How Does $1.2 Billion Vanish?

Have any of you been following the MF Global debacle? I have. At least what I have read in the Wall Street Journal (the latest here). It’s simply unbelievable. How does $1.2 billion in customer funds vanish? These are customer funds, mind you.

As I understand it (if I’m wrong, please correct me), these customer funds are no different from a customer brokerage account at say Merrill Lynch or Charles Schwab. So, it would be like going to check your account balance one day and your account being empty.

I’m not sure why John Corzine and the other executives are not behind bars right now. He and the other executives at MF Global should at least be required to sell all their possessions and put that money towards what they stole from their clients. That would go a lot further than Corzine’s “contrite” attitude about the whole deal.

Ten for Tuesday, January 31, 2012

1. Tax Breaks that Expired in 2012

Write-offs for sales/state income tax has expired. That means those with state income taxes have to pay tax on that money twice?


2. Stop Buying Stuff & Refurbish Things

Interesting ways to re-use old things. For the author, it serves two purposes: saving money and allowing her to have “new” stuff when that spending money urge strikes


3. I Was in a Facebook Fist-Fight

Who knew extended warranties on cell phones were a controversial topic? “People think there is a 50% chance of them damaging their phone when, in all actuality, it’s closer to 5%.”


4. Credit is Not the Enemy – You Are

Best quote: “People need to stop placing the blame on others, including credit issuers, and recognize that they are their own worst enemy.”


5. 3 Rules for Hitting the Target

“Plan one month at a time.” – Breaking a larger goal into smaller ones has definitely helped us stay on track. 


6. Get Your Children Off to the Best Financial Start

A few good tips for teaching kids to save money.


7. Five Reasons to Give Up Goal Setting

Should you give up setting goals?


8. Additive vs. Multiplicative Thinking About Money

This isn’t the most practice article, but it is an interesting article on the way we think about money.


9. 10 Ways to Protect Your Financial and Personal Information When Shopping Online

Best tip: “Don’t click on links when you don’t know the source of the email, social media message or e-card.” If you’re not sure, don’t click it!


10. Why Aren’t People Applying for Mortgages

With mortgage rates so low right now, an interesting article about why people still aren’t applying for mortgages.

A Little Tuesday Morning Inspiration from Tyler Perry

I saw this on Tyler Perry’s facebook page this morning and thought I’d share it with you.

Hey everybody!

This morning I woke and was so frustrated about all the stuff I’m dealing with, trying to get this studio open. I was about to open my mouth and start complaining when I remembered something that happened to me about a year ago.

I was walking to my car and this woman who looked to be homeless started walking towards me. I’m ashamed to say this but I thought, “I don’t feel like being hustled today.” Then I got quickly convicted. I felt guilty so I started digging in my pocket for some money. As she got closer I noticed that she had the kindest eyes that I had ever seen. As I was reaching into my pocket she started to speak. I thought, “Here goes the sales pitch”. She said “Excuse me sir, I need some shoes”. Can you help me? My eyes filled with water because I remember being out on the streets and having only one pair of run over shoes. I was taken aback for a second.

I took her inside the studio and had my wardrobe people find shoes in her size. As she put the shoes on she started crying, praising God and thanking Jesus, and saying, “My feet are off the ground! My feet are off the ground!” Several of the wardrobe people started crying. I was crying. But I never forgot that, “My feet are off the ground!”

I thought, “Wow! All she wanted was some shoes.” She quickly disappeared and never asked me for a dime. I realized that I still had the money in my hand so I went out looking for her. She was gone just that quick so I looked all around the neighborhood for her. I found her standing on a corner looking down at her shoes still crying. I was so touched I asked her how she had gotten homeless. She told me that she had AIDS and that she was waiting to get into a shelter. She said that her family had turned their backs on her and she had nowhere to go and that God would make a way for her. I said to myself, “He just did.” Her faith and her praise moved me.

I took her to a nearby hotel and put her up until she was able to get on her feet. I had someone that worked for me to check on her from time to time and make sure that she had food and clothes. After about a month or so we lost touch but I never forgot her.

This past summer I was shooting “Daddy’s Little Girls” and this woman walks up to me smiling. I didn’t recognize her face but her eyes were familiar. She had on a really nice dress and her hair was done. It was her! She told me that the little help that I had given her changed her life. She was in a house now and doing very well.

I said all of that to say this. After I met this woman, every time I think about complaining and mumbling I remember, “My feet are off the ground!”

I wanted to share this with you just to let you know that when I say that I am thankful for you, I really mean it. And when I say that you are a blessing to me, I mean it. We take so much for granted sometimes that I just wanted all of you to know that I am grateful to God for you everyday.

Thank you for being in my life,


by Tyler Perry on March 21, 2007.

Refund Anticipation Loans

The Statue of Liberty - best tax preparation mascot ever?

Every day on the way home, we pass the Liberty Tax Statue of Liberty waving at us. I never have quite figured out why the Statue of Liberty wants me to do my taxes, but I get the idea that they want me to come in and find out.

The last time we passed them, though, I saw this sign:


This sounds like bad idea on so many levels. I tried very hard to think of a situation in which this could be considered a good idea.  I even called our local Liberty Tax branch to get some details about the offer.

In order to represent them fairly, I want to make it clear that I do not think this is an evil company, nor do I think they are in any way running a scam or anything improper. But I do believe that they wouldn’t loan money to people if they weren’t making a profit from it, and I definitely do not think this is in the best interest of their customers.

When I spoke with the representative at Liberty Tax, I asked her what the terms of the loan are. She informed me that they don’t directly offer the loan or qualify people for it – it’s done through Republic Bank & Trust.  That means the terms will vary depending on the specific circumstances of the customer. I have to believe that people who are trying to qualify for this type of loan don’t have the best credit scores, so I’m sure the interest rates are high. (Based on some of the research I’ve done, it’s possible to see rates up to 500%!) Every person who qualifies can receive a loan of up to $1,500, and the amount is paid back when their tax return refund comes in.

The only positive note I could find in the whole thing is that you can’t qualify until after your taxes are calculated.  At least theoretically, the customer would know how much their refund will be before they decide whether to apply for a loan.

I specifically asked the representative if they recommended these types of loans. She didn’t really answer that question, but simply said she would do what the customer wanted.

Debt is bad. Debt based on the anticipation of having a lot of money come in “soon” is really bad. It’s so tempting, though, to take the easy way out.

Here’s two reasons this is a bad idea:

You’re choosing to have a small amount of money right now instead of a larger amount of money later.

We’re a society that wants instant gratification. We don’t want to wait for anything. Some of it is because we’re greedy: We want our money – and the stuff we can buy with our money – RIGHT NOW. Some of it is because we’re scared: Maybe we are afraid there’s a bill we can’t pay, and this seems like the best – or easiest – way to pay it. But if you wait, you can do more with your money later than you’ll be able to do with it right now.  In order to receive this type of loan, here are some examples of the fees and charges you’ll be expected to pay (rough numbers):

Tax preparation fee: Around $200 (according to

eFiling fee: Usually around $25 (according to TuboTax)

Loan origination fee: Usually around $32 (according to Wikipedia)

Interest (assuming a rate of 20%): $50 (20% is a very generous estimate according to CRL)

So you’re spending $307 to receive your money a couple of weeks early. Is it worth it?

Let me say that again: it’s YOUR MONEY, but you’re paying someone else to give it to you. That does not make sense on any level.


When you go into debt, though, you are giving away control of your finances and part of your life.

When you borrow the money initially, it is subject to someone else’s terms – they decide how much money they will give you, when they will give it to you, how much interest you have to pay back. When your refund finally does come in, it’s not yours to do with what you want. You have to give it back to the people you borrowed it from in the first place. Even the Bible tells us, “The borrower is slave to the lender.”

Here’s an important “grown up financial lesson” to learn: Even when it feels harder in some ways, being in control of your own life and finances brings more freedom and security than handing it over to someone else.

So what would you say to someone who was considering getting one of these loans? Is there anything you could say that would change the mind of someone who had already decided to get one of these loans?

Haven’t We Been Down This Road Before?

I read this last Friday in the WSJ: The Loan Quota Rule

For the latest example of regulatory overreach, look no further than the Department of Housing and Urban Development, which is pushing through a rule to support racial loan quotas a few months before the Supreme Court will rule on whether that’s legal. The Obama Administration’s “fair housing” agenda, apparently, just can’t wait.

At issue is the 1968 Fair Housing Act, which prohibits discrimination “because of race, color, religion, sex, handicap, familial status, or national origin” (our italics). The language clearly implies an intent to discriminate. But courts have brushed the pesky text aside over the years, citing language in other 1960s-era statutes that allows the use of “disparate impact” analysis, which doesn’t require intent and relies instead on statistical data about lending outcomes over larger populations of borrowers.

That prohibition against discrimination is not the same thing as quotas. I’m all for fair lending standards. If a person qualifies for a mortgage based on finances, then they should be able to get the loan. However, I am 100% against giving them a loan in order to meet some sort of racial quota regardless of whether or not they can afford the loan. It seems as though we have been down this road before.


Could This Be the Future of the Restaurant Business

I read this in a Thomas Friedman piece I read this morning. I know I complain about the quality of service I receive at most places, but I’m not sure I’m ready to here…

Last April, Annie Lowrey of Slate wrote about a start-up called “E la Carte” that is out to shrink the need for waiters and waitresses: The company “has produced a kind of souped-up iPad that lets you order and pay right at your table. The brainchild of a bunch of M.I.T. engineers, the nifty invention, known as the Presto, might be found at a restaurant near you soon. … You select what you want to eat and add items to a cart. Depending on the restaurant’s preferences, the console could show you nutritional information, ingredients lists and photographs. You can make special requests, like ‘dressing on the side’ or ‘quintuple bacon.’ When you’re done, the order zings over to the kitchen, and the Presto tells you how long it will take for your items to come out. … Bored with your companions? Play games on the machine. When you’re through with your meal, you pay on the console, splitting the bill item by item if you wish and paying however you want. And you can have your receipt e-mailed to you. … Each console goes for $100 per month. If a restaurant serves meals eight hours a day, seven days a week, it works out to 42 cents per hour per table — making the Presto cheaper than even the very cheapest waiter.”


Interesting Breakdown of Warren Buffett’s Secretary’s Tax and Salary

Saw this on Forbes:

Warren Buffett’s Secretary Likely Makes Between $200,000 And $500,000/Year

Not sure how accurate the author’s numbers are. I’m fairly certain that those who are using tax rates for effect, are probably including payroll taxes. If that’s the case, his numbers are off.

One thing I find amusing about Buffett and his tax situation is that he’s the boss and he COULD pay himself a much larger salary and pay the income taxes on it accordingly. He doesn’t do that, though. Oh, and if he really did desire to pay more taxes, he could always write the IRS a check. My respect for Warren has soured over the last few years.