Financial Samurai

Generally it’s pretty poor taste when a billionaire tells other people to contribute more money to anything.  It’s like sharing a cab ride with Warren Buffet and he asks you to pay with your last $10 bill when he’s got a wad of $100s.  Not cool.  However, Warren’s New York Times op-ed piece finally highlights what Americans everywhere have been wondering all along.  Who are these “millionaires” President Obama and the Democratic party in Congress keep targeting?

In practically every speech on taxes, President Obama likes to pit the wealthier population against everyone else by using the term “millionaires” to pay their “fair share” of taxes.  Class warfare is unnecessary.  As you know, President Obama wants to raise taxes on individuals making $200,000 and families making $250,000.  First of all, why does $200,000 + $200,000 = $250,000 instead of $400,000 as a couple is beyond me.  Is one spouse supposed to suddenly make only $50,000 from $200,000?  Give me a break.  Talk about blatant sexism.

What’s more interesting is how President Obama keeps on referring to those individuals making more than $200,000 as “millionaires”.  Last time I checked, if you make $200,000 a year, you aren’t necessarily a millionaire.  In fact, you are likely far from being a millionaire!  But according to President Obama, it takes you a nanosecond to become a millionaire once you make $200,000 a year.

HOW LONG DOES IT REALLY TAKE TO BECOME A MILLIONAIRE? Read more…

I’m feeling a little sadistic right now.  A large part of me is hoping the equity markets take a big dump again before the end of summer.  Bring on the pain baby!  I thought I was absolutely done with refinancing my primary residential mortgage in 2010 when I got 3.625% for 5 years.  But, I just called my banker and he says I can now get 3.25% jumbo and no points or fees for the same duration!  Because I would simply refinance with the same bank, the process would be streamlined since they have all my documentation.

What is this world coming to?  Who does that, putting more money in the pockets of consumers who never asked for it?  Why save me thousands of dollars a year in interest expense when there’s a guy who’s been out of work for over two years and needs it more?  If I do the refi, living in my house will be cheaper than living in a 2 bedroom rental.  Something is wrong with how government policies are working.  The more the Fed and the Treasury meddle, the more unintended consequences result.

Those with debt are the bad guys right?  We’re living in houses we can’t afford to pay in cash, and we refuse to live in crappy rentals whose landlords never do any updating.  Debtors are living it up because they can, and know there’s only one life to live.  There’s no point making money if you aren’t spending your money.  Meanwhile, savers are getting squeezed as their rates head to 0% and their equity investments go down the tubes.  Debtors are being rewarded again for living beyond their means and that’s just fine by America and our politicians.

ROLLING THE DICE WITH CHEAP MONEY Read more…

Tracy was 27 when I first met her playing co-ed softball in 2003.  She always wore her skin-tight Lululemon shorts and all the guys would stare as she jutted her butt out in a proper stance every time she was at bat.  One game, she managed to get on base four times in a row.  She was good!  Tracy was a blend of German Puerto Rican ancestry and the guys just loved her, just like how every guy loves Jessica Alba.

After every game, the guys would swarm Tracy to try and get her attention.  We’d always go to some bar afterward, and Tracy got all the free drinks and appetizers she wanted.  It was evident that the rest of the girls were annoyed with all the attention Tracy was getting.  Unfortunately, for them, they weren’t as attractive, so the guys really didn’t care. Shallow right?

Despite all her good looks, Tracy had one big problem.  She lacked self-esteem.  Whenever someone would complement her, instead of simply saying “thank you” and complement the person back, Tracy would look down to the ground and shy away.  Sometimes, she’d simply ignore him.  Her silence often was construed as being bitchy unfortunately.  It takes forever for her to open up, but when you finally get to know her more, you realize she’s a nice but incredibly dull person.

A LITTLE BIT OF BACKGROUND Read more…

There’s only been one bank that has consistently treated me like cow poop all these years and that’s Bank of America.  When I saw its shares dip to $6.5 (-45% YTD) during our S&P downgrade meltdown, I couldn’t help but wonder whether it was just karma striking back.  Granted, Bank of America has some wonderful people working for the firm.  I guess it just so happens that I hardly encountered any of them.

During the financial crisis in 2008, I spread my money purposefully to Bank of America given that I was afraid any and all banks could fail, and the FDIC only insured up to $250,000.  Before BoA, I had been banking with Citibank, USAA, First Republic, and a little bit at Chase.  As the markets began to recover in 2010, I withdrew all my savings and expiring CDs and refinanced a mortgage away from Bank of America because I just couldn’t take how uncompetitive BoA’s rates were and how poorly I was treated.

Banks are a commodity business that takes in money and pays you a certain rate, and lends out your money at a higher rate.  It’s what banking analysts call the net interest margin, or NIM for short.  The bank should provide safety, liquidity, and access.  You know what the differentiating factor is in a commodity business?  Good service.  Someone forgot to tell Bank of America!

I HAVE FEELINGS TOO BANK OF AMERICA BAILOUT Read more…

The S&P Credit Agency now ranks right up there as the most hated company in the world.  And Deven Sharma, President of the S&P should probably go into hiding.  President Obama is breathing a huge sigh of relief because the public will no longer only associate the market meltdown with his lack of leadership.  History will show that Deven Sharma, and his quest for fame and power rocked the market and caused millions of people around the world to lose trillions of dollars as well as their jobs.

It would be one thing if the S&P Credit Agency had any credibility by downgrading US sub-prime mortgages back in 2007.  But no.  They rode those security to the ground with their investable grade rating.  With an already frustrated public and a weak market after the debt ceiling debacle, it is absolutely low quality to go ahead and downgrade the US sovereign debt rating on a late Friday evening on August 5th after the market closed.  The S&P had already been in discussions with the White House and Treasury Secretary Geithner, and for the sake of their “principals”, they spat in our political leader’s faces, as well as our faces and downgraded anyway.

EVERYBODY IS PORKED FOR NOW Read more…

As the markets were melting down this past week I decided to go watch the World Champion San Francisco Giants beat up the lowly Arizona Diamondbacks in the middle of the day.  It’s quite a treat to watch every game this season because of our current world champ status.  Next season, we’ll be just another team, trying to figure out our way back to glory.

At $80 a ticket, access doesn’t come cheap, but with the ticket comes all you can drink cervezas.  Besides, 1pm games are the best on sunny days.  Might as well go!  When my friends and I got there, we were shocked.  The stadium was absolutely PACKED!  We are talking 40,000 people enjoying a baseball game in the middle of a work day.  See picture above.

I thought about it for a second and came to the realization that the reason why 40,000 people can spend on average $50 per ticket during the middle of the day is because despite the market meltdown, we all have job security or don’t need to work because we have the disposable income to spend.   With a sample set of 40,000, it’s obvious that the economy will be just fine and that unemployment is actually better than what the media drones on and on about.

Think about it.  If you were broke, you’d just stay at home or go to a bar and watch the game on TV for free.  If you were worried about your job, you wouldn’t ditch the afternoon to go watch a game.  You’d be working your tail off and trying to add value.  If you were unemployed, you aren’t sweating it because you’re getting $1,450/month in unemployment income for 99 weeks.  Spending $50 might be more wisely spent elsewhere, but it’s sunny, and it’s the SF Giants we’re talking about!

People have more money than you know.  Why else do you think companies like Apple, Prada, and Tiffany’s are doing so well?  I went to visit my friend’s new place this past weekend and it was awesome!  They had been living in a quaint 1,300 square foot apartment for the past several years and now own a 5 bedroom, 4,600 house on a half acre in one of the most prime areas for $3.3 million!  He said he wasn’t looking to buy, but couldn’t pass up such a good deal when he was able to sell some of his start-up company shares.  Not bad for a guy in his mid-30s just 5 years out of business school wouldn’t you say?

Don’t listen to media schadenfreude about how bad unemployment and the economy are.  They are just bitter they are tied to their desks and can’t come out and play.  I’ve got my finger on the buy trigger come flash crash, Moody’s/Fitch credit downgrade, banishment of US treasuries by foreigners and political gridlock.  And, I’ll bet you a hundred bucks that the rest of you are thinking the same thing as well.  Why?  Because you’ve got the cash baby!

Readers, do you believe the economy is better than perceived?  Do you have some some positive anecdotes you can share with the rest of us?  What could be some pessimistic viewpoints with my story for all you Debby Downers out there?

HIGHLIGHT POSTS FROM AROUND THE WEB Read more…

One of the key decisions in deciding what car to buy is assessing how much all the other costs are that come with ownership.  Having a car payment isn’t considered an ownership cost because you don’t have a car payment.  Taking out a loan with any interest rate other than zero on a depreciating asset makes no sense.  Given that you earn 10X the value of the car based on the 1/10th rule, you should never have a problem paying cash for a vehicle.  To not do so means you simply can’t afford the car.

There are two main ownership costs to consider: maintenance and insurance.  For new cars, maintenance costs are quite minimal, unless you have a lemon and have to waste all your time going to and from the dealer.  For used cars, maintenance costs are a much bigger issue that can quickly eat into any savings you’ve made from not buying new.  We can talk about maintenance costs in more detail in another post.  For now, let’s talk about insurance costs.

I received my semi-annual car insurance premium bill the other day, and I was pleasantly surprised to discover it only costs $285 every 6 months to cover Moose.  However, by not telling you the full details of what $285 gets, it’s hard to understand whether $285 really is good value.  Let’s breakdown the line-items to better understand what car insurance options I get for my money.

UNDERSTANDING CAR INSURANCE OPTIONS Read more…

The debt relief industry doesn’t really have the greatest reputation for some reason or another.  Perhaps the reason is because we secretly harbor resentment for people who get in way over their heads and look for solutions other than paying off their debt!  When you can solve your debt situation yourself by begging, pleading, calling your creditors to come up with a repayment program, why would you let a debt settlement company charge exorbitant fees?  If you make your case strong enough, you might even get the credit card company or the bank to forgive a portion of what you owe!

Thanks to the horrendous economy in recent years, consumer debt levels have risen to alarmingly high levels.  From buying that new car you shouldn’t have, to big screen TVs that ruin the feng shui in your bedroom, to luxury clothing with 95% margins that never get worn, to nice vacations which you think you deserve, to $100 meals per person, people’s consumer debt has blown up in a bad way.  Never fear though!  With the government ready to bail you out with incredibly long unemployment benefits, free money for your mortgage, and credits for paying on time (shouldn’t you do that anyway?), some consumers will be alright.  But for others, in come the debt relief companies to save the day!  Maybe.

The Issues With Debt Relief Companies Read more…