After the House voted against the bailout today markets have basically blown up. Our retirement portfolios are down over a thousand dollars in one day.
I am not totally sure how I feel about the bailout. On the one hand I don’t want my tax dollars bailing out companies that made poor financial decisions. On the other hand, not helping out those same banks could have terrible ramifications for credit markets in coming years.
If I had to guess, I wouldn’t expect to see a turnaround in the financial markets until at least the end of 2010, if not later. There are too many negative factors facing our economy. The question is how does this affect my investment plans. Common wisdom says to ignore market fluctuations and invest for the long term. But my gut says that there’s a better way to invest than the mutual funds that I’m in. I might have to stop with the passive strategies and take up active investing by picking my own stocks, but I’m not sure I’m ready for the time commitment that will take.
Another concern for me is my job, which is with a major bank. Luckily it’s one of the more stable ones, but then again everyone thought Enron was doing great until they weren’t. Hopefully the news in the coming days is a little better than today’s news.
With all of the bailouts happening it really makes me wonder what else that money could be used for. Luckily The Consumerist has done the homework for me so I don’t need to do the research.
But hey, at least we don’t have socialists for politicians, right?
Last week I made a very non-frugal purchase. In case you didn’t guess, I bought the wonderful camera pictured here, the Canon Digital Rebel XSi. I have been wanting to buy a digital SLR for well over a year now, and have waited due to our debt situation. But now all of our debt is paid down except for a small student loan and a 0% credit card. I get paid every two weeks, which means I get paid three times in October. So instead of doing something responsible like pay off more debt or build up our emergency fund, I bought a camera.
My wife and I have a trip down to Big Sur coming up in a few weeks, which is why I decided to buy it a little earlier than I should have. This is the first time in a few years that I can take advantage of the 30 day grace period on one of my credit cards since it’s now at a $0 balance (well it was for a few days anyways).
Was it the smartest choice? Probably not. But with the amount of hiking we do, and with the holidays coming up I should be able to get a lot of enjoyment using it. And hopefully I can get some better pictures coming through on this blog. And honestly, I’m pretty darn excited to get it. The only thing I slightly bothers me about making the purchase is that I am now lusting after a few high-priced lenses.
So there it is. I will be a slave to money and to my job for a little while longer. But at least I will be taking some rad pictures while waiting for that time to come.
Something that has intrigued me for a long time has been the idea of speed reading. It is alluring to think I could knock out a 300 page book in a few hours or be able to quickly cover massive amounts of news every day. I have read a few articles on the subject here and there, but have never really felt like speed reading was meant for comprehension. But working on this blog has made me realize that being able to process more information quicker would be advantageous, so I am looking for solutions to learn, and to see if speed reading really works.
I found a link to a free online pdf file written by Paul Edwards on non-fiction reading strategies on the Personal MBA website. The article suggests that reading a 300 page book in six to eight hours is doable by following the techniques outlined. I am going to attempt to use these techniques and see how they work. I’ll follow up in a few weeks and let everyone know how it goes.
the McCain health plan would treat employer-paid health benefits as income that employees would have to pay taxes on
So much for cutting taxes. And later in the article:
The whole idea of the McCain plan is to get families out of employer-paid health coverage and into the health insurance marketplace, where naked competition is supposed to take care of all ills
We’ve seen lately how well the free market works when regulation is weak, and there’s no doubt regulation would be weak in the healthcare sector.
Tonight it was announced that the U.S. government will bailout A.I.G. for the bargain price of $85 billion dollars. Add this to the $29 billion for the Bear Stearns bailout and $25 billion (or more) for Fannie Mae and Freddie Mac. Now we’re talking $139 billion dollars that the government is paying out to companies who made poor financial choices and put the United States economy on the line.
Your taxes are not going down
McCain and Obama both like to advocate lower taxes, but the more the government spends the less likely it is that either of them can hold true to their promises. Keep in mind that the government can tax you indirectly through seigniorage, aka the inflation tax. It costs the federal reserve almost nothing to print new money, which the government can then use to pay their debt. But surprise! Printing new money means the money in your pocket is now less valuable than it was before.
So by printing out money and under-reporting inflation the government can take your money right out from under you.
Privatize the profits, socialize the losses
Politicians advocate a free market on the way up, but when things turn sour it is almost guaranteed that they will rush in to help on the way down to prevent stock holders from losing too much money. Of course they are selective in who they bailout. Generally the riskier a company is the more likely it is to be bailed out.
I am a believer in free markets, but if the government is going to step in when things go wrong they need to put regulations in place to limit the tax payer liability when the market goes bust. The saddest part is that money going towards corporate bailouts is money that could go towards helping people who really need the money like those without healthcare.
Times are rough, and we are seeing drastic changes to the financial infrastructure of the U.S. Now is the time to pay off any debt you have, whether it’s credit card, autos, or a mortgage. If you don’t have a liquid emergency fund with a few month’s salary cushion then it’s time to build one up. Only then would I recommend trying to invest money in the stock market, and even then I am not sure I would recommend it.
Keep an eye on what’s going on in the news. There are more failures coming for sure. Washington Mutual is likely to be next, and who knows what’s going to happen in 2009. I still believe that things will get a lot worse before they get better.
Seeing even a glimpse of what life is like in Africa really makes me feel fortunate to live comfortably where I do.
I have seen the website Global Rich List Before where you can put in your salary and see how you stack up against the rest of the world (I’m in the top 0.95% of the richest people in the world), but it’s really hard to put that into perspective. Watching this movie changed that.
Think about what life would be like without running water or without a toilet. Imagine having to cook every meal you made from scratch. Worse, imagine not being able to eat whenever you wanted and having to go days without food. Imagine what it would be like to not have electricity. These are just a few of the things we take for granted that others around the world do not have.
On the other hand, it was interesting to see how the three men brought to the U.S. handled their new jobs. Although they were happy to work and to be able to send money to their friends back in Africa, they complained about feeling ‘alone’ since they no longer saw their friends whenever they wanted. It made me see a little more of the trade-off between money and your life, and how tricky it can be to balance those two things.
It’s a great movie. If you use Netflix I highly recommend adding it to your queue.
This weekend my wife and I finally made it out to our local farmer’s market. It was fun to walk around and check out the stands, although there wasn’t much to see. A few observations I made.
First, the prices were not as cheap as I thought they would be, and in some cases the prices were higher than at the local Whole Foods. I brought along a small notebook to record the prices we paid for everything. I am going to compare what’s cheap and what’s not so we can focus on buying the cheaper stuff there.
Second, the quality of the fruits and vegetables was very high. This is probably due to the fact that everything was grown locally, so it was fresh and in season. The quality of the food partly makes up for the prices paid, although if something is in season it is likely to be cheap at the grocery store as well.
Last, and something that will make it worth going back every week, was coupons for Whole Foods. Someone was handing out $5 off $25 and gave us two. This is 20% off a $50 purchase, not too shabby. Coupled with finding things on sale, we managed to get a lot of food for a pretty good price.
Overall it was a fun trip for the morning, and definitely something we will try to do every weekend going forward.
As of today my wife’s student loan and credit card are both paid off. Next week I will pay off the first of my credit cards, leaving us with my student loan and a credit card at 0% interest. It is a great feeling to be hitting these milestones.
We are still using the debt snowball method to pay off our debt which has been great for keeping the motivation up. We are also fans of the debt snowflake, which has helped pay off our debt much faster than we originally thought by putting extra money towards paying off debt.
It looks like the Corn Refiners Association is starting to fight back against the slew of bad press that high fructose corn syrup has gotten over the past few years. This, coupled with high corn prices thanks to the push for corn-based ethanol, has put a serious dent in the consumption of high fructose corn syrup based foods. I don’t watch much television, but I managed to catch two of their ads this weekend.
And the second ad:
First off, I wouldn’t go out of my way to tell someone how to eat or how they should feed their children (except for now of course, but hey, you could stop reading right now if you wanted). But in my opinion high fructose corn syrup is something to stay away from.
In case you ever find yourself in this situation, here are a few of the problems associated with high fructose corn syrup:
1. High fructose corn syrupdoes not trigger the “I’m full” response in our body. Think about the last time someone baked cookies or brownies and you ate too many. Did you feel sick afterwords? That is your body telling you that too much sugar is bad for you. But how often do you feel like that after drinking a huge amount of high fructose corn syrup sweetened soda or eating a ton of Oreos? From The Seattle Times:
Fructose adds to overeating because it does not trigger chemical messengers that tell the brain the stomach is full and no longer hungry, like food and drinks that contain regular refined sugar do.
So besides the fact that sugar is bad for you, consuming foods sweetened with hfcs does not actually satisfy a sweet tooth the same way sugar does.
2. It is generally found only in the United States, where excessive lobbying has decreased the cost of corn to an artificial low, and the tariffs on sugar has increased the cost of sugar for food producers.
3. It is not “all natural.” All natural implies that you could go outside and find it. High fructose corn syrup is a processed food, and is thus unnatural.
The use of synthetic fixing agents in the enzyme preparation, which is then used to produce HFCS, would not be consistent with our (…) policy regarding the use of the term ‘natural’
Again, not my business what parents do, but I wouldn’t want my children eating excessive amounts of processed foods.
4. High fructose corn syrup is everywhere. The amount of products that use high fructose corn syrup is staggering. A partial list can be found over at the Accidental Hedonist website. It’s interesting to see how many foods that are not considered ’sweet’ have high fructose corn syrup in them, probably as a perservative. Wheat Thins, Salad Dressing, and Oscar Myers Lunchables are standouts for having hidden sugar content.
Both commercials use the line “fine in moderation,” but thanks to high fructose corn syrup being so ubiquitous it’s easy for the average shopper to consume too much,.
I think the majority of the backlash against high fructose corn syrup isn’t necessarily due to it being unhealthy for you (although thats part of it). The backlash comes from the fact that consumers are given little choice in whether they consume it or not. In situations where you do have a choice, such as natural sugar sodas, the all-natural sugar alternative tends to be more expensive.
How does this affect you?
What you eat fuels your body and affects your health. Health care costs keep getting higher and form a significant portion of most senior’s budgets, so it makes sense to eat a healthy diet now to save money later. Food expenses also tend to be a significant part of most family’s budgets, so it’s important to make smart choices when you shop. Cutting out processed foods, sugary sodas, and candies is an easy way to save money.
If you have kids keeping them away from excessive amounts of sugar should be common sense, whether it comes from corn or if it comes from sugar cane.
If you’re interested in learning a little bit more about high fructose corn syrup, here are a few links to check out:
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