Posts
All Comments
Membership has its privileges says the commercial. Really? Watching an American Express Card commercial, I got to wondering why anyone would pay for the privilege of having an Amex card.
In particular, the Green Card seems to offer no real benefit to justify the annual fee.
Reading the New York Times online, I was reminded about a story that I read in with Wall Street Journal. After rereading both stories, it appears one of the writers basically rewrote the other's "story" (without attribution) and added new information. Literal plagiarism – Not. Plagiarism of the thought behind the story – Yes.
Sadly – both stories are about people who think they have "Health Insurance" only to find out their employer had a "self insured" plan administered by a third party (like Blue Cross). Unfortunately, when an employer backing a self-insured plan goes under, Cobra benefits go out the window. Furthermore, people with existing bills end up as unsecured creditors of that company.
As a member of the insurance industry, I am proud of what I do. Furthermore, I can say with complete confidence that most of the people in the industry are decent people. Nevertheless, decent people do make mistakes and do things that seem unbelievable. Recently, Specialty Risk Services (a third party administrator owned by The Hartford) made news with a decision that is simply mind-boggling. In all likelihood, there is a SRS employee who cannot see the forest for the trees.
Source: SF Gate.
Taneka Talley was stabbed to death in March 2006 while she was working as a clerk at a Dollar Tree store in Fairfield. Her killer's only motive, prosecutors say, is that she was African American.
That's also the reason the store's workers' compensation insurer is denying $250,000 in death benefits to Talley's 11-year-old son.
The boy's grandmother, the child's legal guardian, said Specialty Risk Services is taking the position that a racially motivated killing is personal, not work-related - even though the man charged with killing Talley had never met her before. The insurance company, Dollar Tree and their lawyers aren't talking publicly about the case but are defending their position before a state appeals board that hears workers' compensation disputes.
"I think it's unfair. It's discrimination," said Carol Frazier of Vallejo, who gained custody of her grandson, Larry Olden, after her daughter's death and is challenging the insurer's refusal to pay in a case that eventually could go to court.
"They're saying (the killing) didn't arise out of her employment, except that in this case she wouldn't have been killed if she hadn't been at work," said Frazier's attorney, Moira Stagliano. "This person didn't know her, just walked into the store and picked her out."
The opposition by Dollar Tree and its insurers to paying benefits to Talley's son represents an attempt to set new limits on California's workers' compensation system, under which a company provides benefits to employees or their survivors for work-related deaths or injuries regardless of whether the firm was at fault.
Businesses have long assailed the system as overly generous to employees and as expensive, complaints that led to passage of state laws in 2003 and 2004 tightening limits on what medical treatment is covered by compensation payments.
The man accused of stabbing Talley, Tommy Joe Thompson, 45, of West Sacramento, is tentatively scheduled to go to trial Dec. 10 in Solano County Superior Court on a charge of murder. If convicted, he could be sentenced to life in prison.
Talley, of Fairfield, was 26 and working full time at the Dollar Tree on North Texas Street to support herself and her young son. She was stocking shelves just after 9 a.m. on March 29, 2006, when a man walked in and stabbed her, authorities said. The killer fled.
Thompson was arrested that evening. He had previously served a prison sentence for beating his young son in 1994, records show.
At a hearing in March in which Thompson was found mentally competent to stand trial, a defense psychiatrist, Herb McGrew, testified that Thompson had told him he stabbed Talley because she was black. Thompson is white.
"You know that he got up that morning, and he said, 'I'm going to kill a black person,' " said Deputy District Attorney Dane Neilson, according to a transcript of the hearing. "She was, unfortunately, the first person he saw, correct?"
"Correct," McGrew replied.
An insurance company lawyer later cited that exchange in a letter to Stagliano defending the denial of benefits to Talley's son.
"The doctors testify that Mr. Thompson's motivation in stabbing Taneka Talley was purely race motivated," attorney Kelly Hamilton wrote. "As such, it is our belief that our denial in this matter is proper."
The compensation law doesn't consider an on-the-job injury to be work-related if the motives were entirely personal - for example, if an estranged lover or spouse comes to the workplace and attacks an employee because of a private grudge.
The line can be hard to draw when one worker assaults another for personal reasons or when the injured employee was on a personal errand or instigated the assault. But Stagliano said Talley's death was definitely job-related.
"Taneka Talley was at work, doing her job, when she was killed," the lawyer said. "If she had not been in that store, she would not have been available to (the killer), and she would still be alive.
"It's shocking that Dollar Tree and its insurance carrier are using the alleged racist motivation of a killer as an excuse to get out of paying benefits," Stagliano said.
Frazier, who works for the Richmond Parks and Recreation Department, said her daughter had a $15,000 life insurance policy. It covered burial expenses, she said, but is nowhere near enough to care for a growing boy who needs new clothes every six months.
"His mother worked hard on her job for him to get a good education, to go to college," Frazier said.
Larry, now in sixth grade, is "a very good student, he loves sports, really good in basketball - a normal little boy," she said. "He misses his mom."
E-mail Bob Egelko at begelko@sfchronicle.com.
This morning, I needed to make a deposit and headed over to TD Banknorth. While waiting for the teller to finish the transaction, I started looking at their hours. Most days, tellers are available from 8am to 8pm. On Saturdays, the bank is open until 3pm. Years ago, we had to get off early to go to the bank. Now, ATM's and online banking can take care of most transactions 24/7. When that fails, you are not out of luck.
Although I recommend and use ING Direct, they don't have local branches and sometimes you need a bricks and mortar bank. In our family, our banking situation looks like this:
ING Direct – Primary Savings and Checking Account, Certificates of Deposit
TD Banknorth – Backup Checking Accounts. Free ATMS anwhere and paper checks fill in the gaps ING doesn't do well. For example, ING Direct doesn't offer a safe deposit box. In addition, I think it is a good idea to have some "personal" relationship with a human banker.
Vanguard/Fidelity – brokerage services. IRA and longer term savings.
Emigrant Direct- Backup Online Savings Account
Listening to the morons running to the Big Deadbeats (aka the automakers), I decided to a little math. Our $34 Billion auto bailout will cost approximately $110 per US resident. If you consider only taxpayers (eliminate children and others who do not pay taxes), it probably means closer to $250 per taxpayer.
Instead of gifting them the money, we could buy 1.7 million cars from them for $34 Billion at an average price of $20,000 per car. That would keep the plants churning out Malibus and Fusions.
Today, I discovered I could charge my heating oil bill to my Amex Blue Cash card. By doing so, my oil heat provider will give me a 10 cent per gallon discount. Combined with the 1% cash back I get from Amex, I end up with a nice little discount. Furthermore, I get rid of the hassle of send out another check.
Listening to the news on the radio in my card, I heard a story about how pirates tried to take over a huge cruise ship. When I thought about it, I could help but wonder why nobody was selling "protection" to ships in the area. By the time I got home, I could find a story about how a private security firm named Blackwater was pitching protection in London.
Moral to the Story: If there is a need, someone is willing to serve it for a price.
Obama wasn't my pick for President; however, he appears to be very intelligent. Unfortunately, until he takes over next year, Nancy Pelosi is leading the charge on the auto bailout and a "new stimulus" plan. According to today's Wall Street Journal, she made the following determinations:
Although I think ING Direct offers great service and I intend to keep using it for online savings, I have been disappointed by the fact the interest rate on savings has been consistently lower than available with other banks. As a result, I have started the process of opening 3-4 online savings accounts and plan on transferring my emergency fund to the one offering the best rate at any given time. Because it has consistently high rankings from other financial bloggers, I opened an account with EmigrantDirect.
Review: First of all, the signup process was relatively easy and the initial deposit, $100, was transferred quickly and without incident. Nevertheless, I am not happy with the overzealous online security they employ. Instead of ING's difficult number and moving cursor keypad, they force users to answer 2 personal questions before logging on. While not a problem when I am logging onto the site, it is an annoying process when I try to use Quicken's online update feature. Every time, it slows down the process. Although the site works well, it is poorly designed and makes it difficult to see the available rates in CD's and other products.
Bottom Line: I probably will disable the online update feature on Quicken and keep the account open. Compared to ING great experience, I give it an acceptable rating.
While online savings accounts offer good rates, we can boost returns (for very little risk) with a CD ladder.
Why it works: In return for locking up your money for a fixed amount of time, banks are willing to pay you a higher interest rate on your money. For example, ING Direct pays an APY 2.75% for money in its online savings accounts. In contrast, a 1 year CD at ING Direct pays 4.00%. As you can see, you are earning more interest on the same amount of money.
How it works: By investing your money in CD's that mature at regular intervals, you get the benefit of higher interest rates without having all your savings out of reach.
Example of Simple CD Ladder: You have $4,000 to invest and want to have a one year ladder. Buy four $1,000 CDs with terms of 3mo, 6mo, 9mo, and 1 year. When the 3,6,9 mo CDs mature, replace with a a new 1 year CD. Ultimately, you end up with four 1 year CD's. Should you need the money, one of them will be maturing every 3 months. My bank, ING Direct, will automatically reinvest maturing CD's for you.
Example of Complex Two Year Ladder: Let's say you have $24,000 to invest, you could set up a ladder of 2 year $1,000 CD's maturing every month. Ultimately, the complexity of your ladder is up to you as the combinations are virtually unlimited.
Risk: If you have an emergency and need to get your money early, you will get all of your principal back. You will, however, forfeit some of the interest earned. The money invested in a CD ladder should be money you do NOT expect to need in a "common" emergency (car breaks down, medical bill). The longer the term of your ladder, the more risk you have of having the dreaded "early withdrawal" penalty. In my case, I use a one year ladder because I like the idea of accessing 100% of the money within 12 months.
Bonuses to look for:
NEVER, EVER DO THIS: NOT EVER
With respect to municipal securities, it is an "interesting" time. Unlike treasuries, muni's are not considered "risk free" and they have offered an after-tax yield (AT Yield) higher than available through treasuries. Compared to historical norms, the spread between the AT Yield and the yield on treasuries is high. Why? Many muni borrowers are faced with declining revenues (taxes and use fees) as the economy sours.
Before anyone invests in munis, they need to know there are two types of municipal bonds.
Because I perceive the overall risk of munis as manageable, I have money invested in a tax free money market fund and think many of them offer a fair risk/reward at current pricing. Nevertheless, I would avoid a few issuers like the plague:
Getting up early, the wife and I went out on a quest to spend our way into a economic recovery for the US. Starting at 6am at Target #1, we ended up going (in order) to Best Buy, Target #2 (to return a GPS), Home Depot, Staples, WalMart, BJ's, Michael's #1, Michaels#2, and BJ's.
Ultimately, we ended up purchasing three GPS units (returning two), two Blu-Ray DVD players, and a Christmas tree.
The GPS unit was the primary reason for a odyssey of shopping. For months, we have been planning to buy one as a gift to my mother in law.
The Blu-Ray was a splurge as we picked up a $300 unit on sale for $199. It will be our Christmas gift to ourselves.
Finally, the Christmas tree was at a great price and should last us for years.
What I saw: Flat screens were selling fast, Home Depot was empty, WalMart and Target were crowded and people were buying.
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.
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
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.
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.
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:
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?
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.
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.
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"
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.
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 3rd Sprint Cup Championship in a row. Great deal if you like their stuff.
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.
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.
IMHO – term insurance is almost always better than whole life.
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.
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
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.
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.
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:
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.
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.
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 …."
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
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.
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.
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
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.
How does a $6 stock lose $11 per share in a single quarter? Wachovia announced a staggering $23.9 billion in the 3rd quarter. Unreal.
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.
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.
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.
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
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):
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?
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.
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.
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:
Cash Back Transaction occurs every December 1st allowing customers to fund some of their holiday spending.
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."
Eliminating all subscriptions except for the Wall Street Journal.
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.
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?
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.
Next: Up my take on how the chaos in the industry will affect the consumer.
How long did it take you to get to the $100 Adsense minimum to get your money out?
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
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.
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.
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.
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.
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.
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.
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.
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
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.
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?
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.
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?
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.
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.
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.
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.
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.
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.
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:
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.
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.
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
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.
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.
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?
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:
Comparing the before/after pricing quotes from other carriers, I think State Farm's price on the Highlander is significantly better than the competition.
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
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?
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.
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?
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.
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.
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.
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.
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.
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:
Once it is over, back to saving!!
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?
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.
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:
Bottom Line: The SmartCar is a vanity purchase for most people and almost always a bad idea.
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?
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.
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.
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:
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 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.
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
