Category Archives: finance

Do You Track Your Net Worth?

FMF asks the question, and asks why you do/don’t and how often.  My opinion is that you can’t accurately track your financial progress as a whole without a grasp of how to measure your net worth.

Like him, I used to look at mine pretty regularly, but now I check it once, maybe twice a month.  With the market of late, I’ve become almost afraid to.  I use Yodlee to keep everything in one place, and here’s what I look for as a barometer:

  • Is a large one-day or other short-term market swing significantly affecting my net worth?  If so, I try to factor that into my observations.  Just a simple check of my portfolio balances.
  • Are my floor and ceiling both rising? —  There are always fluctuations during the pay cycles where your bank accounts crest and trough.  I feel good if both the low-end and high-end of my net worth’s range are inching higher every month.  Hell, just paying the mortgage should give you a slight upward tickas you build equity.
  • Any recent big expenses?:  I just paid the car insurance, which always suppresses you a bit in the short term.  I don’t make many big-ticket purchases, but a car repair or like-sized expense should be taken into consideration.

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The VP Debate in 50 Words or Less

The format of the debate essentially rendered it batting practice:  straightforward questioning without any curveballs or hard sliders.  Five-o’clock fastballs that allow anybody with a base level of skill to make contact, but no opportunities for a career major-leaguer to flex their abilities.  Or a rookie to strike out.

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End of the Credit Line

Paul Krugman with a sobering assessment of consumer behavior in the wake of the credit crunch.  The simple assumption is that consumers that previously leaned on rising home values to tap equity are now, as those credit lines dry up, leaning on their credit cards.  Which means they’ll be overextending themselves in (at least) two areas now.  What also probably isn’t realized by many of them is that credit card companies will be reacting to the credit crisis by raising interest rates.

The a lesson in here, as well a larger looming danger.  The lesson is to keep in mind that in all of the finger-pointing surrounding the bailout bill and the mortgage crisis, lawmakers will be loathe to admit that the American consumer played a large part in this.  Lots of people willfully and knowingly entered into mortgages they couldn’t afford, and as this piece shows, there are a lot of subscribers to lifestyle inflation who still aren’t able to rein it in and tighten up.  I imagine some have dug too deep a hole to simply climb out by cutting back.

The danger is that all of this is percolating on the outset of the Christmas season, meaning shoppers will have to pull back their spending, leading to a bad holiday retail season, leading to further economic woes.

Drink, anyone?

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The Credit Crisis in Real Time

Just curious, and an informal and highly unscientific survey here:  has anybody else noticed a steep decline or complete shutdown of credit card offers in the mail over, say, the last week or so?  I probably averaged about four or five a week, but they’ve dried up entirely.  Granted, small sample period.

I’m curious to see what other credit offers stop appearing.  I used to get the following pretty regularly:

  • HELOC’s or home equity loans — several month from multiple sources
  • Offers to “skip” a payment on my car loan.  I get them every other month but I’d imagine this will stop for awhile.
  • Pre-approved car loan offers.  A few a month.  Would love to see them disappear.
  • No interest/no payment for umpteen year offers from retailers.  Lowe’s and Best Buy in particular.  I bet these keep coming, as too much of their business model depends on big-ticket purchases.

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The Genesis of the Credit Crisis

A very good article here from Newsweek about how the birth and evolution of the financial instruments that got us into the bailout mess.  Especially useful as a primer on Credit Default Swaps.  Election-year politics have begun to sneak into some of the coverage of the mortgage meltdown, especially in pundit-heavy havens such as talk radio, and to a lesser degree the cable news programs.  This piece illustrates that at the core of the problem are (mostly) well-intended financial products that ballooned way out of control. 

On a side note, I switched my Newsweek subscription to Time a few years back because I felt the quality of Newsweek had gone downhill with an increasing tendency to lean on pop-culture items.  Perhaps an election year and a major crisis has been good for them, in that there’s been a noticeable uptick in substance of late.  Fareed Zakariah’s work in particular is always good.

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Filed under 2008 Election, finance

Tie goes to the (front)runner

Okay, it’s roughly midnight and I’m trying to erase all memory of tonight’s Georgia game, so let’s discuss last night’s presidential debate.  If you’re remotely familiar with SEC football you’ll excuse all spelling and grammatical areas at this time.  I’ll correct them in the morning.

So…the debate.

My brass tacks take on Friday’s debate is that if you went in with a preference towards one of the candidates, you probably think that candidate won.  McCain fans probably think McCain edged out a victory, and Obama supporters likely think the same about their guy.  No major punches seem to have been landed by either side, and more importantly no major gaffes were made as well.

There were things worth noting.  I thought McCain, on the whole, looked better than he had in most of his recent campaign events.  He got off to a sluggish start but seemed to kick into gear after about 20 minutes, and if you watched him sleepwalk through some of his recent rallys you had to consider this an improvement.  That being said, he seemingly refused to engage Obama at all during the debate, to such degree that he wouldn’t even make eye contact with the man.  I felt it came off as petty at best, and somewhat dismissive and disrespectful to boot.  NBC’s split screen caught him on numerous occasions doing his own version of the sigh that buried Al Gore.  In McCain’s case though, it was more akin to an angry glare towards his own lectern, occasionally punctuated by a weird grin.

Obama came across as very composed, and managed to seem measured and professorial without edging towards aloof or haughty.  He was more forceful than I’m used to seeing him, but tempered it with moments where he pointed out his agreement with McCain.  This probably provides some ammo for the McCain campaign, but nothing major.  I was surprised with how well he fared on foreign policy — if this debate was a litmus test for his chops in this area, he handled it adeptly.

On  the economy, both hedged, and somewhat understandably.  Pressed on the bailout package, neither was keen on giving a detailed or authoritative response that would pigeonhole them in on a position.  I can’t fault either since, as Obama noted early, they’re still waiting on the specific language to emerge from the proposal.  That having been said, I have one major issue with how they addressed the economy.  Both candidates, cognizant of a financial crisis and aware that some form of bailout will occur, have not been forthright enough in adjusting their fiscal plans to accommodate what is known:  that a massive expenditure is coming down the pike.

Yeah, I get that the specifics aren’t in yet.  But as I noted earlier, McCain and Obama have to understand that the tax plans and pet projects that each lined out prior to the Wall Street meltdown will have to be adjusted, or scrapped, or otherwise altered to fit our new economic reality.  Pressed on this matter, Obama mentioned clumsily that he’d have to back burner some of his plans, but then laid out a laundry list of spending programs he’d like to implement.  It was not one of his better moments.  McCain handled this only slightly better in that he didn’t answer a question about cutbacks with a wishlist of expenditures.  But his obsession with earmarks is becoming comical, especially given that his running mate has asked for plenty and supported the earmark poster child, the Bridge to Nowhere.  But even if that wasn’t the case, earmarks are a relative pittance of the federal budget — eliminating them looks great as a matter of principle, but does little actual good in the way of spending. 

The bottom line is this:  we are entering a new economic reality as a result of the mortagage crisis.  The next president will not be able to afford the sort of tax relief or tax breaks that they would like to implement, and on top of that will have to make difficult cutbacks in areas that aren’t necessarily politically palatable.  I would appreciate if one or both would start being upfront and honest about that.  I realize I’m a crazy person for suggesting such a thing.

Like I said, you could probably argue that either or neither candidate won.  My feeling is that if McCain didn’t gain any real ground, then in effect he lost a little.  In other words, Obama held serve, and in doing so eliminated any remaining doubts about legitimacy — if he proved anything, it’s that it is ludicrous to suggest he didn’t belong on that stage with McCain.

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An Actual Thing You Can Buy: Designer Baby Clothes

Hey, look, I’m not trying to start a culture war here.  I realize I just went after designer purse rentals, and after this I’ll turn my attention back to affordable absurd items for a while, such as pre-made pb&j’s.

But it’s hard not to comment when you get an email that tips you off to the kids section of eluxury.com.  Granted, a website called eluxury.com is sort of fish in a barrell for me, but considering that I have a child and was not aware that you could spend $130 for a onesie, I thought it was worth the mention.

The following explanation is more for people that don’t have kids — parents, nod along.  A onesie is an article of clothing that your newborn or infant will wear for about eight weeks.  Maybe twelve, if yours is a slow grower.  It will be stained the first time it is worn, by any of a number of fluids or materials.  It will be spit up on, puked on (nonparents, there is a difference), spilled on, drooled on, leaked on, and so on.  Does that sound like the sort of thing you’d go over $20 on?

Hey, no need to bronze them, I guess

Hey, no need to bronze them, I guess

There’s also $175 sneakers for your bundle of joy, mostly notable because in a size 0-6 months, there’s no chance your child will ever walk in them, or even stand upright for that matter.  Thanks again, Baby Dior.  At least you’re less than half the price of a $550 Fendi Bottle Carrier, which is exactly what you think it is.

Moms, your child is not your guest room.  Don’t decorate it as such.  Dads, here’s the thing you have to keep in mind.  If you start your daughter off with $130 outfits and $175 shoes, how much is her wedding going to cost you?

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