Category Archives: Finance

Why Does The Media Still Print Stuff About Madoff?

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The man committed a Ponzi scheme of unbelievable proportions…

So again I have to ask why does the media still print what Bernie Madoff says, knowing that he committed one of the largest frauds in history?  Basically hiding the truth for years, as he robbed many a life savings from investors all along…

To me, I would think that the media would realize that Madoff committed a huge crime that alone would demand that anything the man says is not to be trusted and definitely not publicized!  Me, as just a normal Joe, even I would think that the man is just trying to get attention because life sucks behind bars, or even worse, he’s trying to get less time in Prison by creating a story and hoping that somehow he can make a deal with the justice system.  This is a fantasy of a man in prison and should be ignored.  Such coverage and attention paying to Madoff gives the man attention that isn’t warranted.  Shoot, there was a documentary about how Madoff looks for TV and new coverage about himself in prison.  Isn’t it obvious that this is just an attempt to feed his own fetish?

This isn’t the first thing that Madoff has said that was unbelievable, so why should he be believable now?  Does the media channels really believe what he is saying is newsworthy?  Are they really that naive, don’t they realize that printing such garbage lessens the respect people have for the media channel?

Don’t believe this garbage out there about Bernie…  Madoff is just playing with everybody for his own jollies.  Be the smarter person and ignore any Madoff news or better yet, write to any Madoff news media outlets chastising them of their folly in covering this horrible man!

Sad times…

 

 

My 401k Contribution Mistake This Past Year

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It’s December, and I have to admit I’m hurting financial, but in more of a good way than a bad way.  Still, I’m very stressed out!

This year I decided that I was going to try to max out both my 401k and Roth IRA contributions for the year.  Well, now it’s obvious that it’s not going to happen…

When December 15 rolls around, I will definitely slip past the maximum amount ($17,500) that I can contribution to my 401k for the year, I’m not going to max out my Roth IRA (which is a mistake too, but I won’t discuss that now).  My Money Management assessment was spot on, and if I lived more frugally this past year, I could have definitely accomplished my “maxing out my retirement contributions” goal.

Huh?

So, what happened?  Two words…

Lifestyle Creep, yep, it finally happened to me!  Listed below are my lifestyle creep causes:

  1. I bought a used but reliable with low mileage Toyota Camry last year, but I’m still making payments on it.  This alone adds $230 dollar to my monthly expenses.  I could have paid off the car, but I decided to keep the money in investments instead.
  2. My son needed braces, again!  Yep, I never heard of this but after wearing braces and getting them off, my son had to be fitted with braces yet again!?!  I’m not happy, this cost me $1,500.  It would have been more, but since it’s the second time around, the dentist gave us a discount.
  3. New Lunch habit.  I’ve been going out a few times a week for lunch with the guys, that adds over $200 more a month to my monthly bills that didn’t exist previously.
  4. Boy Scouts, while not huge, my son is enjoying Boy Scouts and the various expenses associated with such an organization..
  5. Increased monthly college savings payments.  Just a small increase, but still an increase all the same.
  6. Newer car (2012 Toyota Sienna) for my wife, $340 more each month.  This is killing me!  I’m not sure how to handle this actually, it’s a big increase and very painful for me.  I had hoped to almost have my car paid off before purchasing a new car for my wife, but my wife had other plans.
  7. The rest of the increases in spending were small (kids getting more expensive) charges.  I’m probably just going to roll with the punches on these, at least for now.

So, even with my list of budget breakers, this year I will still be able to max out my 401k, and I’m still planning on putting 2k towards my Roth IRA.

Next year, I’m changing the entire plan, more to come in a future post about that!

Wish me luck,

Don

Both Best and Worst Personal Financial Times This Year So Far

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“It was the best of times, it was the worst of times“, the quote from the book: A Tale of Two Cities by Charles Dickens best described my cash flow activity pattern for this year, so far.

Let me explain…

RichPoor

“Best of Time” Financial Perspective

First, I now consider myself at the threshold of barely being in the “Upper Middle Class” as I wrote in my article called “My Personal Finance Pyramid Update Lower (Upper Middle Class)“.

I’m doing much, much better than last year in the stock market.  In fact, I’ve already beaten my “secret wealth goal” of increasing my by increasing my net worth this year by more than my annual salary.  In fact, I met this goal a few months ago before the market started to go sideways.  So a big booyah on the net worth increase for this year!

I’m trying to max out both my 401k and my Roth IRA for the year.  This isn’t an easy task, but so far I’m on track to do both.  While this is a positive action for the year, I have to admit, I’m really starting to rethink this goal.

While saving like a mad man, I’m also having my employer take out an ESPP contribution so I can earn that sweet 15% per quarter (not I said quarter, not year!) that program offers as an incentive!  Because of the bull market and my delaying my sale of the stock option, I’ve been able to achieve a bit more than 15% return on each quarterly contribution (not to mentioned that gain off of the money I reinvested after selling my ESPP options for the year).  While there is no doubt that the ESPP is sweet, I think it has more of an impact during a slow or even a bear market.  There would be nothing sweater than gaining 15% per quarter on the money than when the market is down 10%…

“Worst of Times” Financial Perspective:

So looks like I’m doing pretty good from the “Best of Times” piece above, and I am, no questioning it, it’s been a good year for everybody…

The main problem that I have is that I’m “Cash Flow” constrained.  Actually, cash flow constrained might be an understatement.  You see, each month I’m about 600 dollar short from break even.  Now a negative 600 hundred dollars cash flow adds up and hit one hard about… right now!  Yes, my checking account cash buffer has been depleted and it looks like I’m going to have to hit some of my investments to make it through the year!

Eating my investments, is definitely a negative, and feels a bit like I’m moving backwards (because I am).  Now I probably won’t need more than $2,000 to tide me over for the rest of the year, but I need to change my financial plans now instead of later, since it’s a self-induced financial problem instead of a spending/earning problem.

My next post will have a more detailed financial action plan, to reverse my cash flow stream, making it a positive flow again instead of a negative one.

 

Are We Financial Serfs?

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Back in the middle ages and medieval times, most of the feudal European population (roughly 90% or 95%) were serfs of some sort or another. Serfs is an aggregate class name for a lot of smaller classifications, like pheasants and even slaves. Life was different back then, and financial interest of any sort was outlawed by the church, so the magic of compound interest didn’t exist so opportunities to grow money were constricted. Without a way to invest money, either you had it in a container hidden in your one room house or is was collected as part of taxes that your superior took.

So how did the serfs make money? Their lords didn’t pay them money, although the nobles did let the serfs use the land that the nobles owned… In fact, the nobles mainly took their stuff like an ant sips the sweat off of an aphid bug. The nobles let the serfs keep some of the food to survive on, and some were even able to sell their food to merchants (the very small middle class back then, less than 9%) for money. So some of the serfs had money, but without a way to make it grow, they were still very limited.

Serfdom

Now the kicker is that although we have more opportunities since interest isn’t illegal anymore, wealth distribution isn’t really that much different from what it was like in the old days, sort of. I can imagine the net worth of individuals back then being practically flat until about the 95% of the population. Then at the 95% of the population line, the line slopes up dramatically, probably much like the wealth line does for the 1% vs the .01% today.

The difference is that today we own land and have our own houses, so this means that the wealth line is much more gentle slope than the dramatic rise of the middle ages. Equity in houses, not matter how many renters claim otherwise enables the bulk of us to have at least a little wealth!

So are we financial serfs? I don’t think so, but we’re still not that much better off except for the equity in our houses (at least for the majority of us). I think that a big part of our problem is that we aren’t raised financially savvy and shy away from investments of the financial sorts.

Bests,

MR