Archives For August 2008

Seth Godin’s Lost it!

August 29, 2008

Ads are the new tip jars?

Of course Seth’s a marketer so he could have written that post as a way to generate some buzz by ruffling some feathers.

Regardless, ads are NOT tip jars and telling people to click on them just for the hell of it is just stupid.


Here’s why:

That’s the projected path of Gustav. You can click here to see an updated graphic.

FYI – I realize I’m not the only one impacted by hurricanes. I inserted the red dot with the word “Me” next to it in order to give you a frame of reference as to how close my town is to the storm’s projected path.

Anyway, I hope this isn’t a repeat of Rita.

I received an email from a reader this morning with a link to this article: Morris Family’s Plight Shows Flaw in Housing Assistance Program. The reader wanted to know my thoughts and the thoughts of AFM readers.

Legalities aside, would you rent an apartment to the lady in the article? I’m not a landlord, nor am I familiar with all the laws involved in being a landlord. That said, I’m not sure I would make a good landlord as I think I’m too soft on people (yes, I’m a softy even though you wouldn’t know it from some of my posts!).

I like the fact that this lady does at least seem to be trying to get her life back on track. I’m all for that! I think that’s awesome.

One thing the article did not mention was how long this lady would receive the housing assistance. If I was a landlord, I’d want to know that information before I made any decisions. I can imagine trying to evict a renter who can’t pay the rent is expensive.

I did think this law seems a bit ridiculous (emphasis mine):

According to the Legal Services of New Jersey (LSNJ), an independent, non-profit group that helps provide free legal help to low-income residents: “New Jersey law makes it illegal to refuse to rent housing solely because a tenant will pay rent with rental assistance.”

The organization also recommends that individuals receiving subsidies should contact an attorney or the state Division on Civil Rights if a landlord refuses to rent to an individual because of poor credit history or the amount of your income.

ISN’T THAT THE POINT OF A CREDIT HISTORY? If I’m a landlord and someone with a poor credit history comes to me and wants to rent an apartment that I OWN, it should be up to me to decide whether or not I want to take a chance on this person. After all, it is MY PROPERTY that’s at risk here.

Rant aside, I do believe in second chances and this lady does at least seem like she’s straightening her life out. If I were a landlord, I’d consider renting to her.

What about you? What are your thoughts?

FHA Raising Its Premiums

August 28, 2008

Saw this in yesterday’s Wall Street Journal.

Beginning October 1, the FHA’s upfront premium charged to most borrowers will increase to 1.75% from its current 1.5%. The WSJ gave an example that the upfront premium on a $300,000 loan will be $5,250, which is $750 higher than the old premium. The annual premiums will remain at 0.50% to 0.55% of the loan balance.

I found the last part of the article ($) quite interesting as it echoed a lot of the thoughts coming from me and the readers of this blog. Check this out (emphasis mine):

Congress has given the FHA a prime role in backing new, more affordable loans for people who are struggling with their current mortgages. Those refinances are likely to be risky because borrowers who are rescued once often fall behind again later.

Let me repeat that:


This makes perfect sense when you think about it. Think about a kid who constantly gets into trouble and gets bailed out by mommy and daddy—only this time the kid is a borrower and mommy and daddy is the U.S. taxpayer.

It’s time to cut those apron strings.

FYI – If you haven’t yet signed up for a chance to win the latest giveaway, you still have time. Just head over to that post and leave a comment.

I’ll announce the winner tomorrow morning.

Good luck!

One of the things I love about Jeffrey Gitomer’s books* is their simplicity. You can pick up a little book, flip to a page, start reading, and pick up something useful or motivational.

On page 83 of the Little Gold Book of Yes! Attitude* is a list of ten actions a person can take in order squelch a bad attitude:

Be nice. It’s really hard to have a bad attitude while being nice to people. Try it and you’ll see what I mean.

Be kind. I always thought “nice” and “kind” meant the same thing.

Smile. It’s amazing the power of a smile. Just make sure it’s not an evil smile!

Make friends. Remember the worn out saying, “In order to have friends, you must first be a friend. My kids have a hard time understanding that one. We’re working on it.

Say nice things. Along with smiling, saying nice things can really put another person at ease. It’s also very hard to have a bad attitude if you’re saying nice things.

Praise others. I’m not very good at this one. I’m going to practice giving people genuine praise.

Take responsibility. Imagine a workplace where people took responsibility for themselves and their work!

Be proud of your work. Imagine a workplace where people took pride in their work! Who cares if it’s not your dream job. Consider it a stepping stone to your dream job.

Be proud of your accomplishments. This one goes hand-in-hand with the last one.

Don’t worry, be happy. For me this is easier said than done. I’m a worrier. I don’t know why, but I am.

Most people (MYSELF INCLUDED!!!!!) would do well to memorize this list!

Oh, and I want to add one to this list:

Listen to “Summer” by David Sanborn. The song is on his disc “A Change of Heart.” Put it on, turn it up, listen to it, and you will have a change of attitude.

*Affiliate Link

We hear a lot of people calling for increased consumer education when it comes to financial matters in this day and age. Not everyone agrees, though.

Lauren Willis, for instance, an associate professor at Loyola Law School in Los Angeles says that financial education for the masses is not only a waste of time and resources, but it may be dangerous.

At first I was shocked at such a statement. How can education ever be a bad thing? A few ways, apparently:

  • Sellers of financial products would (and do) spend billions drowning out well-meaning messages to consumers from nonprofits or government agencies.
  • Also, financial products and regulations are always changing making it hard for educators to keep up.
  • Teaching the basics is a waste of money. Studies show that sending people to either high school personal-finance classes or adult retirement seminars does not result in better financial behavior.
  • Financial literacy classes give people the illusion that they can successfully manage their finances. So rather than seek help, they end up making worse decisions.

This is very thought-provoking to me. I can understand the argument that financial companies would just try to sell consumers under the guise of a financial education seminar; financial planners and insurance salesmen and stockbrokers do it all the time – and that’s when dealing with relatively savvy and educated consumers.

Also, I can see how it might be a waste of resources in certain circumstances, especially when dealing with older people who already have bad habits ingrained. And then there are some who just can’t or won’t make responsible financial decisions no matter how many times you tell them about how great compound interest is or how important it is to pay your bills on time. Also, many people who need the most help and make the worst decisions are so under-educated and/or have so few resources that financial literacy classes are way over their heads or flat out inapplicable.

For instance, I volunteer for a non-profit and regularly lead personal finance seminars for women who are trying to enter/re-enter the workforce. Last week one middle-aged woman interrupted my speech on how to track spending to ask what she should do since she gets the numbers mixed up. She keeps getting called by the bank because someone is trying to cash a $75,000 check when she meant to write a $750 one, for instance. I was speechless, unprepared to deal with such a basic comprehension problem. If she can’t even keep her digits straight, all this other information is totally and completely useless!

Another lady wanted me to go into my “how to make a budget” example in more detail. She’d just gotten a job in fast food making $6.15 an hour and she works 30 hours a week and she wanted to know how much that meant she’d be making per month; and she wanted to know how to save up the $500 she needed to get off the Salvation Army program. I hardly knew where to start (though I did use her numbers as an example, and it turns out she can afford to save at least $100 a month, if not more).

In any event, sometimes the best financial advice you can give someone is to GET HELP – not to try to turn them into a financial planner. Lauren Willis’ advice is to try to get everyone to understand that the people selling you financial products often don’t have your best interests at heart. “What’s more, politicians need to regulate financial products and make them into things that will benefit consumers, rather than expect education to be the cure-all it is not. Sellers could be required to offer you a default product that is safe. Whenever you applied for a mortgage, for example, you would have to be offered a 30-year fixed amortizing loan.”

In general I’m an advocate of people being responsible for their own decisions rather than turning the government into a giant babysitter. But at the same time I do agree that we can’t expect everybody to be as knowledgeable and diligent about personal finance as those of us reading this blog right now.

More from Meg at The World of Wealth