I have a stack of things I want to post here at Cashtalk, but I've been quite busy with other commitments. One of the oldest that has been staring me in the face from the cover of "Fortune."
The story is about a neat program that I had looked at a couple of months ago called Zillow. Not only can you search for homes that are for sale, but it offers some unconventional tools as well.
Zillow allows you to virtually look at houses in your area and find out their "zestimate." This is an estimated price based on surrounding sales and closures on houses. You can see what your house is worth, or what price the people you know may have paid for their home or could sell their home for.
There is also an interesting feature called "make me move," which allows you to post the amount you would accept for your house today even though it isn't technically for sale.
You can upload your own data to improve the database. According to the article I read, most of the East and West coast are populated with zestimates. The Midwest and South are slowly catching up, but there isn't as much of a real estate craze there to drive the demand.
Check it out and let me know what you think.
Thursday, March 22, 2007
Friday, March 16, 2007
Iowa City One of the 10 Best; Affordable Places to Live
This is a long overdue post, but hopefully it will be the jump-starting of a more regular postings.
This article sent to me by Chiara, talks about 10 locales around the country that offer a low cost of living, good prospects for work and a high quality of life.
Iowa City has made the list and I found the statistics about it quite interesting. It seems around here, everybody is trying to figure out how to revitalize downtown or find out new ways to get people to come work here.
According to the article, we have a 2.7% unemployment rate (4.6% is the national average) and 5-year job growth has been 12.33% compared to 4.9% across the rest of the country.
Read the article and find out if your locale made it to the list!
This article sent to me by Chiara, talks about 10 locales around the country that offer a low cost of living, good prospects for work and a high quality of life.
Iowa City has made the list and I found the statistics about it quite interesting. It seems around here, everybody is trying to figure out how to revitalize downtown or find out new ways to get people to come work here.
According to the article, we have a 2.7% unemployment rate (4.6% is the national average) and 5-year job growth has been 12.33% compared to 4.9% across the rest of the country.
Read the article and find out if your locale made it to the list!
Wednesday, November 29, 2006
A Golden Perspective on the Current Devaluation of the Dollar
A host of dour economic news has caused the dollar to lose a significant portion of its value relative to other world currencies. An interested reader sent me and article he saw which tries to explain the reason why the US dollar is important for world trade and that relationship to the former gold standard which was ended in 1971 by Richard Nixon.
It is an interesting excerpt and I encourage you to read it in order to gain a certain historical perspective on current events.
I can't speak to whether it will be the best $11 dollars you will ever spend, but it might be worth looking into, if these types of historical economic issues have interest for you.
It is an interesting excerpt and I encourage you to read it in order to gain a certain historical perspective on current events.
The Daily Reckoning PRESENTS: 1944's Bretton Woods Agreement had the original intention of smoothing out economic conflict after World War II. Howver, the actual outcome - replacing of the gold standard with the dollar standard - ended up causing far more problems throughout the years, as today's falling dollar will show. Addison Wiggin explores...
BRETTON WOODS
by Addison Wiggin
The year was 1944. For the first time in modern history, an international agreement was reached to govern monetary policy among nations. It was, significantly, a chance to create a stabilizing international currency and ensure monetary stability once and for all. In total, 730 delegates from 44 nations met for three weeks in July that year at a hotel resort in Bretton Woods, New Hampshire.
It was a significant opportunity. But it fell short of what could have been achieved. It was a turning point in monetary history, however.
The result of this international meeting, the Bretton Woods Agreement, had the original purpose of rebuilding after World War II through a series of currency stabilization programs and infrastructure loans to war-ravaged nations. By 1946, the system was in full operation through the newly established International Bank for Reconstruction and Development (IBRD, the World Bank) and the International Monetary Fund (IMF).
What makes the Bretton Woods accords so interesting to us today is the fact that the whole plan for international monetary policy was based on nations agreeing to adhere to a global gold standard. Each country signing the agreement promised to maintain its currency at values within a narrow margin to the value of gold. The IMF was established to facilitate payment imbalances on a temporary basis.
This system worked for 25 years. But it was flawed in its underlying assumptions. By pegging international currency to gold at $35 an ounce, it failed to take into effect the change in gold's actual value since 1934, when the $35 level had been set. The dollar had lost substantial purchasing power during and after World War II, and as European economies built back up, the ever-growing drain on U.S. gold reserves doomed the Bretton Woods Agreement as a permanent, working system.
This problem was described by a former senior vice president of the Federal Reserve Bank of New York:
"From the very beginning, gold was the vulnerable point of the Bretton Woods system. Yet the open-ended gold commitment assumed by the United States government under the Bretton Woods legislation is readily understandable in view of the extraordinary circumstances of the time. At the end of the war, our gold stock amounted to $20 billion, roughly 60 percent of the total of official gold reserves. As late as 1957, United States gold reserves exceeded by a ratio of three to one the total dollar reserves of all the foreign central banks. The dollar bestrode the exchange markets like a colossus."
In 1971, experiencing accelerating depletion of its gold reserves, the United States removed its currency from the gold standard, and Bretton Woods was no longer workable.
In some respects, the ideas behind Bretton Woods were much like an economic United Nations. The combination of the worldwide depression of the 1930s and the Second World War were key in leading so many nations to an economic summit of such magnitude. The opinion of the day was that trade barriers and high costs had caused the worldwide depression, at least in part. Also, during that time it was common practice to use currency devaluation as a means for affecting neighboring countries' imports and reducing payment deficits. Unfortunately, the practice led to
chronic deflation, unemployment, and a reduction in international trade. The lessons learned in the 1930s (but subsequently forgotten by many nations) included a realization that the use of currency as a tactical economic tool invariably causes more problems than it solves.
The situation was summed up well by Cordell Hull, U.S. secretary of state from 1933 through 1944, who wrote:
"Unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war... If we could get a freer flow of trade ... so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance of lasting peace."
Hull's suggestion that war often has an economic root is reasonable given the position of both Germany and Japan in the 1930s. The trade embargo imposed by the United States against Japan, specifically intended to curtail Japanese expansion, may have been a leading cause for Japan's militaristic stance.
Another observer agreed, saying that poor economic relations among nations "inevitably result in economic warfare that will be but a prelude and instigator of military warfare on an even vaster scale."
Bretton Woods had the original intention of smoothing out economic conflict, in recognition of the problems that economic disparity causes. The nations at the meeting knew that these economic problems were at least partly to blame for the war itself, and that economic reform would help to prevent future wars. At that time, the United States was without any doubt the most powerful nation in the world, both militarily and economically. Because the fighting did not take place on U.S. soil, the country built up its industrial might during the war, selling weapons to its allies while
developing its own economic strength. Manufacturing by 1945 was twice the annual rate of 1935-1939.
Due to its economic dominance, the United States held the leadership role at Bretton Woods. It is also important to note that the United States owned 80 percent of the world's gold reserves at the time. So the United States had every motive to agree to the use of the gold standard to organize world currencies and to create and encourage free trade. The gold standard evolved over a period of hundreds of years, planned by a central bank, government, or committee of business leaders.
Throughout most of the nineteenth century, the gold standard dominated currency exchange. Gold created a fixed exchange rate between nations. Money supply was limited to gold reserves, so nations lacking gold were required to borrow money to finance their production and investment.
When the gold standard was in force, it was true that the net sum of trade surplus and deficit came out to zero overall, because accounts were eventually settled in gold - and credit was limited as well. In comparison, in today's fiat money system, it is not gold but credit that determines how much money a country can spend. So instead of economic might being dictated by gold reserves, it is dictated by a country's borrowing power. The trade deficit and the trade surplus are only "in balance" in theory, because the disparity between the two sides is funded with debt.
The pegged rates - the value of currency to the value of gold - maintained sensible economic policy based on a nation's productivity and gold reserves. Following Bretton Woods, the pegged rate was formalized by agreement among the leading economic powers of the world.
The concept was a good one. However, in practice the international currency naturally became the U.S. dollar and other nations pegged their currencies to the dollar rather than to the value of gold. The actual outcome of Bretton Woods was to replace the gold standard with the dollar standard. Once the United States linked the dollar to gold at a value of $35 per ounce, the whole system fell into place, at least for a while. Since the dollar was convertible to gold and other nations pegged their
currencies to the dollar, it created a pseudo-gold standard.
The British economist John Maynard Keynes represented Great Britain at Bretton Woods. Keynes preferred establishing a system that would have encouraged economic growth rather than a gold-pegged system. He favored creation of an international central bank and possibly even a world currency. He proposed that the goal of the conference was "to find a common measure, a common standard, a common rule acceptable to each and not irksome to any."
Keynes' ideas were not accepted. The United States, in its leading economic position, preferred the plan offered by its representative, Harry Dexter White. The U.S. position was intended to create and maintain price stability rather than outright economic growth. As a consequence, Third World progress would be achieved through lending and infrastructure investment through the IMF, which was charged with managing trade deficits to avoid currency devaluation.
In joining the IMF, each country was assigned a trade quota to fund the international effort, budgeted originally at $8.8 billion. Disparity among countries was to be managed through a series of borrowings. A country could borrow from the IMF, which would be acting in fact like a central bank.
The Bretton Woods agreement did not include any provisions for creation of reserves. The presumption was that gold production would be sufficient to continue funding growth and that any short term problems could be resolved through the borrowing regimens.
Anticipating a high volume of demand for such lending in reconstruction efforts after World War II, the Bretton Woods attendees formed the IBRD, providing an additional $10 billion to be paid by member nations. As well-intended an idea as it was, the agreements and institutions that grew from Bretton Woods were not adequate for the economic problems of postwar Europe. The United States was experiencing huge trade surplus years while carrying European war debt. U.S. reserves were huge and growing each year.
By 1947, it became clear that the IMF and IBRD were not going to fix the problems of European postwar economic woes. To help address the issue, the United States set up a system to help finance recovery among European countries. The European Recovery Program (better known as the Marshall Plan) was organized to give grants to countries to rebuild. The problems of European nations, according to Secretary of State George Marshall, "are so much greater than her present ability to pay that she must have substantial help or face economic, social, and political deterioration of
a very grave character."
Between 1948 and 1954, the United States gave 16 Western European nations $17 billion in grants. Believing that former enemies Japan and Germany would provide markets for future U.S. exports, policies were enacted to encourage economic growth. During this period, the Cold War became increasingly worse as the arms race continued. The USSR had signed the Bretton Woods agreement, but it refused to join or participate in the IMF.
Thus, the proposed economic reforms turned into part of the struggle between capitalism and Communism on the world stage.
It became increasingly difficult to maintain the peg of the U.S. dollar to $35-per-ounce gold. An open market in gold continued in London, and crises affected the going value of gold. The conflict between the fixed price of gold between central banks at $35 per ounce and open market value depended on the moment. During the Cuban missile crisis, for example, the open market value of gold was $40 per ounce. The mood among U.S. leaders began moving away from belief in the gold standard.
President Lyndon B. Johnson argued in 1967 that:
"The world supply of gold is insufficient to make the present system workable - particularly as the use of the dollar as a reserve currency is essential to create the required international liquidity to sustain world trade and growth."
By 1968, Johnson had enacted a series of measures designed to curtail the outflow of U.S. gold. Even so, on March 17, 1968, a run on gold closed the London Gold Pool permanently. By this time, it had become clear that maintaining the gold standard under the Bretton Woods configuration was no longer practical. Either the monetary system had to change or the gold standard itself would need to be revised.
During this period, the IMF set up Special Drawing Rights (SDRs) for use as trade between countries. The intention was to create a type of paper gold system, while taking pressure off the United States to continue serving as central banker to the world. However, this did not solve the problem; the depletion of U.S. gold reserves continued until 1971. By that time, the U.S. dollar was overvalued in relation to gold reserves. The United States held only 22 percent gold coverage of foreign reserves by that year. SDRs acted as a basket of key national currencies to facilitate the inevitable trade imbalances.
However, Bretton Woods lacked any effective mechanism for checking reserve growth. Only gold and the U.S. asset were considered seriously as reserves, but gold production was lagging. Accordingly, dollar reserves had to expand to make up the difference in lagging gold availability, causing a growing U.S. current account deficit. The solution, it was hoped, would be the SDR.
While these instruments continue to exist, this long-term effectiveness can only be the subject of speculation. Today SDRs make up about 1 percent of IMF members' nongold reserves, and when in 1971 the United States went off the gold standard, Bretton Woods ceased to function as an effective centralized monetary body. In theory, SDRs - used today on a very limited scale of transactions between the IMF and its members - could function as the beginnings of an international currency. But given the widespread use of the U.S. dollar as the peg for so many currencies worldwide, it is unlikely that such a shift to a new direction will occur before circumstances make it the only choice.
The Bretton Woods system collapsed, partially due to economic expansion in excess of the gold standard's funding abilities on the part of the United States and other member nations. However, the problems of currency systems not pegged to gold lead to economic problems far worse.
Addison Wiggin
The Daily Reckoning
Editor's Note: Addison Wiggin is the editorial director and publisher of The Daily Reckoning. Mr. Wiggin is also the author, with Bill Bonner, of the international bestseller Financial Reckoning Day and the upcoming thriller Empire of Debt. Mr. Wiggin is frequent guest on national radio and television programs.
The above essay was taken from Mr. Wiggin's newly-released book, The Demise of the Dollar...and Why It's Great for Your Investments. To order your copy, please see here:
The Most Important $11 You Will Ever Spend...
http://www.amazon.com/exec/obidos/ASIN/0471746010/dailyreckonin-20/
I can't speak to whether it will be the best $11 dollars you will ever spend, but it might be worth looking into, if these types of historical economic issues have interest for you.
Tuesday, November 28, 2006
More Keeping Up with the Joneses
This is a great opinion article written about a recent book that has come out called, "Green with Envy: Why Keeping Up with the Joneses is Keeping Us in Debt". The book examines many different Americans across different walks of life and discovers how they spend money and what motivates them. It appears that for the most part, envy is the culprit. I'm going to have to see if they have this book at the library.
Remodelling to Sell Your Home (Anytime)
My parents have convinced me to remodel two of my bathrooms and they are willing to assist me with the manual labor when they visit for Christmas. This article points out that whenever you remodel a home, you should plan for the future, whenever that may be and the time you will sell your home (or just re-appraise it to remove the extra equity). The article offers many great suggestions on ways to improve your house, or if you are going to buy a house in the future, things to look for, that won't hurt you when you try and sell the house later.
Some of the great suggestions were to have a well-lit front area. Plant a lot of trees, which will save you money, too. Don't cover up your yard with a deck, but make sure you can see your yard with large windows. Use natural materials like stone when doing landscaping, instead of trendy material, which might not be appealing in the future.
Read the article and let me know what you think!
Some of the great suggestions were to have a well-lit front area. Plant a lot of trees, which will save you money, too. Don't cover up your yard with a deck, but make sure you can see your yard with large windows. Use natural materials like stone when doing landscaping, instead of trendy material, which might not be appealing in the future.
Read the article and let me know what you think!
Top 25 Suburbs According To Businessweek
Businessweek has an article rating 25 suburbs as being affordable, safe, have great education and are within easy driving distance of the perks a major metropolitan area can offer. If you are thinking of moving or are currently looking for a job, consider these sites illustrated by a great slide show!
I should probably mention, of course, that Iowa City and Coralville made the list!
I should probably mention, of course, that Iowa City and Coralville made the list!
Holiday Shopping Tips
Doing Christmas shopping can be stressful and expensive. Compound these with overspending and Christmas often loses some of its traditional cheer. An article at Bankrate.com has 10 tips to try and keep spending under control and yet still have a traditional Christmas filled with pleasant memories rather than two aspirin or two Tums.
Tuesday, November 21, 2006
Prepare for the Winter with an Energy Audit
This is a great article at Bankrate.com that goes into some detail on ways to make your home energy efficient and enable you spend less on heating. I think I need to take them up on the idea of the heating blanket for the water heater. I have already used plastic weather sealing for my windows, which makes the house feel warmer already.
If you live in an area where it gets cold in the winter, check out the article to save a few bucks!
If you live in an area where it gets cold in the winter, check out the article to save a few bucks!
New Cashtalk Forum
Cashtalk is launching a discussion forum today. It can be found at the top of the "Links" section. It can be used to start conversations with other users and will be a useful way of searching for topics that are relevant to money, finance, and business. If you would like to post in the forums, the password is "Cashtalk."
Response to "Young People and Debt"; Some Ideas
Hi Kevin,
It's good to hear from you! I'm glad you are taking this seriously and appreciate your interest in debt. From the article you found, you can see that millions of people in the U.S. are in debt.
But let me say this and get it out of the way: all debt is not bad. There. It's out there. It would be hard for most people to buy a house without the use of debt and it is hard for some to attend college without taking student loans. However, the bad debt is that which does not help you earn income or provide shelter over your head, i.e credit cards or other types of soft loans.
When you take out a loan for a house, one of the benefits (besides having a place to live) is that the government helps you by giving you a tax deduction for the interest. This can be beneficial and if you look at specific numbers for yourself, you might find that you actually come out ahead.
Going to college is important, because the average income of a college graduate over a high school graduate is significantly higher. Try $1,100 a week compared to $620 a week; almost double! Going into some debt to obtain this higher degree and thus higher future earnings makes sense.
Credit cards, cars, and other "toys" that people don't really need are where most of the problems lie. The thing that helped me the most was creating a monthly budget. Literally sit down at the beginning of the month and estimate how much each of the categories like food, utilities, rent/mortgage, clothing, gas, etc. will cost you. Use your past experience to guide you. Then create "soft" categories like gift money, entertainment, "having fun", etc. These are the categories that can be pared back if money is tight. Finally, figure out how much you have left over and either invest the difference at a reasonable interest rate or pay off high interest debt.
I used to only use debit cards, because I didn't want the temptation of credit to lure me into using it. Every day I would get offers with "0% interest for 12 months!" and so on. It is easy with these cards to buy things you don't really need. Only the discipline of a monthly budget helped reign in my spending. After about a year, I started using credit cards again, within the constraints of a budget. I made this change because with a lot of credit cards, you can get points that apply to bonuses. Mine in particular is points toward Amazon.com gift cards. Anyway, because I have a budget, I only spend within it and pay off the card at the end of every month.
I can't begin to describe how much freedom this gives you. Most people in my family laugh at my wife and I, because they think we are so restricted, but knowing where every dollar is going before the month even begins is quite liberating and helps you gain a better understanding on ways you can cut corners and save more.
But something tells me you already know most of this, Kevin. You want to take the next step and tell others in an organized fashion and in a way that really helps them make a change in their lives.
Searching the internet for the words "Debt management," "Financial Planning Organizations," "Finance Clubs," etc. does not yield much relevant to your question. It seems to me that there are probably two options at this point. The first, is that you create your own organization with the goals to manage money wisely. You become accountable to each other and read articles on ways to save money and pay off debt. I would be more than willing to lend you a hand by doing research or forwarding articles to you. If you wanted, you would also be welcome to use Ca$htalk, which would also help others who aren't geographically near Calvin College.
The second option stems from the first and specifically relates to the question, "Why do you want to get out of debt?"
People will have different answers to the question. Some don't want the monthly payments, others will want to start investing, others want to buy that boat they've had their eye on and will begin to save for it. Your personal answer to that question will create a goal for yourself. For me, it might be to be able to invest more. So, in order to learn more about that goal and get closer to achieving it, I would look for a club at Calvin where investment is the goal. Bringing up topics like, "How do I invest when I'm xx amount in debt?" would be a good start.
Of course, investment isn't everyone's goal and while Calvin does have an investment club, I'm not sure they have a boating club, especially one that focuses on getting the boat, rather than becoming a better boater. In this case, creating your own club is probably the better option. Please let me know if that is the direction you are heading and I will support you wholeheartedly.
In a way, Ca$htalk was created with the goal of learning more about money and business in order to not fall into traps such as high consumer debt. Posting questions here and even articles that you find interesting that relate specifically to financial management are another way to stay accountable, help others do the same and learn more about the complex world of finance, personal money management, and economics. I try my best to scour the internet and read books on the topics and present those for your information here. I'd also like to try and recruit more experts who have far more experience and knowledge than me to post articles on their own specialties. If you know of anyone who might be interested, let me know and I'll drop them a line.
I hope this long answer helps and thank you again for reading.
It's good to hear from you! I'm glad you are taking this seriously and appreciate your interest in debt. From the article you found, you can see that millions of people in the U.S. are in debt.
But let me say this and get it out of the way: all debt is not bad. There. It's out there. It would be hard for most people to buy a house without the use of debt and it is hard for some to attend college without taking student loans. However, the bad debt is that which does not help you earn income or provide shelter over your head, i.e credit cards or other types of soft loans.
When you take out a loan for a house, one of the benefits (besides having a place to live) is that the government helps you by giving you a tax deduction for the interest. This can be beneficial and if you look at specific numbers for yourself, you might find that you actually come out ahead.
Going to college is important, because the average income of a college graduate over a high school graduate is significantly higher. Try $1,100 a week compared to $620 a week; almost double! Going into some debt to obtain this higher degree and thus higher future earnings makes sense.
Credit cards, cars, and other "toys" that people don't really need are where most of the problems lie. The thing that helped me the most was creating a monthly budget. Literally sit down at the beginning of the month and estimate how much each of the categories like food, utilities, rent/mortgage, clothing, gas, etc. will cost you. Use your past experience to guide you. Then create "soft" categories like gift money, entertainment, "having fun", etc. These are the categories that can be pared back if money is tight. Finally, figure out how much you have left over and either invest the difference at a reasonable interest rate or pay off high interest debt.
I used to only use debit cards, because I didn't want the temptation of credit to lure me into using it. Every day I would get offers with "0% interest for 12 months!" and so on. It is easy with these cards to buy things you don't really need. Only the discipline of a monthly budget helped reign in my spending. After about a year, I started using credit cards again, within the constraints of a budget. I made this change because with a lot of credit cards, you can get points that apply to bonuses. Mine in particular is points toward Amazon.com gift cards. Anyway, because I have a budget, I only spend within it and pay off the card at the end of every month.
I can't begin to describe how much freedom this gives you. Most people in my family laugh at my wife and I, because they think we are so restricted, but knowing where every dollar is going before the month even begins is quite liberating and helps you gain a better understanding on ways you can cut corners and save more.
But something tells me you already know most of this, Kevin. You want to take the next step and tell others in an organized fashion and in a way that really helps them make a change in their lives.
Searching the internet for the words "Debt management," "Financial Planning Organizations," "Finance Clubs," etc. does not yield much relevant to your question. It seems to me that there are probably two options at this point. The first, is that you create your own organization with the goals to manage money wisely. You become accountable to each other and read articles on ways to save money and pay off debt. I would be more than willing to lend you a hand by doing research or forwarding articles to you. If you wanted, you would also be welcome to use Ca$htalk, which would also help others who aren't geographically near Calvin College.
The second option stems from the first and specifically relates to the question, "Why do you want to get out of debt?"
People will have different answers to the question. Some don't want the monthly payments, others will want to start investing, others want to buy that boat they've had their eye on and will begin to save for it. Your personal answer to that question will create a goal for yourself. For me, it might be to be able to invest more. So, in order to learn more about that goal and get closer to achieving it, I would look for a club at Calvin where investment is the goal. Bringing up topics like, "How do I invest when I'm xx amount in debt?" would be a good start.
Of course, investment isn't everyone's goal and while Calvin does have an investment club, I'm not sure they have a boating club, especially one that focuses on getting the boat, rather than becoming a better boater. In this case, creating your own club is probably the better option. Please let me know if that is the direction you are heading and I will support you wholeheartedly.
In a way, Ca$htalk was created with the goal of learning more about money and business in order to not fall into traps such as high consumer debt. Posting questions here and even articles that you find interesting that relate specifically to financial management are another way to stay accountable, help others do the same and learn more about the complex world of finance, personal money management, and economics. I try my best to scour the internet and read books on the topics and present those for your information here. I'd also like to try and recruit more experts who have far more experience and knowledge than me to post articles on their own specialties. If you know of anyone who might be interested, let me know and I'll drop them a line.
I hope this long answer helps and thank you again for reading.
Monday, November 20, 2006
Young people and debt
I read this interesting article in USA Today about Twenty and Thirty somethings and how they are becoming more and more burdened with debt. I wonder if there is some type of program or club that I could start on Calvin's campus to promote awareness about falling into debt. Suggestions?
Thursday, October 26, 2006
What Benefits Some, Hurts Many
I keep getting the feeling that I'm a "shill" for Walter Williams. It's just that the more I read him, the more he makes sense, and the more I want to let people know. His ideas of trade and economics are spot on and should be understood by more, so that the next time tariffs or trade restrictions are discussed, you will know how they impact you and the rest of the United States.
His latest article is about having the United States become totally self-sufficient with regards to spices, cocoa and coffee. His reasoning correctly points out that this is preposterous, but then gives real examples where United States trade policy and protectionism is doing just that. His real life examples include sugar, luggage, and textiles.
I appreciate that he recognizes that these protectionist policies do help some, but then he calculates the overall cost to the U.S. for those few people. An excellent article, that I'm sure will have you thinking twice about free trade.
His latest article is about having the United States become totally self-sufficient with regards to spices, cocoa and coffee. His reasoning correctly points out that this is preposterous, but then gives real examples where United States trade policy and protectionism is doing just that. His real life examples include sugar, luggage, and textiles.
I appreciate that he recognizes that these protectionist policies do help some, but then he calculates the overall cost to the U.S. for those few people. An excellent article, that I'm sure will have you thinking twice about free trade.
Thursday, September 07, 2006
How Mortgage Rates are Set
I just finished reading an article about how fixed-rate mortgages are set. They are based on the 10 year Treasury bonds that are traded in Chicago. The people that fund mortgages (hedge funds, institutional investors and even regular individual investors) use the Treasury rate as a guide and the mortgage interest rates adjust accordingly.
So, as many people believe, the Federal Reserve does not, in fact, have much influence on mortgage rates. They control the supply of cash through fixing an overnight rate that banks use to loan money to other banks.
The most useful take away from the article is how to spot a deal on either a 15-year fixed-rate mortgage or a 30-year fixed-rate mortgage based on where they are trading today.
So, as many people believe, the Federal Reserve does not, in fact, have much influence on mortgage rates. They control the supply of cash through fixing an overnight rate that banks use to loan money to other banks.
The most useful take away from the article is how to spot a deal on either a 15-year fixed-rate mortgage or a 30-year fixed-rate mortgage based on where they are trading today.
Thursday, August 24, 2006
New York Real Estate Negotiation
I came across this article about real estate negotiation (primarily with examples from Manhattan). It has some interesting points, of which I find the most intriguing the idea that you shouldn't (as a buyer) tell your broker what your upper limit is. The article points out that both the buyer's and seller's realtor have a vested interest in a higher selling price.
There are a lot of anecdotes in the article which give it an interesting perspective. Check it out and let me know what you think.
(The article requires free registration with The New York Times)
There are a lot of anecdotes in the article which give it an interesting perspective. Check it out and let me know what you think.
(The article requires free registration with The New York Times)
More Money Saving Tips
Another great article from Bankrate that has 10 tips for saving money, each worth $500 or more a year for a total of $5,000 savings a year if you follow them all. This article had a lot of great ideas and that's why I'm posting it here, so I'll have access to it in the future.
So which one do I like best, but am not currently using? Buying more generic household products like toilet paper, paper towels, plastic cups, etc. The hard part about implementing this one will be trying to convince my wife that the generic toilet paper is the same as the name brand (or at least more economical). Wish me luck!
So which one do I like best, but am not currently using? Buying more generic household products like toilet paper, paper towels, plastic cups, etc. The hard part about implementing this one will be trying to convince my wife that the generic toilet paper is the same as the name brand (or at least more economical). Wish me luck!
Saving Money on Energy and Groceries
If you've read Cashtalk for some time, you know that I'm always on the lookout for good deals. I came across two different articles from different sources today about ways to save money. The first is how to get the most for your dollar at the grocery store. I like the introduction because it says that the very fact that you're buying your dinners at the store, rather than eating out results in financial savings. The article goes further with tips on maximizing your dollars at the store by interviewing different chefs, caterers and cookbook authors on ways they save money when picking up supplies.
The second article was at CNET.com and focuses on ways to eliminate wasteful uses of energy and hopefully decrease your monthly energy bill. According to the article, 10 percent of our energy bills are made up of electronics "invisibly" sucking up energy in standby mode or when we think they aren't "on." However, the bulk of our energy bill is to keep our house at a certain temperature. Going through the audit on this site might help you identify ways to cut that bill a little.
The second article was at CNET.com and focuses on ways to eliminate wasteful uses of energy and hopefully decrease your monthly energy bill. According to the article, 10 percent of our energy bills are made up of electronics "invisibly" sucking up energy in standby mode or when we think they aren't "on." However, the bulk of our energy bill is to keep our house at a certain temperature. Going through the audit on this site might help you identify ways to cut that bill a little.
Does More Money Make You Happier?
I've been spending a lot of time at the Bankrate site because of the possibility of me buying a house. I want to stay on top of interest rates to know what they will most likely be when I decide on a house to purchase.
Anyway, I came across this article about whether or not more money can make you happy. One observation from the article says that going from shear poverty to the middle class can significantly increase happiness, but if you are increasing your yearly income from $100,000 to $100 million a year, the benefits concerning happiness are negligible.
More telling as to whether you are happy with your income or not, is how your neighbors live. The amount of happiness tied to the amount you make is relative to how much the people around you make. If you make more than the people you know, then you will probably be happy, even if you're poor by definition. If you live in Beverly Hills and you are the one making the least, you will most likely be unhappy, even if your income is in the millions.
So when is enough enough? When you reach a point where you realize that making more won't make you happier. If you already the highest earner in your peer group, nothing more will make you happy.
Other interesting observations cited in the article (actually from a Pew Research study) are: Republicans are happier than Democrats, Married people are happier than Unmarried, Churchgoers are happier than non-Churchgoers, and "Sunbelt" residents are happier than people living elsewhere. Contrary findings: Retirees are no happier than workers, and pet owners are no happier than non-pet owners.
So what does "happy" mean? In the Pew study, the respondents could define it however they saw fit. An interesting technique and one that allows a more accurate reading. It recognizes that happiness can be relative, but our own perception of that happiness (and whether we achieve it) is what is compared in the study.
So what is more important than money? According to Bruce Weinstein, after basic needs are met, money and material goods are not what make us happy. Being loved and having meaningful friends and having someone to love are what make people have happy lives.
One important point recognized in the article, too, is that it is not important to be happy all the time. We strive for that, but actually happiness is guided by emotions more than anything. People who try and suppress certain emotions might find it unhealthy. Emotions can guide us and give us appropriate reactions to our environment. If we were happy all the time, then we may miss something that our brain is trying to tell us.
Enough rambling. Check out the article and let me know if you're happy!
Anyway, I came across this article about whether or not more money can make you happy. One observation from the article says that going from shear poverty to the middle class can significantly increase happiness, but if you are increasing your yearly income from $100,000 to $100 million a year, the benefits concerning happiness are negligible.
More telling as to whether you are happy with your income or not, is how your neighbors live. The amount of happiness tied to the amount you make is relative to how much the people around you make. If you make more than the people you know, then you will probably be happy, even if you're poor by definition. If you live in Beverly Hills and you are the one making the least, you will most likely be unhappy, even if your income is in the millions.
So when is enough enough? When you reach a point where you realize that making more won't make you happier. If you already the highest earner in your peer group, nothing more will make you happy.
Other interesting observations cited in the article (actually from a Pew Research study) are: Republicans are happier than Democrats, Married people are happier than Unmarried, Churchgoers are happier than non-Churchgoers, and "Sunbelt" residents are happier than people living elsewhere. Contrary findings: Retirees are no happier than workers, and pet owners are no happier than non-pet owners.
So what does "happy" mean? In the Pew study, the respondents could define it however they saw fit. An interesting technique and one that allows a more accurate reading. It recognizes that happiness can be relative, but our own perception of that happiness (and whether we achieve it) is what is compared in the study.
So what is more important than money? According to Bruce Weinstein, after basic needs are met, money and material goods are not what make us happy. Being loved and having meaningful friends and having someone to love are what make people have happy lives.
One important point recognized in the article, too, is that it is not important to be happy all the time. We strive for that, but actually happiness is guided by emotions more than anything. People who try and suppress certain emotions might find it unhealthy. Emotions can guide us and give us appropriate reactions to our environment. If we were happy all the time, then we may miss something that our brain is trying to tell us.
Enough rambling. Check out the article and let me know if you're happy!
Thursday, August 17, 2006
Buying a Home
It has been more than a month since my last post to Cashtalk. I've started a new job in marketing and have begun looking for a new home. I've never bought a home before and have had to learn what most of you probably already know. What type of mortgage to get? Which bank can give me the best deal? What to look for in a house? Will it be easy to "fix up"? Will there be any problems when I try to resell (in which case, I probably shouldn't buy it in the first place)?
I've looked at probably about 20 houses in this area and before that, I pre-established a limit that I do not (or cannot) want to spend more than. It is certainly a buyer's market. Homes that have been on the market for a few months have reduced their price. Almost every realtor I talk to at open houses always ends the conversation with, "The sellers are motivated. They might be willing to talk about the price or closing costs."
I guess that's great for us, but I don't want to just buy a house because it's a good price. I want to live in a neighborhood that's quiet and has easy access to the amenities that I've grown accustomed to (going downtown, close to a grocery store, being able to go to a park, and close to the local pool for swimming). I don't want a house that is right next to the freeway. I'm not excited about houses that are mirror images of those around them (even though inside they are really, really nice). These tend to be newer houses, which don't often hold their value really well.
So, how did you buy your house? What was important to you when deciding to make an offer? Did you know it was the one when you did buy it? Were you happy with your decision, or did you discover something wrong after you'd already closed? I'd love to hear your stories and learn from them.
I've looked at probably about 20 houses in this area and before that, I pre-established a limit that I do not (or cannot) want to spend more than. It is certainly a buyer's market. Homes that have been on the market for a few months have reduced their price. Almost every realtor I talk to at open houses always ends the conversation with, "The sellers are motivated. They might be willing to talk about the price or closing costs."
I guess that's great for us, but I don't want to just buy a house because it's a good price. I want to live in a neighborhood that's quiet and has easy access to the amenities that I've grown accustomed to (going downtown, close to a grocery store, being able to go to a park, and close to the local pool for swimming). I don't want a house that is right next to the freeway. I'm not excited about houses that are mirror images of those around them (even though inside they are really, really nice). These tend to be newer houses, which don't often hold their value really well.
So, how did you buy your house? What was important to you when deciding to make an offer? Did you know it was the one when you did buy it? Were you happy with your decision, or did you discover something wrong after you'd already closed? I'd love to hear your stories and learn from them.
New Tax Changes: Some Good, Some Bad
Bankrate.com has an article about new tax laws that will mostly take effect in 2007.
I'm most impressed with extending the contribution limits to Roth IRAs. Previously, these limits would have expired in 2010. Now, in 2008, if you qualify, you'll be able to contribute up to $5,000 a year to a Roth IRA. After that, the limits will be adjusted for inflation. That's great news for savers who want to build up a retirement fund from which they won't have to pay taxes when they withdraw (after 59 1/2 of course).
Another provision extended the tax-free distributions from 529 savings accounts (you know, the education funds). This tool was expected to expire in 2010, too, but Congress made them permanent. So if you have children and expect them to attend college, this would be a great way to invest some money and try to keep on top of tuition inflation (currently around 7% a year).
There are 10 distinct changes to the tax code that the bill from Congress addressed. Read the article to see how these could effect you.
I'm most impressed with extending the contribution limits to Roth IRAs. Previously, these limits would have expired in 2010. Now, in 2008, if you qualify, you'll be able to contribute up to $5,000 a year to a Roth IRA. After that, the limits will be adjusted for inflation. That's great news for savers who want to build up a retirement fund from which they won't have to pay taxes when they withdraw (after 59 1/2 of course).
Another provision extended the tax-free distributions from 529 savings accounts (you know, the education funds). This tool was expected to expire in 2010, too, but Congress made them permanent. So if you have children and expect them to attend college, this would be a great way to invest some money and try to keep on top of tuition inflation (currently around 7% a year).
There are 10 distinct changes to the tax code that the bill from Congress addressed. Read the article to see how these could effect you.
Company Social Events: Don't Get Drunk!
I came across this article at Monster.com about how to act during a company social event (you know, parties, Christmas celebrations, dinner at the boss' house, etc.).
One of the most important is: Socialize Outside your Group. Get to know others. Put yourself out there, don't just hang out with the people you work with or feel comfortable with. Who knows, in the future when you apply for a job, they might just remember you being friendly and that could help!
One of the most important is: Socialize Outside your Group. Get to know others. Put yourself out there, don't just hang out with the people you work with or feel comfortable with. Who knows, in the future when you apply for a job, they might just remember you being friendly and that could help!
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