Archive for September 2007
The last two years have taught me many, many things about personal finances. Some of the lessons have been useful and others thought-provoking, but a few have really knocked my socks off and changed the way I view the world. Here are the five lessons I learned that really altered my perspectives.
Every time you buy anything, you sacrifice a bit of your dreams.
I have an old college friend who constantly moans about how he hates his job and how he dreams of not having to work any more. Yet every single weekend, he spends about $100 on two new video games and about $60 on beer and pizza – he then spends the whole weekend “zoning out on reality” by playing games and watching football.
He constantly tells me how he should be making more money and how it’s difficult to save money, but it’s pretty easy to see that he’s spending away his future here. Every time he buys a video game or goes on a beer and pizza binge, every single time, he extends his attachment to the misery of his job. If he took that $160 a week and invested it, then spent his weekend free time looking for other avenues to raise money (like building a side business), he’d be moving directly towards the kind of freedom that he wants.
While his case is an extreme example, it’s true to a degree for all of us: every frivolous purchase is an active choice to postpone our dreams. Consider what your dreams are the next time you pull out the plastic – and ask yourself if this item you’re buying is worth giving up a piece of that dream.
There is no such thing as a free lunch.
I used to often do things like sign up for in-store credit cards to get that “awesome” 10% discount. To me, it was like they were giving me money for free! I used to collect big time on the credit card offers on campus as well that offered “free” tee shirts just for getting a card.
Bad move. There is no such thing as a free lunch. If someone is giving you something for “free,” you will be giving them something in exchange. Often, it’s your time – other times, it’s personal information or access to you as a customer. Sometimes, it’s a freebie in exchange for signing up for something costly, as is the case with freecreditreport.com.
If someone offers you something for seemingly nothing, step back for a second and think about what they’re actually getting in return. Usually, it’s something more valuable than the freebie – your time, your information, or sometimes even your money.
My “income” wasn’t nearly as high as I believed it to be – and neither is anyone else’s.
Want to see how much you really make? Take your salary, then subtract your annual income taxes from it. Then subtract all of the extra expenses you incur because of work – professional clothing, transportation to and from work, extra food, work-related social gatherings, travel. Then add up how many hours you actually contribute to your job in an average week – time at work, time transporting to work, time spent traveling, time spent doing other work-related tasks like buying work clothes and attending work-related social functions. Multiply that average week by 50 or so (assuming two weeks off a year), then divide your real income by your real working hours and find out what you actually bring home per hour.
Ouch. There’s no other word for how you feel when you see that number. Lots of people working at high paying jobs discover their hourly rate compares well with McDonald’s. So why not do other tasks that pay you more per hour than your real job? I know of at least one woman who switched to a lower paying job (on the surface) that actually allowed her to bring home more cash per hour of work than before.
Thinking about things in this fashion really changes your perspective about what’s really important in life.
Investing isn’t just for rich people – it’s for everyone.
It wasn’t long ago that I had a perception that investing in the stock market and building a portfolio is something that rich people did, not people like me. In fact, I often used the fact that many investments return quite well as an excuse to believe that “the rich get richer and the poor get poorer.”
It’s not true. Anyone who is capable of spending less than they earn can invest and start collecting some great returns on the fruits of their labor. In fact, the internet era has made it easier than ever for people to invest – you can do everything from the convenience of your web browser. All you have to do is start spending less than you earn – that’s it.
Success is a choice.
This one is going to get some people upset, I’m sure, but it’s true. If you want something to happen in your life, you have a choice to make: do you really want it to happen? Are you willing to wake up for three hours in the middle of the night most nights to get posts written for your blog, so that you can spend the daytime with your family? Are you willing to spend weeks in a row without any simple relaxing activity – no television, no entertainment, just the stuff you need to do to get the job done? Are you willing to forego spending unnecessary money, period?
Success at anything requires some level of sacrifice, and often the big successes require a lot of sacrifice and focus. If you want to turn your financial life around quickly, you’re going to have to make some very tough choices. If you want to start a successful business, you’re going to have to make some sacrifices.
I used to look at people who started their own successful businesses with jealousy, and I felt like people who had their finances in order were given access to some secret that I didn’t know. It’s not true – success at anything is a result of a lot of hard work. You lay the groundwork for good things to come to you, but it’s a challenge. Are you up to the task?
Another recipe I’m making today from Jean Anderson’s unfortunately titled Process This!, making more use of my food processor. I’ve moved it to a permanent home on the counter, and tossed the enormous plastic storage box for the accessories to follow a tip from Daytipper: store the cutting disks in plastic bags, writing on the bag which disk it is. — UPDATE on that idea: it just occurred to me that even better would be to store each cutting disk in a padded CD-mailer envelope—a better fit and more protection.
Anyway, the recipe:
1/3 cup oil-cured black olives pitted and patted very dry on paper toweling
1 cup mayonnaise
1-2 Tbs fresh lemon juice
1/4 tsp (or, as I say, “dash”) hot red pepper sauce—Tabasco for me.
Pulse the olives briskly 3 to 4 times in a food processor fitted with the metal chopping blade. Scrape down the work bowl, then pulse quickly once or twice.
Add the mayonnaise, 1 Tbsp of the lemon juice, and the red pepper sauce and pulse briefly to combine. Scrape down Scrape down the work bowl, taste, and if the mayonnaise is not tart enough, pulse in the second tablespoon of lemon juice.
Mound in a bowl and serve as a dip for raw zucchini or fennel sticks, cauliflower or broccoli florets.
My alteration, now that I’m walking and losing weight: instead of 1 cup of mayonnaise, I’ll use:
1/3 cup mayonnaise
1/3 cup fat-free cottage cheese
1/3 cup Z Trim Fat Replacement Gel (same mouth feel as fat)
I’ve now made it: very tasty and also reasonably compatible with sensible diet.
UPDATE: From ThinkProgress:
“The American air force is working with military leaders from the Gulf to train and prepare Arab air forces for a possible war with Iran, The Sunday Telegraph can reveal.”
UPDATE: “John Bolton, the former US ambassador to the United Nations, told Tory delegates today that efforts by the UK and the EU to negotiate with Iran had failed and that he saw no alternative to a pre-emptive strike on suspected nuclear facilities in the country.”
Looking bad. Seymour Hersh has a long article in the upcoming New Yorker, which begins:
In a series of public statements in recent months, President Bush and members of his Administration have redefined the war in Iraq, to an increasing degree, as a strategic battle between the United States and Iran. “Shia extremists, backed by Iran, are training Iraqis to carry out attacks on our forces and the Iraqi people,” Bush told the national convention of the American Legion in August. “The attacks on our bases and our troops by Iranian-supplied munitions have increased. . . . The Iranian regime must halt these actions. And, until it does, I will take actions necessary to protect our troops.” He then concluded, to applause, “I have authorized our military commanders in Iraq to confront Tehran’s murderous activities.”
The President’s position, and its corollary—that, if many of America’s problems in Iraq are the responsibility of Tehran, then the solution to them is to confront the Iranians—have taken firm hold in the Administration. This summer, the White House, pushed by the office of Vice-President Dick Cheney, requested that the Joint Chiefs of Staff redraw long-standing plans for a possible attack on Iran, according to former officials and government consultants. The focus of the plans had been a broad bombing attack, with targets including Iran’s known and suspected nuclear facilities and other military and infrastructure sites. Now the emphasis is on “surgical” strikes on Revolutionary Guard Corps facilities in Tehran and elsewhere, which, the Administration claims, have been the source of attacks on Americans in Iraq. What had been presented primarily as a counter-proliferation mission has been reconceived as counterterrorism.
The shift in targeting reflects three developments. First, the President and his senior advisers have concluded that their campaign to convince the American public that Iran poses an imminent nuclear threat has failed (unlike a similar campaign before the Iraq war), and that as a result there is not enough popular support for a major bombing campaign. The second development is that the White House has come to terms, in private, with the general consensus of the American intelligence community that Iran is at least five years away from obtaining a bomb. And, finally, there has been a growing recognition in Washington and throughout the Middle East that Iran is emerging as the geopolitical winner of the war in Iraq.
During a secure videoconference that took place early this summer, the President told Ryan Crocker, the U.S. Ambassador to Iraq, that he was thinking of hitting Iranian targets across the border and that the British “were on board.” At that point, Secretary of State Condoleezza Rice interjected that there was a need to proceed carefully, because of the ongoing diplomatic track. Bush ended by instructing Crocker to tell Iran to stop interfering in Iraq or it would face American retribution.
At a White House meeting with Cheney this summer, according to a former senior intelligence official, it was agreed that, if limited strikes on Iran were carried out, the Administration could fend off criticism by arguing that they were a defensive action to save soldiers in Iraq. If Democrats objected, the Administration could say, “Bill Clinton did the same thing; he conducted limited strikes in Afghanistan, the Sudan, and in Baghdad to protect American lives.” The former intelligence official added, “There is a desperate effort by Cheney et al. to bring military action to Iran as soon as possible. Meanwhile, the politicians are saying, ‘You can’t do it, because every Republican is going to be defeated, and we’re only one fact from going over the cliff in Iraq.’ But Cheney doesn’t give a rat’s ass about the Republican worries, and neither does the President.”
Still contemplating it. Probably Taylor of Old Bond Street St. James shaving stick. And you know the razor and blade. What brush, though?
They certainly seem to fit the description.
I don’t think this was a good use of taxpayer money. From Vanity Fair:
Billions over Baghdad
Between April 2003 and June 2004, $12 billion in U.S. currency—much of it belonging to the Iraqi people—was shipped from the Federal Reserve to Baghdad, where it was dispensed by the Coalition Provisional Authority. Some of the cash went to pay for projects and keep ministries afloat, but, incredibly, at least $9 billion has gone missing, unaccounted for, in a frenzy of mismanagement and greed. Following a trail that leads from a safe in one of Saddam’s palaces to a house near San Diego, to a P.O. box in the Bahamas, the authors discover just how little anyone cared about how the money was handled. — by Donald L. Barlett and James B. Steele October 2007
Hidden in plain sight, 10 miles west of Manhattan, amid a suburban community of middle-class homes and small businesses, stands a fortress-like building shielded by big trees and lush plantings behind an iron fence. The steel-gray structure, in East Rutherford, New Jersey, is all but invisible to the thousands of commuters who whiz by every day on Route 17. Even if they noticed it, they would scarcely guess that it is the largest repository of American currency in the world.
Officially, 100 Orchard Street is referred to by the acronym eroc, for the East Rutherford Operations Center of the Federal Reserve Bank of New York. The brains of the New York Fed may lie in Manhattan, but xeroc is the beating heart of its operations—a secretive, heavily guarded compound where the bank processes checks, makes wire transfers, and receives and ships out its most precious commodity: new and used paper money.
On Tuesday, June 22, 2004, a tractor-trailer truck turned off Route 17 onto Orchard Street, stopped at a guard station for clearance, and then entered the eroc compound. What happened next would have been the stuff of routine—procedures followed countless times. Inside an immense three-story cavern known as the currency vault, the truck’s next cargo was made ready for shipment. With storage space to rival a Wal-Mart’s, the currency vault can reportedly hold upwards of $60 billion in cash. Human beings don’t perform many functions inside the vault, and few are allowed in; a robotic system, immune to human temptation, handles everything. On that Tuesday in June the machines were especially busy. Though accustomed to receiving and shipping large quantities of cash, the vault had never before processed a single order of this magnitude: $2.4 billion in $100 bills.
It’s a trap. Watchdog Blog describes it:
Earlier this summer, we sounded the alarm about binding mandatory arbitration (BMA) clauses in the fine print of cable bills sent out by Comcast. Comcast was not the first company to pull this trick on consumers and, sadly, we’ve learned it is far from the last.
Today, Public Citizen releases a ground-breaking report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers [pdf]. It shows how credit card companies rig their contracts with consumers, using binding mandatory arbitration to evade accountability, strip consumers of their rights and enforce their will. In fact, arbitrators rule for business between 94 and 97 percent of the time.
In a nutshell, BMA is private, corporate-dominated secret “court” that overwhelming rules against consumers. In this world, merely by signing your name on the dotted line, you have forfeited your right to a trial by jury. If someone steals your identity and runs out to buy a $4,000 plasma TV – and the credit card company wants YOU to pay for it – the dispute will automatically bypass the public civil justice system. Instead, it goes straight to an arbitrator who may have heard thousands of cases for that same credit card company.
Arbitrators make all their dough from repeat business, so it’s no surprise that they usually rule in favor of business. Consumers are left with no way out because the decisions they make are final and there is little room for appeal.
Here is what you can do to stand up to this corporate bullying from credit card and other companies:
- Pressure Congress: Write your representatives in Congress and ask them to support the Arbitration Fairness Act of 2007 introduced by Sen. Russell Feingold (D-Wis.) and Rep. Hank Johnson (D-Ga.).
- Protect Yourself: Read our report [pdf] and learn all of the ways you can protect yourself from getting trapped in arbitration.
- Tell Others: E-mail this post to friends and family.
Have you suffered from binding mandatory arbitration? Share your story in the comments.