The Katana: Deflation Is Out Of The Question

I don’t talk much about my finances, but I will tell you that I’m in the process of refinancing a couple mortgage loans down by 1% each.  The interest savings is tremendous, making me very positive about consumption trends going forward as 10 other people I know are also refinancing.  It behooves you to at least call your local bank and check their latest rates.

It does make me wonder with the strength of the stock markets lately, how the bond market can still be so frothy to provide such record low interest rates.  Do remember that the higher treasury bond prices go, the more yields fall.  Could there really be deflation on the way?  I highly, highly doubt it but the bond market is telling us otherwise.

To humor our minds, lets say there is deflation on the horizon.  What would you do with your spending habits?  You’d probably stop consuming due to the assumption that whatever it is you want to buy will be cheaper in the future.  As a result, you’d hoard cash and de-leverage.  Bingo, that is exactly what plenty of folks are doing, including myself.  This self perpetuating mentality is very damaging to economic progress.  In addition to delaying consumption, you will probably seek ever higher yields.  With the 30 year treasury yielding 4% right now, it sure looks like a buy compared to only 2.85% on the 10 year.

When talking about deflation, keep in mind that money is simply a medium of exchange.  The more money currency you have, the better as the strength of your currency improves vis a vis the goods and services which it can buy.  Frugality really is en vogue again, and I just can’t wait until Samurai September when I spend the whole month buying nothing!

POSTS THAT CAUGHT MY EYE:

Buying Blogs, Selling Blogs: How I Built My Blogging Business

3 years ago, I was told by many bloggers: “You will never make money blogging. And if you do, $200/month will be your highest peak ever”.

Three year ago, The Financial Blogger was averaging 500 visits per month and I was ecstatic when I made my first deal of $10 for a link.

Three years later, I now run three financial websites, bought 2 of them and flipped a blog within a year. I am now able to work 1 full day per week on my online business (while I still have to keep my “day job” in the meantime). I really like buying and managing finance blogs as I think it is currently one of the best investing opportunities we can find.

When I asked Sam if I could write a guest post for Financial Samurai, he asked me to include more details on how I appraised blogs and how do I decide or not to send $10K over the wire (or more!) simply to buy a “.com”.

Look at Blogs as a Real Estate Investing Opportunity

Staying Calm Under Pressure

Even at 7:30pm the night is hot.  That’s what happens when you go barbecuing somewhere in the South Pacific in the middle of summer.  You can almost taste the grilled chicken from the remnant fumes simmering off the grill.  Dinner is served!

The family gathers around the picnic table.  We take a deep breath and begin to eat.  In just the first bite, my father freezes, tries to swallow and let’s out a little gag.  We ask him what’s wrong, and he shakes his head not knowing.  One of us gives him a glass of water, and still, no change.  My father raises up his hand, excuses himself and says that he has to go to the emergency room.

DOUBT AND CONFUSION

The White Cloud of Happiness

My mother is a white cloud.  Every time I see her, she smiles even bigger than I can ever smile.  She loves to talk stories about any of life’s teachings she’s discovered, and I generally just keep quiet and listen.  Sometimes I don’t understand everything she says, but that’s OK.  It makes me happy just knowing she’s happy imparting wisdom onto me.

One of the holiday presents I got my father was a signed copy of Andre Agassi’s autobiography, “OPEN.”  To me, the book was gold, because Andre is my idol.  It was my only copy, and I decided to give it to my father because I remember him loving to read and enjoying the game long ago.

When my father opened his present, he did thank me and showed his appreciation.  However, a week later, the book still lay on the coffee table unread.  Somewhat dismayed that Agassi was being ignored, I spoke to mom about perhaps taking the book back since I cherished it so much.  She mentioned her unused Barnes & Nobles gift card and had an idea.

Later that evening, my parents went to the Mall for date night without us.  Apparently, Carl’s Junior had a two-for-one special and my father was just dying to go!  When they returned, my mother brought me over to the kitchen and told me, “Shhhhhh, take a look at the book.  I bought another copy of “OPEN” and swapped it with your signed copy, so you can take it home!  Dad will never know!” We laughed so hard it hurt and gave each other high fives!  My mom was right, dad never found out.  Mom, who knows very little about tennis, was encouraged by my enthusiasm she even read “OPEN” before dad!

LESSON LEARNED