNMENT PROGRAM. Because all the previous ones have worked SO WELL.

There are other options, of course. Like this one:



Just exactly how contributing six percent of one's income per year for thirty years, plus Social Security (yeah, right) gets one to "retirement security" ... well, I must be missing comething in my Google Docs Retirement Insurance spreadsheet for an employee starting with a $40k salary.

With pay raises of 2 percent per year, and expected annual returns of 4 percent per year, our $40k/year worker would amass just a touch under $172k at the end of Year 30.

From there, in a "math that almost works" world, our Joe Sixpack could withdraw about $12,600 per year (18 percent of his final pay, or $1,050/month) for 20 years before draining the account. (Note that these calcs are independent of taxes and inflation, both of which are pretty certain to be, uh, "non-negligible" going forward.)

Of course, there'll be Social Security payments to count on in 30 years. Don't forget about those. Ahem.

However, if I step into the "math that doesn't work" world which Time magazine seems to inhabit above, I'd find that Joe's account, if he withdrew "about a quarter of his final pay" each month, would be in the red by Year 43.

Good thing his retirement paycheck would be "guaranteed."

Look: At the conservative end, would Joe's monthly check for $1,050 be better than nothing? Absolutely. It might buy him a couple bags of decent sandwiches, anyway.

Does it resemble anything close to real "security?" No.

Does anything in the proposed plan resemble real "security?" No.

Plus I have a few more concerns about this "retirement insurance" setup:

• If it's privately run, we're told that "some government regulation" would be needed.

I mean, they did such a great job with the banks and AIG and all. I'm supposed to feel reassured by this? Really?

• If it's government run ...

Well, yeah. Just smell the goodness of those low, low returns you'll get by investing in long-term Treasuries and other government bills. Aw, what the heck — we can always just print it, right?

• If the insurance companies can earn better than 4 percent a year, what's the investment vehicle?

Lemme guess: Stock market? Mortgage-backed securities? Collateralized debt obligations? Other financial hodge-podge?

Or are we looking at just another government-authorized Ponzi scheme?

And what happens to the market indexes when everyone's six percent STOPS going into their 401ks, and STARTS going elsewhere?

And if the premiums are just going back into the stock market, how's that better/different than what we have now?

Call this scheme whatever you like — retirement insurance, a privatized version of Social Security designed to complement the other doomed Social Security, or something else — but I want to know just how exactly they'll get to the level of "50% of final pay" that the Time author conjures above.

Of course, they did use the word "presto" in their presentation, which sort of suggests magic of some kind.

Could it be that maybe — just maybe — this whole "retirement security" insurance thing is, as I suspect, just a newfangled continuation of our country's ongoing War on Math?

Labels: Investing, Saving

Readers who've followed my discussions regarding irresponsible home buying and lending know that I'm pretty opinionated on this topic: It's quite obvious, for instance, that the taxpayer-backed Federal Housing Administration (FHA) has become today's subprime lender of choice. (Nobody else is stupid enough to do it.)

As this week's evidence, I point you to this NY Times article:

NY Times: FHA Problems Raising Concern of Policy Makers

Oh, it's worth a read, all right. Even if you only pay attention to the real-life FHA borrowers profiled. The first one's Bernadine Shimon, a teacher in Northglenn, Colorado.



No, the government gave you an anchor ... and then told you to swim. Check this:



I won't skid off into a ditch here with some rant about how it is NOT the government's job to "take risks on people." (Or did the publisher leave a page out of my pocket U.S. Constitution?)

Instead, I'll just keep the party going, and offer up a second FHA-borrower profile — that of Chaz Fullenkamp:



Really? How, pray tell, do you figure that?



Yeah. And I'm surprised we even still have a financial system. Or a currency that's good for anything other than kindling.

And Recent FHA Results Say...

Also in the article, we're told that FHA's loan portfolio is facing, uh, a fair amount of default and delinquency issues.



And:



And:



So how do Congressfolk feel about this? It's no biggie, apparently.



And a certain Massachusetts representative's response is even better:



I'd say these reactions are unbelievable, but they aren't. What else would you expect to hear from elected officials who well and truly believe there are no limits to what we can and should throw money at? (Vive la printing press!)

You know, really, I wish that this were all a bad dream. But it's not. It's real.

The financial profligacy — and often, sheer ignorance — of these people is absolutely astounding.

Labels: Homeownership, Mortgages

It was almost precisely two years ago that I wrote a blog entry entitled "ASPIRE Act Doesn't Inspire Me Much".

Somehow I lost track of the ASPIRE Act after that. Can't imagine why, given the economic events that got rolling around that time. [/snark]

Guess what? Looks like the idea hasn't died:

US News: Coming Soon: $500 for Every Newborn?

I didn't like the idea two years ago.

I don't like it now.

You know what such an idea screams to me? It says, Let the government "care" for you — cradle to grave. After all, we know what's best.

Or maybe I'm just imagining things.



Handing someone $500 (or more) at birth, when they've done precisely ZERO to earn it. Sounds positively ... redistributive.



Financial literacy programs, I'm all for. The rest of Cramer's spiel, though, is trash. There are other motives at play here. I just can't put my finger on them.



Yeah. Progressive.

Kind of like cancer is "progressive."



Now there's a surprise. NOT.



Cost? What cost? A few clicks on the FedRes mainframes, and WHAMMO you've got brand new cashola, ready to be spread hither and yon. We've established this.



That'd be a fine argument — except that creating costly entitlement programs is usually the unspoken goal of vote-buying politicians.

Am I alone in my displeasure on this?

Labels: Saving

Behavioral finance is absolutely fascinating to me, which is part of the reason I enjoyed Why Smart People Make Big Money Mistakes so much. (Here's my Smart People review, for those who are interested.)

Thanks to Bob Lawless and this Credit Slips article, a previously-unconsidered instance of anchoring just came to my attention:

Research from Professor Neil Stewart (University of Warwick) indicates that the presence of a minimum payment on card statements caused people to pay 43 percent less toward their credit-card debt than they otherwise would. Revolving cardholders see that bold minimum payment number printed on their statements, we surmise, and somehow in their minds the minimum-payment figure takes on importance — when in fact it really should have none (insofar as to what's in the cardholder's best financial interest, anyway).

When they make the decision of how much to pay that month, the cardholder subconsciously "latches" to the minimum-payment amount. It becomes an anchoring point — a low one whose implementation certainly benefits the card company — that has a lowering effect on whatever final decision Joe Cardholder makes.

From a short article at The Economist:



Yet another reason why — despite all the "It's not fair!" debtor outcry — minimum payments ought to be (and have been) raised.

Labels: Credit Cards, Debt

You might not be living paycheck to paycheck, but 61 of your 100 closest friends are.

Those are the figures reported by a new survey from Careerbuilder.com, in which Harris Interactive surveyed 4,478 workers about their current financial standing. Sixty-one percent reported that they're living at or near a "paycheck to paycheck" basis. Further:



Admittedly, earning $100k in NYC isn't the same as earning $100k in Memphis, so the tangible value of the "$100k" aspect has to be moderated somewhat.

How has the recent economic tumult affected the paycheck-to-paycheck figures? Well, here's a visual:



And here's a nasty (though not unexpected) tidbit that does NOT bode well for the future:



Some other factoids from the survey:

• 36% of workers report no participation in 401k, IRA, etc.


• 33% say they are not able to save ANY money each month


• 30% say they are able to save $100 or less each month


• 16% say they are able to save $50 or less each month

Oy. Not a pretty picture, no matter how you look at it!

Labels: Spending, Statistics

It's a guilty pleasure of mine, I guess: I really enjoy getting my hands on well-written books about Wall Street and its shenanigans.

I have to put "well-written" in there because quite a few of the financial exposés that hit bookstores are, from a literary standpoint, solidly pathetic. I'd offer Greenspan's Bubbles as a recent example of these, as well as Chain of Blame. The very nature of our capitalist system pretty much guarantees that great stories are out there waiting to be told — many of them not at all flattering to the characters involved — but I'll be darned if there aren't authors out there who seem to try to use the written word to outdo Wall Street's all-too-common awfulness.

Thankfully, Michael Lewis' Liar's Poker: Rising Through the Wreckage on Wall Street is not in that camp. No, Liar's Poker was a great read, fun and engaging. Liar's Poker does its author proud. Beyond that, it's also the best first-person Wall Street account I've yet read.

(For a recent sample of Lewis' work, you might wish to read "The End," a late 2008 article published in Conde Nast. If you enjoy financial journalism, it's a page-turner I heartily recommend!)

Liar's Poker: Selling Bonds For Salomon Brothers

I wasn't paying much attention to Wall Street and investing in the 1980s — heck, I was just finishing high school in 1989, while Liar's Poker was published in 1990 — but Michael Lewis was. In fact, he was living it. Lewis was a bond trader for Salomon Brothers during the mid-1980s. During this time, he worked primarily in Salomon's London office, pawning off bonds of all shapes and sizes on well-heeled clients. But from his across-the-pond desk, Lewis managed to build a mighty strong picture of 1980s Wall Street. From his preface:



Lewis' story begins with his eventful ride through Salomon's training program, into which he was thrown in July of 1985. "I knew nothing about trading," Lewis writes. He had just finished up his master's degree in econ from the London School of Economics. "And next to nothing about Salomon Brothers. I knew only what I had read in the papers, and they said that Salomon Brothers was the world's most profitable investment bank."

And what was Salomon training like? Well, the classroom setting was pretty standard. You had the folks in the "front row" (brown-nosers) and you had the folks in the "back row" (jackasses). And ne'er the twain shall meet.



It's all ridiculously entertaining, and yet atrocious. Tough to put down, in other words. Sure, everyone likes to slow down and check out the train wreck. But how many times do you get to look back in history and actually see the train (an unabashed and barely-regulated Wall Street) leaving the station?

Yeah, see, that's Liar's Poker.

Those of you with some knowledge of Street history will find in Liar's Poker a nice healthy smattering of famous secondary characters: Lew Ranieri (bigger-than-life mortgage bond guru), Michael Milken (the junk-bond, supposed-insider-trading guy), and John Meriwether (of later Long Term Capital Management fame), among others. Looking back, I'm almost tempted to just label the book as a really fiery first-person tale of "Who's who" interactions on 1980s Wall Street.

But doing that would leave Liar's Poker shorthanded. This is a biography of Wall Street excess, too, and as such it absolutely glows. You're pulled in via Lewis' great storytelling, yes, but it also has these nice currents (like Lewis' mental sneers at how much his Salomon peers' pay often was, and how much his own pay usually wasn't) that trail along with everything else.

Then there are the you-always-knew-it accounts of that thing that Wall Street does oh so well, and does to this very day: taking its own shitty trades and lobbing them off on an unsuspecting investing public.

Here's Lewis relating a painful phone call in which he had to tell a client ("Herman the German") that the AT&T bonds Lewis had sold him a day previous a day previous had ... well, they had depreciated. Significantly.

The kicker? By selling these bonds to his customer, Lewis had unknowingly relieved a losing position on Salomon's own trading book. "I had made the mistake of trusting a Salomon Brothers trader," Lewis writes. "He had drawn on the pooled ignorance of me and my first customer to unload one of his mistakes. He had saved himself, and our firm, sixty thousand dollars."



Yeah. So let this be a lesson to you readers: When the bank (investment or otherwise) calls you a Valued Customer, make sure your backside is iron-plated.



Well. That'll make you feel good about your full-service broker, won't it?

And here's a chunk toward the end of Liar's Poker in which Lewis moves outside his bond-trading world to describe the suits handling "take-overs" for 1980s Wall Street:



Lewis covers the decline and downfall of Salomon Brothers quite well, too. If you're interested in how venerable old Street institutions like Salomon can dissipate into the nothingness of history, you'll get a blow-by-blow helping of that as well.

In the end, I had a great time reading Liar's Poker, and can recommend it thoroughly. Be warned, though: You're going to find it very difficult to put down!

Labels: Book Reviews

I don't know what their problem is, really. It'll all work out fine if they'd just keep saying the refrain: Debt is good. Debt will save us. Debt is good. Debt will save us...

Edmunds.com: "Buyers Feel Regret as C4C Final Tally is Released"

Yeah, the title's a bit loaded. But here's the part that intrigues me:



Obviously we have some folks out there who aren't minding the "green shoots" as well as they should be!

Labels: Automobiles, Debt

Ever read a news story that pisses you off ... only to go read the comments and get even more riled up?

Yeah? Well, here's my venture into that particular world for this weekend:

Sac Bee: Backlash Against Banks...

For a guy like me who wants, overall, to see mortgages foreclosed faster rather than modified (read: delayed), the article is just painful. But then I get to the comment from someone with the moniker of "cwraider." Dated 9/6/09 @ 5:53:07pm, it reads thusly:



The emphasis above is mine.

What happened to three years of interest-only payments?

Seriously?

It went to the bank, cwraider. It was interest only. Your $75k was the pure profit you paid to Countrywide/BOA for the honor of taking out a death-wish loan on a home you had no business buying (or refinancing).

Most of the time I run the other way when folks talk about implementing policies to "protect people from themselves." But I really can't argue with the fact that the failures in the current system have been widespread, and immense.

Labels: Homeownership

So CNN/Money has this nifty little series called "What I Bought With My $8k Tax Credit." Tune in, and you get seven stories from "first time" homeowners who've recently taken advantage of the fedgov's $8k tax credit. (Which, coincidentally, I was against — before I was against it even more.)

In the interest of trainwreck-gazing, let's take a gander at Homebuying Couple #3, shall we?

They're Noel and Mike, of San Carlos, California. Noel's 30 and a hair stylist; Mike's 31 and a crane operator. Their FHA-backed mortgage tallied at $750k. (We're not told their income, but we can infer that it's less than $150k/year since the tax credit starts phasing out at that joint-income level.)

From the article:



Translation: We're big on appearances. And we like to spend money.



They had to "hurry" to buy the house. They didn't want to "miss out." And they figured out that closing costs and fees would be "high" only when they got "closer to the end."

Anybody else's palms getting sweaty yet?



Translation: We like to spend money. Our wedding planner, realtor, and mortgage broker made a killing on us, which is great for the economy! Right?



Is it just me, or is reading this like eating glass?

What the house next door is "going for" is immaterial, insofar as to whether the Noel/Mike tag team can actually make more than a few years' worth of ~$4,100-per-month payments (not including taxes and insurance) on their newly purchased barbecue-with-a-house-around-it. ($750k minus 3.5% down payment, financed for 30 years at 5.5% = $4,109 P&I monthly payment) I'm sure their realtor, however, highlighted the $1.2 million house next door at every opportunity.

"Aren't these formica shower accents just divine?" she'd observe. "Really, they look just fabulous in this space. You're lucky they're in a house which just happens to be next door to another house — one that's going for one-point-two million! Can you believe it?!"

But who are Noel and Mike gonna believe: me and my silly observations of the recent macroeconomic cratering, or their dashing realtor, who stands to book a sweet five-digit profit from the rushed decisions of two starry-eyed and appearance-conscious newlyweds?

I mean, their realtor's probably perky and outgoing — not a downer, like I am. I'm just a guy with no debt- or bill-payment stress, steadily increasing savings accounts, a mortgage balance that's less than half my annual income, and a positive net worth. Also, I can sleep at night without the aid of pharmaceuticals, which is a bonus.

Although ... I don't have a courtyard.

Maybe that's my problem.

Back to the Noel & Mike show:



Translation: No, really. We like to spend money!

It's at this point, Dear Reader, that I'd like to ask those of you who are praying types to go ahead and include Noel and Mike in your nightly missives. One lost job, one intermediate-term downsizing — heck, one bad ANYTHING — and this couple is sunk.

(Actually, it's the taxpayer who's sunk. But nobody gives a flip about them.)

Labels: Homeownership

Okay, kids. Have fun with this one:

Wash. Post: Squeaking by on $300,000

It's a five-pager, and worth a read. Make sure to keep a hankie nearby.

For the next "conversation starter" question from August's Money magazine, let's go with:

What am I pleased with about our financial life?

This one's easy: Every single day I am grateful that we're debt-free except for the mortgage.

I was pretty torn with the answer to my first question ("What's your biggest money worry?"). Not so this time. With no car loans, student loans, or credit-card debt hanging over your head, life is much more pleasant. Morning sunlight on your kitchen table is brighter. Mesquite smoke from your backyard grill smells smokier. (Grilled sausages, anyone?)

And perhaps best of all, your Cash Flow Box stays pretty darn empty. (Read the linked post; an empty Cash Flow Box is a good thing!)

Last year, when we paid off our 2006 Accord — a 5-year note which we zeroed out in just 990 days — that meant we were officially "debt-free except for the mortgage" for the second time. We'd hit the same mark in May of 2005 when I said "So Long!" to Sallie Mae.

For those who are wondering: Yes, it was just as good the second time!

Labels: Debt

In the August 2009 issue of Money magazine — likely to be my last, as I'll not be renewing my subscription — there's an inner section entitled "Make Peace With Your Money." Perusing through it brought me to a small batch of "Couples' Conversation Starters," a set of six questions supposedly geared to get money-conscious couples up and talking about their finances.

I thought it might be interesting to devote a couple of posts to considering some of these questions, and how they might related to my household. Here was Money's first question:

What's your biggest money worry nowadays?

Hmmm ... that's a toughie. If I had to pick a single answer, I suppose I'd say that my largest concern is my household's lack of liquid savings. As I write this, we've managed to compile a nudge over $11,000. Our goal is $15k, and I feel as though it's taking forever to get there. (Things like backyard fences always seem to get in the way. Truly, being a homeowner ain't just about the payments.)

If I might be obliged a "Biggest Worry, Part B," it would be — and I'm not kidding here — Washington's complete disregard for debt and deficits at the national level. Though such has been the case for years, the "Deficits don't matter (when they're due to spending on YOUR pet projects)" mentality is like a dagger to my debt-hatin' heart. The hubris and folly so evident here just boggles my mind.

When the solution to every fiscal problem, year after year, is "More credit! Cheaper credit!" you just know the game isn't going to end well. If I didn't have a six-year-old daughter at home — a cutie who's just now beginning to grasp some concepts of money and debt — then this might not bother me as much as it does.

But I do, and it does.

So there you have it: When I worry about money, those are the two biggest monsters in my head. Liquid savings, thankfully, I can do something about. The ever-mounting devaluation of my labor (read: the dollar), on the other hand, is more a matter of bipartisan policy, pocket-lining, and socialized losses than anything else.

When you're a control freak, as I am, to feel so powerless against something which affects your family's future so directly ... well, it's not much fun.

Labels: Saving

Well, July 2009 is gone. Which means another "cash only" month is in the books for the IYM household.

For those readers who might be new to this blog miniseries, my household has moved to (largely) cash-only spending for the three-month period of June, July, and August 2009. Previous to this little experiment, we paid for most everything with no-fee, cash-back credit cards. (As per my "How We Manage Our Money" post, we don't carry balances ... EVER.)

The idea here? I want to see how much less we spend when we spend only cash. Actually, in the two months we've been on this cash-only kick, we've actually used debit cards a handful of times as well. But greenbacks have been the payment mode of preference, since I want to make the spending feel as "immediate" as possible.

For simplicity's sake, I've picked seven every-month spending categories to watch closely during this experiment.

Why Not Total Spending?

I don't pay much attention to our overall total monthly spending when looking for cash-only results. The reason? The "grand total spent" doesn't tell the true story of cash-only versus plastic, because any one month can have irregular but necessary expenses — like backyard fence replacements — which have nothing to do with whether we spend cash or not.

Results: Cash-Only in July

So here's how our spending in July (cash only) compared to the average monthly spending in March, April, and May (when we paid with plastic):

Results: Two Months of Cash-Only (June & July Averaged)

And here's one that's even more interesting to me. In this chart, I've averaged our cash-only spending months (June/July) and compared it to March/April/May:



Wowsers. More than a twenty-two percent decrease in spending across these common categories.

The old maxim, "When you spend cash, you spend less!" sure appears to be holding up. One month to go!

Labels: Credit Cards, Spending

An email I received yesterday informs me that ING Direct has recently changed the transaction limits on their Electric Orange debit Mastercard. (More specifically, they've changed the limit for signature-based debit-card transactions.)

So, as of today, here are the current limits for the Electric Orange debit Mastercard:

• Signature-based ("Credit") Transactions: $5,000 per Day


• PIN-based ("Debit") Transactions: $25,000 per Day


• ATM Withdrawals: $1,000 per Day

And here's the text of their email:



Since we're on the topic, here are some other relevant Electric Orange limits as well:

• "Person2Person" Transfers: $5,000 per Day


• "Bill Pay," "Mail a Check," "Overnight a Check": $100,000 per Transaction

Way more info than you probably ever wanted to know can be found at ING's Electric Orange Terms and Conditions. Also, curious souls may wish to check my Electric Orange review for my thoughts on Electric Orange checking accounts. (I love mine!)

Labels: Banking, Debit Cards