Thanksgiving - Sadness

1. After the Thanksgiving parade, my wife and I decided to get out of the cold and get some hot food before going home. Sadly, there were more than a few "singles" in the bar on Thanksgiving.
   
2. Beside the Henry Hudson Parkway, we saw two separate men "camping" in freezing weather. Please say a prayer for their health and wellbeing.
   

Macy’s Helps Me Out

Things did not go smoothly, but my local Macy's eventually did the right thing for me. Looking to buy a new winter coat, my wife and I went on Sunday. Instead of having the winter coats in the same area, they had them for sale in different locations throughout the store. After spending an hour looking and trying on coats (on two levels of the store), we found a nice, single breasted Calvin Klein in a $150 rack (along with many double and single breasted). When we tried to check out, the clerk said it was a different "style" from the ones on sale and was $400. When he went to look at the sale rack, it took him almost 15 minutes to figure out why.

Today, I spoke with the store manager and he agreed to honor the price.

$1.87 gallon for gas

I cannot believe it. I found gas for $1.87 per gallon. When it gets below $1.50, I am going to start investing in auto companies. Buy Low – Sell High

Citi’s Competitors - Competing with Govt?

If your company competes with Citibank, how can you win? Clearly the government has decided they are "too big to fail." Let's say you are a regional bank and you have made good decisions with your loan portfolio. In normal times, you would be the big winner and would be able to steal business from Citi. Now, everyone knows mistakes by Citi employees will be covered by the government. More importantly, Citi employees know it.

Let's say you are a loan officer at Citi. Compared to a loan officer at Regional Bank, you will be more likely to close that difficult loan.

Psychics for Financial Advice – NY Times

Now, the New York Times is writing about people going to a psychic for financial advice. http://www.nytimes.com/2008/11/23/fashion/23psychic.html?_r=1&hp

Even though they aren't endorsing it, bringing it up as "an option" is deplorable. They should be giving legitimate guidance to readers.

Backlash against Automakers

Much to my surprise, it looks like the imbeciles running congress (and Obama and Bush) have realized that giving the Big Three $25B is the financial equivalent of flushing it down the toilet. Please understand, I do hate unions (indeed my wife is a member of one). Nevertheless, a bailout will require the following:

1. Bankruptcy – this will allow the big three to cancel their union contracts and rehire workers without legacy costs (Retiree Healthcare).
   
2. Restructure their plans to a word dominated by cars – not SUV's.

Thanksgiving for Two - Ideas?

My wife and I are having Thanksgiving alone this year. Does anyone have any good recipes/ideas for Thanksgiving for Two? We are thinking going out might be the best way to have "all the fixin's" without spending an arm and a leg. Thoughts?

Injured at Work – Workers Comp

A few years ago, I had the misfortune of blowing out my knee. As an insurance professional, I expected to be treated like I treat my customers. What actually happened?

1. The claim representative lied to me about what I was required to do. In particular, she stated I was not entitled to a copy of my recorded interview and that I was required to sign an "unlimited" medical release.

2. Later, I discovered she lied in her claim log.

3. Ultimately, they denied my claim. They claimed a knee injury in my 30's was related to a knee injury when I was ten years old. The fact I played years of football and lettered in wrestling were not relevant to them. The fact I missed a total of THREE days work because of a major knee surgery was not relevant.

4. All I wanted was to have my medical bills paid. Had they paid them, I would have never gotten attorney and would not have pursued ALL my legal remedies.

Luckily, most claims professionals are not idiots and/or liars. Thanks to my attorney, I got was I deserved.

Insurance – Last Man Standing

During a unit meeting, the state of our industry (insurance) came up. Listening to how all the carriers (including ours) are being punished by the stock market for bad investments, I got to thinking about who would win the battle for Last Man Standing.

Frankly, it is frustrating and I am angry. Insurance carriers have people who are paid to take risk and charge an appropriate premium for it. Although not perfect, carriers are experiencing underwriting results are well within acceptable ranges. Nevertheless, all of us are getting hammered because the investment geeks, who are paid to keep premium receipts safe, didn't do their jobs.

Are we circling the drain?

Looking at the market crash day after day, I cannot help wonder: "Are we circling the drain"
1. Banks – RIP

2. Automakers – Dead, but just don't know it

3. Insurers – on life support

4. Retailers – Dreaming that this will not be their "Last Christmas"

GM Card – Rebates if GM goes under?

If GM goes under, will people with "Rebates" on their credit cards become creditors of GM? Although I am not sure, I suspect the credit card company will be a creditor of GM and we will continue to be creditors of the bank.

10% off Kobalt Tools

If you need any tools, Lowes is offering 10% off all in stock Kobalt tools through tomorrow. This is part of their celebration of Jimmy Johnson's 3^rd Sprint Cup Championship in a row. Great deal if you like their stuff.

Insider Trading – Mark Cuban Indicted

Do not anger Federal law enforcement agencies unless you are willing to fight – sometimes for your freedoms. According to news reports, Dallas Mavericks owner Mark Cuban has been indicted for insider trading. Until he is proven guilty, Mr. Cuban is innocent as a matter of law. Nevertheless, his aggressive attacks on the SEC has involves serious risk. Given the severity of his attacks, he is unlikely to be able to negotiate a friendly, favorable settlement.

Bottom Line: It looks like he will be going to trial. As a Mavericks fan, I hope he doesn't end up like Martha Stewart.

    

Group Life Insurance – Not Enough

It is a good idea to have your own policy outside of employment, even if you have access to group insurance. In my case, my employee pays 3x my annual salary. Nevertheless, an individual policy is an important part of any financial plan.

1. Group rates are not "underwritten" and thus rates reflect the good and bad risks within the underwritten pool. When you are young and healthy, you are overpaying for insurance.
   
2. If you lose your employment, they are required to offer you a "conversion", but it doesn't have to be a good one. When I left my last employer, the conversion was a whole life policy at something like $500 per month.
   
3. You can shop around for the best rate that fits you needs.
   

IMHO – term insurance is almost always better than whole life.

UAW Tries to Kill Big Three Automakers!!

It looks like the idiots running the UAW are not content with forcing the Big Three automakers to beg Congress for $50B. Now, they are looking to actually kill them off. Ron "No Brains" Gettelfinger has announced the UAW will not make ANY concessions to save the Big Three.

Honda and Toyota can make money selling cars made in the United States. Why? They are not stuck with crippling UAW rules. Now, the UAW wants taxpayers to give the Big Three $50b to subsidize three businesses that cannot succeed unless they change everything (including their Union contracts) about their businesses.

Pay Full Price for Infants – Poll?

A story in today's New York Post makes a big deal about Carnegie Hall charging full price for infants even if they sit in their parent's laps. On the one hand, I feel sorry for the parents. Nevertheless, I think some parents feel "entitled" to special treatment without regard for others. In this case, I would not want to be in the seat next to a parent with a child in her lap. There is a 100% chance the child would get into the neighbor's space.

http://www.nypost.com/seven/11152008/news/regionalnews/one_hall_of_a_nerve_138837.htm

HIG – The Hartford is now a bank?

When I got home, the news reported The Hartford (HIG – aka Hartford Financial) was converting to a savings and loan. According to the reports I have read, this will allow HIG to take advantage of the federal bailout of banks.

My thoughts:
1. Hopefully it will work. HIG is a major employer in the area and I don't want mass layoffs in my area.

2. Bailout mania seems to be spreading to everyone. I cannot wait to see Walmart convert to a bank to get federal cash?

3. Hopefully, HIG senior execs in the life insurance operation (and in corporate) who caused the debacle will be forced out and will be replaced by better stewards of policyholder and shareholder funds.

 

Full Disclosure – I was once an employee of HIG.

My best investment!

My lovely wife.

Best Adsense Search Term – Mesothelioma?

On another PF website, I heard Mesothelioma was the best "search" to earn adsense dollars. After I tried it, I discovered it actually works. Why? I have no idea.

Porno – Solution to Financial Problems?

If you have financial problems, you should consider making a porno movie to solve your problems. At least, that is the premise behind Zack and Miri Make a Porno. Since I like the actors, I decided to check it out. From the movie, I have identified some key "flaws" in their plan:

1. Their biggest problem was spending brought on by poor impulse control. If you spend your rent money on skates "because I needed them," you are going to have problems.
   
2. Instead of porno, try getting a 2^nd job and/or a better job. Barista is not a high paying job.
   

401k – no more Stable Value Fund

Until this week, the safest option available in my 401k has been a Stable Value fund. Although not the riskiest of investments, a safe investment should be truly safe. Luckily, my employer added a money market fund (treasuries only) to our options.

$2 Gas – I will find it!

My new "fun" goal is to spend less than $2 per gallon on gasoline. While I know people in other parts of the country have pulled it off, my state has high gas prices that have made it impossible for quite some time. Yesterday, I paid $2.18 at BJ's Wholesale.

Socialist Win in US Elections?

Now that Obama has won and the Democrats are in complete control, let's hope the Democrats on the left don't lead the more reasonable Democrats towards "socialist" policies. Already, I am worried by their constant call for "universal …."

Housecleaner’s Big Home

Once again, the WSJ has found another example of mortgage madness that is hurting us all. Without any irony at all, they introduce us to a couple with a combined $70,000 in income who managed to borrow $637,288 for their home. Ain't America Great!

 

"Nanci Puerto, a 40-year-old house cleaner in Antioch, ran into such a problem. She refinanced her house for $637,288 from IndyMac in 2006, taking out cash for a down payment on another property. She and her husband, who works in a machine shop, take home a combined $70,000 a year. Each month, she makes the minimum payment on her loan, $2,416. At the same time, she watches the outstanding principal swell since that payment doesn't fully cover the interest costs. Now she owes IndyMac $707,000, on a house that the county tax assessor says is only worth $410,000." http://online.wsj.com/article/SB122548504641688959.html

Expect Insurance Rates to Rise in 2009

One of the ways insurance companies make money is by investing premium dollars. Unfortunately, like everyone, they have lost money. Without the prospect of investment income, they are going to need to rates.

Recognizing Risk - Yes

One of the main causes of the subprime and credit crisis was the failure to recognize the possibility of risk. Today, I heard a good sign. While discussing a business transaction with other parties, the issue of default risk was seriously evaluated by everyone. Two years ago, everyone would have said ABC Bank is bulletproof and their guarantee is good enough – without any thought.

No matter what it costs consumers …

A man with good intentions can do a huge amount of damage. According to a story in today's Hartford Courant, there is a movement to federalize the approval of new electrical transmission lines. Without getting into the pros/cons, a quote by an opponent of new transmission lines caught my eye.

"Opponents say they're determined to see the lines installed underground, no matter what the cost to all electricity customers." At least they admit it. With Connecticut residents already paying among the highest prices for electricity, I am glad to hear they don't care about us at all. So if everyone's electric bill went up by $100 per month, they would be fine with that? If people couldn't get electricity, they are cool with that?

 

http://www.courant.com/business/hc-transmission1030.artoct30,0,495815.story

Purchases TIPS for Free

Last week, I purchased $5K of TIPS during the treasury auction using my account at Fidelity account. Now that the auction is concluded, I actually bought $5K in bonds for a total of $4,620.44. I seem to have made $1.42 in accrued interest. I did not pay any commission.

This was my first attempt at purchasing individual bonds. I don't like bond funds (especially government ones) because the fund value can drop as interest rates change. With the individual bond, they interim value might vary from day to day; however, I will get the full face value (plus an inflation kicker) back when the bond matures.

Wachovia: $6 stock loses $11 per share

How does a $6 stock lose $11 per share in a single quarter? Wachovia announced a staggering $23.9 billion in the 3^rd quarter. Unreal.

Mortgage Crisis – Makes Me Vomit

How can a housepainter get a $350K plus home? Reading a story about the California housing debacle in the WSJ, I couldn't contain my rage. Basically, a bank gave a loan with nothing down to a housepainter who takes home $3,000 per month. The initial payment: $2,000 per month. While the borrowers are not blameless, anyone who participated in giving them a loan should go to jail.

Link: http://online.wsj.com/article/SB122462963345656289.html#

Money Quote: A California state housing agency also chipped in a $11,200 loan toward the Pedrozas' purchase. Ms. Pedroza figured that with her husband bringing home $3,200 a month as a house painter, the family could afford the monthly mortgage payment of about $2,000. Ms. Banuelos, a college student, said the payments were affordable for her husband, who also had ample work as a house painter.

$2+ Gas – The Good News in Down Economy

The one upside of the recession has been the dramatic downturn in oil prices. Yesterday, I paid $2.94 per gallon. At least it shouldn't cost me an arm and a leg to heat the house (oil heat) this year.

New York Debt – Warning!!!

If you invest in Municipal Bonds, I strongly recommend against placing any money in New York State bonds or New York City bonds. Simply put, the crippling losses on Wall Street are going to devastate their budgets.

Given the entitlement structure they maintain, the bad union contracts with state/muni workers, and massive pension obligations, it will be difficult for them to make the cuts needed to balance their budgets.

Columbus Day – No Pain Holiday

While I don't really understand why Columbus Day is a major holiday, I cannot say I am unhappy about having tomorrow off. In particular, the closed markets make for a day without pain and anxiety

Should Hedge Funds be banned?

One of the major reasons the stock market continues to tank is forced selling by hedge funds. It works like this:
1. Investors give the fund managers $100m to invest;

2. Prime Brokers lend the fund managers an additional $900m "on margin" to invest;

3. In good times, this leverage allows investors to ramp up profits as a $100m investment grows on a $1B base;

4. In good times, all this "buying" power drives up prices.

5. In bad times (that would be now):

1. As the fund "loses" money, it's leverage begins to grow, the lenders get nervous and want their money back and/or more collateral from the fund;
   
2. As the fund "loses" money, the investors get nervous and pull their money out;
   
3. The combination of lenders pulling back on loans and the redemptions by investors forces the fund to liquidate its holdings;
   

This combination forces prices down. As prices fall, they are forced to sell more investments. Essentially, it becomes a giant snowball of selling as all the funds are forced to liquidate.

While I tend to favor free markets, I think hedge funds add little to the greater good and actually harm the markets as they add volatility. For that reason, I am starting to think they should be banned. At the very least, their ability to leverage up their positions should be severely limited.

What do you think?

No More Storage

My wife and I cleaned out the storage locker and have started cramming the stuff into the house, basement, and shed. Annual Savings: $1,000.

Job Loss Fear!!

Life in the insurance industry simply blows. We spent most of the day watching our stock price go down the crapper. If this keeps up much longer, I may be able to buy my entire company with the amount of money in my coin jar.

Simply put, I am holding onto my job for dear worth. My wife and I are eliminating all unnecessary spending – all of it. Preparing for the worst.

The Amex Blue Christmas Card – The Perfect Cash Credit Card

While I enjoy my Amex Blue Cash card, I don't like the fact I will receive my cash back at roughly the same time I will get my tax refund (hopefully) and my annual bonus (if I am really lucky). Looking at it now, I think Amex would have a winning card if it offered the Amex Blue Christmas Card.

Features:

1. Identical to the Blue Cash Card except;
   

Cash Back Transaction occurs every December 1^st allowing customers to fund some of their holiday spending.

Monthly Spending Cuts

Today, I dropped $25 for a new deposit stamp for my wife and I's joint checking account. Despite this frivolous spend, I am looking at ways to reduce "monthly spends."

1. I am cutting back dramatically on my golf expenditures;
   
2. I will move to cut our cable bill by $50 per month by the end of the year;
   
3. We are moving our stuff out of storage saving $75 per month; and
   

Eliminating all subscriptions except for the Wall Street Journal.

Tax-Exempt Money Fund – Enormous Yield?

For my long term savings, I keep about $5,000 in a Vanguard with all of it parked in a Tax-Free Money Market Mutual Fund. Much to my surprise, this month's interest payment is almost double last month's interest. Even without the tax benefit, it is yielding 5.67% on a 7-day basis according to Barron's. Clearly, the market is demanding a huge risk premium. Since this is my "safe money," I am considering moving it to the federal MM fund.

What are you cutting back on?

Talking with co-workers and friends, I see a definite trend of cutbacks. For me, less golf, eating out, optional home repairs have become the order of the day. To save $100 per month on storage, my wife and I intend to shoehorn more stuff into our very small house (and her mom's storage locker at her apartment). Bottom line, we have moved into a world of fewer extras.

Tonight, we are making turkey taco meat for dinner. By making almost 2lbs, I can take my lunch to work 3 times this week.

What are you cutting back on?

Part 2: Insurance Industry – Rage from Employee View

In follow up to my post on fear in the Insurance Industry, I am writing to provide insight on the rage felt by many of us who work in the insurance industry.

1. Executive Compensation – for many companies, layoffs, reduced compensation, and/or no bonus' are going to be a reality in 2008 and 2009. Those of us lucky to survive will have to do "more with less." Nevertheless, it never seems like executive pay ever goes down.
   
2. Accountability – even if the top executives are held accountable (and fired) for the failures that put our companies at risk, new top executives will be hired who make more money than those they replace. Often the departing execs take nice golden parachutes with them. If we get canned, we get 2 weeks per year with the company. The Lehman rank and file got nothing.
   
3. Harry "Peabrain" Reid – by making unfounded allegations that a Life insurer was about to go bankrupt, he took $20 billion out of the market caps of good companies. Poor Hartford Financial took the worst of it. While my company (P&C) wasn't affected, his idiotic comments make us want to scream.
   

Next: Up my take on how the chaos in the industry will affect the consumer.

Adsense $100 minimum?

How long did it take you to get to the $100 Adsense minimum to get your money out?

Part 1: Insurance Industry – Fear from Employee View

Bottom line, everyone I know is cutting back. Although my company is still hiring and our line of business is allegedly doing well, we all work in the financial services industry and know what can happen quickly. On the one hand, some of our key competitors have taken major beatings and opportunities to expand are everywhere. On the other hand, could we be next?

One of my coworkers deferred a bathroom renovation, I deferred a cosmetic repair until Spring, and others are taking similar steps to cut back on cash outlays.

 

Tomorrow, I will post Part 2: Insurance Industry – Rage from Employee View

Congress IQ Test – While Rome Burns.

1. Reid publically states a major insurer could go bankrupt and all the life companies go into a nosedive. HIG went down 32% as everyone thinks it is the "one." Can you say irresponsible?
   
2. Whether you support or do not support the bailout, it is the most important vote this year. How do congressidiots act, they trade their votes for pork such as a racetrack and children's arrows. Republican or democrat, they should be tossed from office immediately.

Our lives as DINKS

With one full month as a married couple, my wife and I are finally getting the benefit of DINK (Dual Income No Kids) lifestyle. With all the chaos in the market, we are keeping spending to a minimum and trying to live on my salary and bank most of hers.

64mpg Corolla – Carpooling

September is my first full month of married life. Looking at our first month/budget vs. actual spending, I noticed our gasoline expenses were significantly below my target. Why? Carpooling saved me more money than I expected. How? Our Carpool works like this: 2-3 times per week, I hitch a ride to/from work with my wife (about 10 miles each way). She continues on to her job. We always take her Toyota Corolla (32mpg) for this.

Lets say we go 64 miles per week in a carpool. She uses 2 gallons of gas for a total cost of approximately $8. Had I been driving, I would have used about 3.5 gallons and spent about $14 for the priviledge.

Over the course of a month, we save $55-60 in after tax dollars. While I am in her car, her effective mpg goes from 32mpg to 64mpg.

Failure: $13m for 18 days work

Ain't America great, Alan Fishman runs WaMu for 18 days and can make $13m for taking the company into receivership. While he didn't cause the problems that led to its failure, he didn't solve the problems either and should be ashamed.

90-Day of Drugs - $10 at Target

When I picked up my 90 day prescription at Target, I thought she charged me the wrong amount when my total bill including some other things was $17.22. According to the clerk, Target is running a special on generics.

If you need a common generic, now might be the time to stock up. I would call first to make sure your drug qualifies for the special offer.

Paid off the car

Not sure it was a good idea; however, I paid off my wife's car a year early. On the bright side, we are down to one car payment (and a reasonable one at that) allowing us to increase our monthly savings. On the downside, our savings (not large enough) took a big hit.

Note to self: must increase savings – do not pay off debt until the cash cushion is increased.

The “Rich” and Taxes?

If you don't believe the "rich" pay a large percentage of our taxes, check out this statistic from today's Hartford Courant: "Despite having only about 60,000 people, the town contributed nearly $600 million in state income taxes in 2006 — more than three times the income taxes paid by the combined populations of Hartford, Bridgeport, New Haven and Waterbury. With only 1.8 percent of tax filers, Greenwich provides nearly 13 percent of all state income tax, helping to pay for schools in West Hartford and road repairs in Rockville, not to mention every other cost related to running the state."

The story goes on to discuss the problems Connecticut may face in light of the problems with the stock market.

AIG Dividend Today – WTF?

Today, I received notice of an unexpected transaction in my IRA. When I investigated, I discovered AIG had paid me a dividend roughly equal to 10% of the current value of my holdings. In light of what happened to my investment, I would have preferred they held onto the cash and paid down that government loan.

Dumbest Bank Move -2008

All over the world, bankers have made poor decisions. Nevertheless, the NY Times has identified the dumbest banking move of 2008.

The Money Quote: "a government-owned German lender gave Lehman Brothers what might be called a parting shot in the arm, transferring 300 million euros to the investment bank on the same day it filed for bankruptcy." Source:

http://www.nytimes.com/2008/09/19/business/worldbusiness/19kfw.html?_r=1&adxnnl=1&oref=login&ref=business&adxnnlx=1221851290-iy+1BHW866974hcONMdeYA

Money Market Funds – Avoid Losses

For people with significant savings in money market accounts, I strongly recommend you make sure you know what your fund invests in. For very little upside (often a few basis points), your fund may be invested in things like Lehman paper. A few days ago, a prominent money market fund "broke the buck" subjecting its clients to losses. While they did not suffer major losses (about 1%), they did suffer losses. To avoid them, look for a money market fund at your brokerage that only invests in government securities. Alternatively, many brokerages have the ability to purchase federally insured CD's on your behalf.

AIG - RIP? Stupid Rating Agencies

Although my company competes with AIG, it is sad to see the state they are in. While they made their own bed, someone else lit the fire. Now, the ratings agencies are stoking the fire by creating a self-fulfilling prophesy.

Rating Agency: They will have trouble raising cash. We will reduce their ratings.

AIG: Because their ratings dropped, they need MORE money and it is hard to get.

Great system: Who designed it? Torquemada?    

Ratings Agencies Useless – See AIG

IMHO – rating agencies are just about worthless. In good times, they give the illusion of safety by telling the investing public what they want to hear. In bad times, they make bad things worse by identifying what everyone already knows.

For example, AIG has been the 900 pound gorilla of the insurance industry for years. With a gold plated balance sheet, they were a money making machine for shareholders. After being forced to replace its dynamic CEO, Hank Greenberg, AIG suffered a series of management miscues and losses in the credit markets. Nevertheless, it should not have been fatal, but the ratings agencies are making things worse.

After AIG stock plummeted (and I mean plummeted), S&P decided to notice that a low stock price might make it hard to raise capital and placed them on ratings watch. Their action, of course, caused AIG stocks to plummet even more and made it more difficult for them to raise capital. Basically, they are like a weatherman who only reports what has already occurred.

eBay Revenues – what to do?

Over the past few weeks, I sold some excess stuff on eBay and ended up with approximately $300.00 sitting in my paypal account. Originally, I planned to spend the money on myself; however, I have decided to drop it into savings.

What do my friends in the Blogosphere do with their eBay revenues?

 

Lehman Liquidation – Very Likely?

According to the WSJ, the Lehman bailout is in trouble. If so, it will be a long day tomorrow on Wall Street. Although the depressed prices might look like a buying opportunity, I don't think the time is right. Look to 2009 to move into stocks.

Cheapskate Biden - No Charity

According to news reports VP candidate Joe Biden's made a $2.2million in the past 10 years (source: tax records). Total charitable contributions: $3,690!!! While charitable giving has not been my strongsuit, even I managed to beat his total.

No financials are safe – Credit Freeze

IMHO – there is not a credit crunch. In many ways, large financials are subject to a credit freeze. If not, why would a company like AIG plummet again because it cannot access the capital markets.

Until this shakes out, no financials are safe.

The Lipstick Revolution – Palin’s Surge

Republican or Democrats, one has to notice the incredible impact Sarah Palin has had on the McCain campaign. Love her or hate her, the days of all-male presidential tickets appear over. As the drama over the "Lipstick on a Pig" comment illustrates, female voters are an enormous voting block and they appear unwilling to take abuse from male politicians anymore.

Obama’s Idiotic Fannie/Freddie Comments

According to news reports, Obama wants to prevent the ousted executives at Fannie/Freddie from collecting on their severance packages. Although they are likely to walk away with large packages per their contract, there doesn't appear to be evidence of illegal behavior by them. Absent such evidence, the government doesn't have the power to abrogate their employment contracts.

Having said that, I expect we will learn they are walking away with millions of dollars. While CEO pay is often obscene, it is not yet illegal and Obama knows it.

Winter Coat – When should I buy one?

Bottom line, I need a nice, wool winter coat. Should I buy early in the season when there are a lot of choices or late in the year when the retailers are struggling to move out ? Still relatively new to the northeast, not sure when the best time to buy is.

Avoid Annuities due to Insolvency Risk

Simply put, Annuities are Loans to Insurance companies by their customers. Right now, I think it is a mistake to purchase an annuity (variable or fixed) from any insurance company. When you purchase an annuity, you transfer funds to the carrier in return for a promise from the company to pay you in the future according to the terms of the contract.

Key Concepts about Your Loan to your Insurance Carrier:

1. Insurances Companies can and do go out of business. Like banks, car companies, or any other firm, they are susceptible to mistakes by management and financial realities. In the past few years, AIG, once the strongest insurance carrier on the planet, lost something like $50BILLION in market cap.
   
2. The longer it takes for you to "collect" on your annuity, the more risk you have.
   
3. Most Life Insurers invest a large portion of their assets in fixed income securities. Traditionally, this has been a sound, well thought out strategy. Unfortunately, the credit crunch and subprime crises means many of those "assets" could depreciate and leave the carrier unable to pay you. For example, a well run Insurer I have experience with states it has:
   

• $90+ Billion in Assets
  
• Asset Backed Securities: 9%
  
• Residential CMO/Mortgage Backed Securities: 4%
  
• Commercial Mortgages: 6%
  
• Commercial Mortgage Backed Securities: 15%
  

Although the insurer has a good reputation and solid rating from AM Best, it would have a significant problem if those assets became impaired.

While great ratings (AM Best, Fitch, and S&P) matter, they are not perfect. If you don't believe me, ask someone who bought AAA rated mortgage backed securities in 2006.

Christmas Trips Home – Fly on Christmas Day

Flying to see family for Christmas can be very expensive. While talking to my sister, she mentioned flying on Christmas day to save money. Since I was planning on using AA points (I want to use them up and stop using American Airlines forever), I wasn't paying that much attention. When I went to book my flight, I discovered AA doubled the number of airmiles needed to fly out on Christmas Eve Day compared to Christmas Day. Basically, they want people to pay first class prices for coach seats. As a result, I am flying home at 7am on Christmas Day with my lovely wife.

Thanks American Airlines. Each time I deal with you, you lose what little goodwill you may have left.

We plan on using the "saved" points for a trip to Florida in February.

British Universal Healthcare – Privatizing?

While there are certainly some issues with the United States health care system, the British "Universal" Health plan is not perfect. If it was, would they try this:

http://www.businessinsurance.com/cgi-bin/article.pl?articleId=25756

Health Insurance – am I naked?

According to my wife's employer, I was added to her plan effective 9/1/08. Nevertheless, the carrier doesn't have a record of the change; however, they say it normally will take a few weeks to get me an insurance card and it will be retroactive.

Since my employer is about to cancel my health insurance, I am nervous about the situation. Until I get the card in hand, I will worry about being "naked" with respect to health insurance. As I learned from emergency appendix surgery earlier this year, you never know when you might need it.

Marriott Responds – Poorly to our Complaint Letter

After we wrote a letter complaining about Marriot's abysmal service and condition on our wedding night, they thought it would be appropriate to send us a voucher for a free night at the exact same hotel. Since the Marriott in question is less than 1 mile from our house, the voucher is basically worthless. Who wants to stay in a hotel down the street? (Especially one with bad memories).

The only reason we had a room in the first place was because it was our wedding night. My wife and I have decided to send the voucher back with a cc to head of Marriott hotels.

Target 800 – Credit Score

Because of an identity theft incident, I subscribe to Equifax's credit monitoring services. While reviewing my credit report for any problem entries, I noticed Equifax is offering Scorewatch free for 30 days. Well – I haven't hit my target of 800, but things aren't bad.

Has anyone made it to 800?

Auto Insurance and Marriage – Crazy

As my wife and I continue the process of merging various financial affairs, I noticed an interesting item on our bill from State Farm. For some reason that cannot be justified by any sanity or financial data, State Farm is charging us 50% more to insure her older Corolla than it is charging to insure my nearly new Highlander.

Things I know:

1. Somewhat beat up (but reliable), the market value of the Corolla is ¼ the market value of the Highlander (if that).
   
2. My wife is the primary driver. Although my driving record is good, I had an at fault accident two years ago. Her record is perfect.
   
3. From a credit perspective, we should be identical.
   

Comparing the before/after pricing quotes from other carriers, I think State Farm's price on the Highlander is significantly better than the competition.

Changing Health Insurance Mid- Year – Nervous!

According to a document provided by my wife's employer, I will be added to her insurance effective September 1, 2008. Until I get an insurance card from Blue Cross, I won't feel completely comfortable with my situation. As a result, I won't forward the "proof of other insurance" to my employer until after I talk with the new insurer

Gas Prices – Commodity or Branded??

Do you pay extra for "branded" gas from companies like Exxon, Mobil, or BP? IMHO – Gas from any reputable company is gas.

The other day, I paid $3.61 per gallon at my local BJ's Club. On the way home, I saw prices as high as $3.84. In my area, the Citgo consistently has the lowest prices and the Shell has the highest. At some point, one would expect the Shell customers to switch to Citgo; however, they do not.

Why not? Despite all the protestations about gas prices, I think most people are lazy and not sensitive to gas prices. They just fill up in the most convenient spot without even considering the cheaper gas one block away.

Your theories?

Married – Setting up Joint Accounts

This weekend, my bride and I started the process to merge our finances. First step, we merged two of our checking and savings accounts (we used the same bank) at TD Banknorth. In the joint savings account, we will keep $1-2K for emergencies. The joint checking will be for ATM use and for the rare times we have to write a check.

Most of our money will be direct deposited in ING Checking and Savings accounts. Unless a check is required, we will pay everything using online bill pay.

Thanks Marriott – Not!!

If the bride/groom reserved a block of 10 rooms for the weekend, would you give them a decent room? At our local Marriott, they had other plans.

Because most of my family was from out of state, I decided it would be nice if everyone stayed at the same hotel and took a block of ten rooms. In addition, my bride and I reserved a room for the night of the rehearsal dinner and our wedding night. What did we get?

1. The first room offered was next to the ice machine (aka the nuclear power plant).
   
2. When I complained, they gave us another room. Unfortunately, I didn't inspect it carefully. We checked out of the room at 5am due to the horrible smell of mildew. Thanks Marriott!!!
   

During the rest of the honeymoon, we stayed in an airport Sheraton (using Starpoints) and a Hyatt (honeymoon). Both of them provided clean, quite rooms and great service. Next time we travel, we will remember.

Wedding/Honeymoon Over

Back from the honeymoon and still adding up the damage. It was worth it. In the following weeks, I will be posting on some of the highlights – the Hyatt and the lowlights - the Marriott.

Final Wedding Report

Tomorrow is the big day. I am marrying a wonderful woman in a beautiful church with a dinner in a great restaurant (and view) to follow. Today, we are doing a few last things, but it looks like we managed not to bankrupt ourselves. On to the honeymoon. Next posting in 2 weeks.

Housing Market - Starting to Harden?

Although I would not be the farm on it, I am starting to see signs the housing market (in Connecticut) is starting to harden. Currently, I work with two new employees looking to buy homes. According to them, the supply is now limited to the "dregs." From what they see, the only people who are willing to sell at the depressed prices are the people who have no choice. Everyone else is holding on to their houses.

Since Connecticut did not have the massive housing developments of California and Florida, one would expect us to be "leaders" in the recovery due our limited supply of housing.

Charging the Wedding!!!

Having already put a large amount on my Citibank card to pay for the honeymoon, next week I have to pay for the wedding and the reception. Although I had enough money in savings to pay for all of it, paying it off seemed risky. Instead, I did a balance transfer to move the money from Citi to Discover. At a cost of $75, I get to use their money for 12 months free. For the reception, it is going directly on the Discover card and I get 5% back since it is a reception.

When we get back, my wife will be back to work (she is a teacher) and our cash flow will really pick up. While we cannot quite live on my income alone, it is close enough to bank a large portion of her paycheck. We should have enough cash in the bank to pay everything off by Christmas.

 

Wedding Spending Orgy

Only one week until the spending orgy of the year, the wedding cake, tux, hotel rooms, reception, limo, flowers, rehearsal dinner, and on and on. If I ever become dictator for life, my first dictate:

1. Church/temple/other – one priest
   
2. Like the NFL – a salary cap (and a hard cap) would be instituted. $1,000 or one month take-home pay – the smaller.
   

Once it is over, back to saving!!

$3 per gallon gasoline – in 2008?

This morning, I paid less than $4 per gallon for fuel for the week. Will we get to $3 per gallon before 2008 is over?

ATT – Faster DSL for the same price

After I threatened to turn off my phone line and go with DSL, SBC (now ATT) offered to double my DSL speed for free. While I don't need a landline, I will enjoy having faster download speeds.

Smartcar is a Dumbcar

Carpooling with my fiancé in our Toyota Corolla, we spotted a "Smartcar" at a stoplight. Although interesting to look at, the idea behind it is idiotic:

1. It only gets 33mpg in the city. While not awful, we get similar mileage from the much larger Corolla.
   
2. It has room for two people and almost no cargo. In comparison, the Corolla is large enough for 4 people for short trips. Indeed, we feel comfortable planning a 3,000 mile trip (with a lot of luggage) later this year.
   
3. It is simply too small. In a crash, size matters and the SmartCar has no room for error.
   
4. Cost – For the price of a SmartCar, one can easily purchase a very well made Honda Fit or Toyota Yaris with money to spare. Both are larger, more practical and can match it in mileage. For just a little more, you can get a nicely appointed Civic or Corolla.
   

Bottom Line: The SmartCar is a vanity purchase for most people and almost always a bad idea.

Pricing Errors – Do you fix them?

A few days ago, I bought a GPS unit for my fiancé at BJ's Wholesale club. Today, Quicken picked up the charge; however, it was $150 less than it should have been. Should I go to the store to correct the error?

If I notice the mistake and I am still in a store, I always do my best to correct the error. Honesty is important to me. In this case, I am torn. Going back to the original store would be impossible (I bought it out of state) and working with the local store to fix it would be a huge hassle. My time is valuable and wasting an hour in the store to correct their mistake seems excessive.

Thoughts?

Not smart enough to live!

When I got home today, Quizo's sub was running an add touting the amount of meat in their sandwich for the amount charged. As part of the ad, they show a guy trying to eat a roll of coins. For some reason, they feel the need to inform watchers not to try it at home. IMHO – anyone who would try to eat a roll of coins is not smart enough to live.

Prius Mania

Driving down the highway, I saw a convoy of SIX Toyota Priuses cutting in and out of traffic. They do seem to be everywhere. Indeed, one of my friends is waiting to take delivery of a new Prius. My dream car, an Accord sized hatchback with hybrid technology – 40+mpg. Very different from my – I want a Mustang days.

Thought on Oil Prices – Long Term

Thankfully, it looks like the days of massive increases in oil prices are over (for the short term). With consumers cutting back, the demand curve has shifted to the left enough to stabilize prices. Nevertheless, long term supply increases are unlikely (even at the high prices) and consumers need to make "savings" permanent:

1. No more SUV's.
   
2. Don't buy houses 50 miles from your job.
   
3. Carpooling is your friend.
   
4. If not carpooling, ride mass transit.
   
5. Small houses are cool. McMansions are not.
   
6. Insulate, Insulate, Insulate.

20 cents per gallon of Gas?

At the pump today, I realized my Amex Blue Cash card was saving me over 20 cents per gallon. Unless the gas stations have a larger markup than I think, this cannot last long.

Biggest Winners- Cash and Energy

Biggest Winners in 2008:
ARLP – Coal is king with an 18% appreciation. A relatively large position, kept the portfolio on track.

HAL – Oil Services – paid off with a 19% positive move;

Cash – Dividends and Interest consisted of almost 40% of my semi-annual earnings.

Do not forget dividends and income. In a down market, they can provide a nice cushion during tough times. For the first 6 months of 2008, dividends and interest received has kept my losses to reasonable levels. Furthermore, they provide a source of cash for opportunistic purchases as discounted prices.

Mid-Year Biggest Loser Stock Report

Six months into 2008, my biggest losers are:

AIG – minus 38%

CIT - minus 60% (luckily, I sold off most of my holdings for a profit on the trade. Unfortunately, I didn't sell it all)

My employer – down almost 40% for the year, it is also my largest loss in total dollars.

Learnings: Diversification works. Despite these losses, my portfolio is off a total of 3% in a down market. I

Hypermiling Warning from AAA

Although getting outstanding mileage could seem like a great idea, AAA warns of the dangers of extreme tactics.

 

http://www.courant.com/news/local/hc-hypermiling.artjun29,0,355595.story

WSJ.Com – Abusing Subscribers

When Murdoch took over the Wall Street Journal, I knew things would change. Unfortunately, they have decided to make subscribers view a full page ad – that requires a click through to get to content. If it was free content (see NYPost.com), I would understand. Since I pay for my subscription, I am not going to tolerate it. Unless the ads stop, they are going to lose a subscriber.

Support my Wedding Fund!!

 

With the wedding just weeks away, it is time to raise money fast from the blogosphere. With only $22 in adsense earnings, I am asking the blogosphere to show your power by clicking on my adsense links en masse. Can we raise $20 in June? How many clicks would that be?

Actually, this post is mostly in jest; however, I strongly recommend both books on Amazon. Anyone interested in the business world should give them a read.

Best use of $581m Tax Refund

 

According to news reports, Kodak won a $581 million tax refund from the IRS. Instead of blowing it on a big screen TV, they are using it to fund a stock buyback program. Of course the Kodak execs and lawyers who won the refunds, they will be using their bonus money for ENORMOUS screen TV's.

DIY – When to outsource!

Do it yourself is a good way to injure yourself if you don't know what you are doing or don't have the right equipment. Today, I am getting a quote to have my gutters cleaned out. A few days ago, I looked up and realized I was growing things in my gutters. J It looks like a garden. Although I can get to the gutters on the lower levels, I have one gutter 2 stories up that I don't have a good ladder to reach. Thus – outsourcing to someone who knows what they are doing. They get paid and I stay safe.

Sold my Beer- BUD

A few months ago, I decided to invest some of my IRA money in Budweiser. Even in a downturn, I expected the parent company of the King of Beer would continue to generate nice cash flows. It was intended as a long term investment. Luckily, it turned out to be buyout target and the stock shot up in value. Friday, I closed out the position and moved the proceeds to cash.

While the people who stay in through the buyout will probably make a little more money, I didn't want to be greedy and decided to take profe,its now.

Of course, the investment in AIG has not turned out so well, but that's another story.

Easy Energy Saving Tip

An easy, inexpensive way to save electricitcy is to look for appliances that are "always on." For example, my printer did not come with an off switch. Although it goes into sleep mode, there is no reason it should draw any power when I am not using it. To stop this, I have it hooked up to an extra powerstrip I had laying around.

Going Nuclear Now?

Although alternative energy sources (solar and wind) can and should be exploited, the simple fact is they will not be able to provide enough energy to power the US for quite some time (if ever). Although hydroelectric power provides clean energy, blocking rivers to provide power is no longer considered a good environmental practice. Bottom line, we need to build nuclear power plants all over the country to replace oil plants.

1. Clean and free of greenhouse emissions;
   
2. Largely conflict free.
   

Sending billions of dollars a year to the Saudis and the Russians is fundamentally a bad plan.

Do you take food to the movies?

How many people bring their own food and/or drinks to the movies? Because I prefer Coke Zero to Diet Coke, I snuck a 20oz bottle in a few months ago. Although we don't go to the movies often (1 time per month at most), we always take our drinks with us.

1. We save $5 or more on my Coke Zero and her bottled water;
   
2. We get to have what we want, not what they offer;
   
3. We can take in candy in reasonable sizes and/or what we like at a reasonable price. Who wants to pay $5 for a box of raisenetts?
   

   
    

We do, however, buy popcorn if we are in the mood.

 

BTW – if you have a drive in theater near you, we recommend the experience. Two lawn chairs, a radio, and an ice chest and you get to see two movies for the price of one.

Trade for new Gas Grill!!

When I bought my home, it came with a ginormous Viking grill complete with marble countertops. At 8 feet long, it takes two people to take the cover off it. Furthermore, it was not in poor shape and needed a significant amount of work to bring it back to "like new" status. Because of the problems, I have used it exactly TWO times in almost three years.

Today, I made a trade with a neighbor who happens to be a handyman. He is going to buy us a new Weber gas grill and I am going to give him the old grill. Furthermore, he is going to use a Bobcat he rented to clear some brush from the back of my property.

Everybody wins. With a large family and plans to entertain, it fits his lifestyle. For us, grilling is normally a 2 person (at most 4 person) experience. Instead of a full blown outdoor kitchen we never used (and actually hated), we will have a something that fits our needs. In the summer, we can leave it on the deck and enjoy it often and easily. In the winter, it is small enough to clean off quickly and clear any snow around it.

I cannot wait to fire it up next week.

Auto Sales Data – Return of the Hatchback?

According to recent sales data, gas guzzling SUV's are no longer selling worth a flip. The top 4 models are listed below. The only SUVs selling reasonably well are small CR-V and Escape sized vehicles.

Personally, I would like to see the return of the hatchback to prominence in the US. Popular all over the world, they offer a ton of practical space in a compact, fuel efficient vehicle. My dream vehicle – a Honda Civic sized hatchback – possibly a hybrid – certainly a 4 cylinder.

 

Honda Civic / Hybrid	53,299
Toyota Corolla / Matrix	52,826
Toyota Camry / Hybrid	51,291
Honda Accord / Hybrid	43,728

Linens&Things – Horrible Out of Business Sale

My fiancé and I noticed Linens & Things was having a going out of business sale. Simply put, it was the worst sale ever. Because they were unwilling to accept their own 20% off coupons, many items were more expensive than the pre-sale prices.