Archives For July 2008

Reader Dave sent me a link to Laura Rowley’s Four Habits of Financially Peaceful People.

The Habits (along with my thoughts on each one):

1. They know exactly where their money goes. I’ll admit that I pay less attention to this now than I used to. But, if my finances were really tight and I had to make changes, I would definitely want to know where every dollar was going.

2. They know what they want their money to do. You have to have goals otherwise you’ll see no point in saving your money. The biggie goal for everyone is retirement. Other goals could be an adequate emergency fund, downpayment for a house, college fund for kids, money for a new car, or anything else that will require a significant chunk of change.

3. They either don’t carry revolving debt, or have a specific plan to pay it down. We paid off our credit cards two years ago and have never looked back. It is SO AWESOME to not have credit card debt! I can’t tell you how good it feels! It’s amazing how quickly you can save up for something when you don’t have to use your money to pay off credit cards.

4. They invest in their job skills, and don’t expand their lifestyles as fast as their salaries. This is really the only way to get ahead financially. You’d be amazed at how quickly you can improve your financial situation when you don’t increase your lifestyle everytime you get a raise. It’s true that you really can spend everything you make if you don’t practice discipline.

So, what are your thoughts about these habits? I think all of these habits are important and I pretty much practice all of them. What about you?

AFM reader, Beth, emailed me a copy of this article she found on Yahoo this morning. You can read the article here. This quote from the article is astounding (emphasis mine):

“We look forward to put in place new authorities to improve confidence and stability in markets,” White House spokesman Tony Fratto said. He said the Federal Housing Administration would begin to put in place new policies “intended to keep more deserving American families in their homes.

“…deserving American families?”

According to Merriam-Webster, the definition of “deserve” is:

transitive verb
: to be worthy of : merit [deserves another chance]
intransitive verb
: to be worthy, fit, or suitable for some reward or requital

This kind of talk drives me nuts! This is all politics.

Here’s some of the provisions of the bill:

The measure includes $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners; $3.9 billion for communities to fix up foreclosed properties causing blight in neighborhoods; and $15 billion in tax cuts, including an expanded low-income housing tax credit and a credit of up to $7,500, to be repaid, for some first-time home buyers.

I’m curious as to how the $3.9 billion for communities to fix up foreclosed properties will be allocated. Someone’s gonna get rich off that deal. I’m also not quite sure what the $7,500 credit (to be repaid) means. Other articles I have read make no mention of the credit having to be repaid.

There’s also no mention of help for struggling homeowners like me who want to add on a master suite and put in a swimming pool. Darn it!

A little Wednesday humor for you.

My son (I won’t name him but I will say he’s my youngest son) tried to make some Kraft EasyMac without water. Here’s how it turned out:


I was sitting at the table and all the sudden I started smelling a burnt smell. The microwave was filled with smoke and made a lovely aroma that filled the entire house. From now on he’ll be stuck making peanut butter and jelly sandwiches. No more “Easy Mac” for him. It’s not good for him anyway. LOL!

Oh, and I’m looking for a lawyer so that I can sue Kraft Foods. It’s all their fault since they didn’t explicitly state that cooking the noodles without water would fill the house with putrid smoke!

I read ($) today that the parent company for Bennigan’s and Steak and Ale have shut down all company-owned locations. It doesn’t surprise me one bit. The last time I went to Bennigan’s it was dirty, the seats had rips in them and the food wasn’t very good. Not a recipe for a successful restaurant. If they can’t keep the main part of the restaurant clean, how am I to expect the food prep area to be clean? Scary thought. My experience with Steak and Ale wasn’t much different.

It’s sad but it was time for these restaurants to say goodnight and close their doors forever.

The article I read did say that franchised Bennigan’s were still opened but who knows for how long. It seems like the franchisees are out of luck.

So far this year the following restaurant chains have filed for bankruptcy (but are trying to remain open):

Vicorp Restaurants’ Bakers Square and Village Inn
Buffets’ Old Country Buffet

Who’s next?

From yesterday’s Wall Street Journal:

Imagine flipping through a jargon-free annuities-offering document.

The day is inching closer when that might be possible.

Industry groups are banding together to present prospective buyers of annuities with streamlined, plain-English descriptions of the basic features and costs of annuities, much like those now offered by some mutual-fund companies. Those shopping for an annuity also may be able to go online and compare the costs and features of one annuity to those of another.

As part of a pilot program, a simplified, 2½-page document is being tested in Iowa and West Virginia. The document was developed by the American Council of Life Insurers, or ACLI, in Washington, in conjunction with the National Association for Variable Annuities, or NAVA, in Reston, Va.; insurance-agent groups; and others in the industry.

Annuity Papers, Please. Hold the Jargon ($)

How much information will be available?

“We want to provide useful information, not an overwhelming amount of information,” says Carl Wilkerson, vice president and chief counsel, securities and litigation at the ACLI [American Council of Life Insurers]. The idea is to help consumers be “better equipped to make apples-to-apples comparisons,” he says.

My question is: if people can actually understand them, will they buy them? LOL! Once they know how expensive they can be, will they still want them? Will brokers be able to sell them once there is no longer a scary prospectus to hide behind? Will the broker’s compensation from the product be readily available?

Let’s face it, the insurance industry loves the complexity of annuities. They are hard to compare to each other and very hard to fully understand. Heck, lots of insurance salesmen don’t even fully understand them.

I’m interested to see how this plays out. Oh, and if anyone has access to the new 2½ page document mentioned in the article, I’d love to see it.

This is unbelievable: ‘Extreme Makeover’ house faces foreclosure.

From the article:

More than 1,800 people showed up to help ABC’s “Extreme Makeover” team demolish a family’s decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.

Three years later, the reality TV show’s most ambitious project at the time has become the latest victim of the foreclosure crisis.

After the Harper family used the two-story home as collateral for a $450,000 loan, it’s set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed.

Wow! They had it all and now are losing it all. According to the article, in addition to the house, which was valued at $450,000, the family received an $250,000 and college scholarships for their kids. So, if I’m understanding this correctly, this couple blew through $700,000 in 3 years.

This is why I didn’t care for “Extreme Makeover.” They gave people way more than they were capable of managing. I realize the show is called “extreme” for a reason but this just seems crazy to me. Wouldn’t it have been just as extreme to build five $90,000 homes for five families instead of one $450,000 home for one family?

They gave this family too much and they just weren’t smart enough to handle it. Sad.

I wonder how the other “Extreme Makeover” families are doing?

Thanks to AFM reader, D.B., for the link.

Check this out: L.A. Wants to Clamp Yearlong Ban on Fast Food.

The ban only affects South L.A.—the “poor side of town.” The goal of the moratorium?

The aim of the yearlong moratorium, which won full support from a City Council committee last week, is to give the city time to try to attract restaurants that serve healthier food.

My question: what good is it going to do if people won’t eat at these places? People eat what they like and what they can afford. Besides, if this area is economically depressed, there’s not going to be a lot of “nice” restaurants that want to risk locating in the area.

Instead of this silliness, why don’t they start a massive education campaign? Teach people how to eat instead of treating them like animals. Pair up with Weight Watchers and educate people on how to evaluate meals based on points, which is quite enlightening.