More Money Blog

I hope everyone had a good holiday with family, friends, and gifts

This time of year most people make new year’s resolutions. For many it is to lose weight, or to make more money. The thing about these resolutions is that most people forget about them a few weeks after the new year. This is sad, I don’t think most people realize that if you really want to change something, you really have to focus on it almost every single day and track your progress.

I rarely make a new year’s resolution, however this year I decided to make a small one. I want to be much better at micromanaging my finances. Whenever I managing or think about my finances, it is always about the big things. I’m always asking myself how I can bring in more money or sell assets off that take too much time to manage. By spending all my time thinging about the big things, I often ignore the small things such as fees and the rate of return I’m getting on my money in the bank. Another examle is paying a little too much for things that I don’t need each month. If I cut things back to where they should be, I could save a substaintal amount of money over time.

Hopefully I will be better at this in the new year. I plan on paying more attention to the small things, without losing sight of the big picture.

That’s about it! If you an interesting new year’s resolution, feel free to comment or write in to us about it.

I have discovered that audio books are a wonderful thing. I seem to never have the time to sit down and actually read a book.  I’m not the fastest reader and it always takes a number of sittings to read an entire book. Luckily, there are audio books where I can download the entire book to my iPod and just listen to it. Plus I can listen to it on my iPod almost anywhere.

One website where you can download a whole bunch of audio books is www.music-clubs.com. You can simply pay once to download whichever book you need, or you can pay a subscription fee to download a number of books. 

This site has over 50,000 audio books in just about every category. Some of the main categories include fiction books, non-fiction books, business / careers / self help books, books for kids, and religion / spirituality books. Basically anything you are looking for you should be able to find.

If you are like me and can never find the time to sit down and read for a few hours, or you spend way too much money buying a hard copy of every good new book, definitely check out this website.

It’s the weekend and their isn’t much going on so I thought I would write a little post about the recent bailout with GM and Chrysler, I’m sure you guys have heard about it by now on the news and it’s a pretty hot topic.

The white house agreed to give GM and Chrysler a total of about $17 billion with a number of strings attached. To me, this just looks like money to survive until Obama gets into office and can provide them with much more money.

There are a lot of different aspects to this problem, however I think the best route is to do some sort of organized bankruptcy. I understand that there are tons of jobs linked to this industry and that a bankruptcy would mean many job losses, much lower car sales, and probably another down leg in the economy. However, it makes no sense to continually give money to a company that is basically already bankrupt and hasn’t been profitable in a long time. Some are saying GM and Chrysler will need around $100 billion to make it through 2009.

I can understand the government working with large and about to fail banks such as Citigroup, but to spend billions on company that just makes cars makes no sense to me. There have been a number of instances in the past were industries have collapsed. It happens and people move on. 

Another frustration that I have with the automakers is that there haven’t been any significant advancements in automotive technology. I think it’s about time that we get a flying car or at least an electric one. How about one that drives itself? How about a decent normal sized and safe car for just a few thousand dollars? The only thing that these companies have done is make cars bigger and more expensive. Take a look at Chrysler.com. On their main page there is a picture of a gigantic mini-van and it says “make your house jealous.” UGH, GIVE ME A BREAK! People should not be driving around miniature houses. Someone needs to make affordable cars that last a very long time and there needs to be a lot more innovation in the automotive industry. I think this can be achieved by allowing these companies to fail and allowing new ones to form.

Consumerist recently posted a very good article about personal finance during a deep recession. Their article includes nine good habits for a deep recession and is definitely worth reading. Here are a few of the key points that I thought were very important:

• Pay off debt
• Know where your money is going
• Eliminate Waste
• Buy smart and used
• Understand your investments

Read the full article here:
http://consumerist.com/5113811/top-9-good-habits-for-a-deep-recession

The collapse of oil and gasoline prices over the past six months has been astonishing. From $150 for a barrel of oil in July, to $39.75 as of writing this post. That is an insane move, especially in just six months. Take a look at this chart:

How low will it go? $20?, $10, Free?  

The past few weeks have been quite good for stocks as they bounced off around 7,000 in the DOW. Volatility in the markets is also declining substantially. Another excellent sign is that the market seems to be largely ignoring negative news and it seems to be having a difficult time staying at low levels during the day.

Here is a one month chart of the DOW. It has rallied substantially from the lows.

Here is a six month chart of volatility. Clearly decreasing after hitting extreme highs.

So does this mean the stock market has bottomed? It’s possible, but nobody knows. The market generally goes back to retest lows before moving higher. It’s also true that historically there is a “Santa Clause” rally around this time of year. So if you are planning on getting back into this market for the long term, I don’t think this would be a good entry point since we are about 20% up from the lows.

I’m sure you’ve heard that phrase hundreds of times. It is often overlooked though. One of the victims of the Bernard Madoff Ponzi scheme, Joyce Greenberg spoke out on CNBC about her loss. 

Joyce Greenberg is a former stock broker and even she was fooled by Madoff’s scheme. This is quite scary and many are placing blame on the SEC for allowing it to go on for so long.

Joyce Greenberg’s advice near the end of the video clip below was to not put all your eggs in one basket. She also said that she thought there was nothing that she could do to prevent herself from becoming a victim. Joyce Greenberg also said that she didn’t “put all her eggs in one basket” and she seemed very calm and much less angry than most of the other victims. 

I have heard a number of other stories where people have lost the majority of their net worth due to Madoff. This is very sad and shouldn’t happen, but when investing almost anything can happen. Some people have to learn this lesson the hard way it seems.

Here is a link to the video:
http://www.cnbc.com/id/15840232?video=967457561 

The U.S. Federal Reserve just cut the key interest rate from 1% to 0 - .25%. This is the first time that they have established a range for the rate and the first time that it has ever been this low.

So what does this mean for you? It means that you will likely earn little to no interest on your bank account balances. Therefore, it would be a wise move to start buying CDs immediately (like now, or before the end of the week). On the other hand, this will take the interest rate down on most other loan products.

The market reacted positively to this news and was up almost 400 points on the DOW (December 16).

Here is a historical chart of the rate, to show how low the rate currently is:

Just thought I would update you guys with some news hot off the press incase you haven’t hear about it yet.

The Treasury Department is contemplating a proposal that would cut mortgage rates for new loans for homes, according to the Wall Street Journal.

The plan would employ Fannie Mae and Freddie Mac to offer mortgages with rates as low as 4.5%, roughly 1% lower than current rates.

The measure is under consideration as part of the Treasury Department’s continued effort to limit foreclosures, which has been at the core of the financial crisis. The plan would seek to revitalize the financial market without bailing out homeowners and lenders, the Journal reported.

http://www.marketwatch.com/news/story/treasury-may-set-mortgage-rates/story.aspx?guid={2997E462-B056-43E3-AF13-70EB82403632}

Spending huge amounts of money on cell phone bills, the latest and greatest iPod, or the top graphics card is almost always a waste in my opinion. Early adopters of new tech toys like cell phones and computers often pay way too much because the product is brand new. In my opinion, the way to have great tech toys is to buy something that is good, but has been out for a while. Sometimes it is hard to resist buying the latest and greatest, but it is well worth it. Here are a few of my favorite and inexpensive tech toys:

AT&T Go Phone – I have a very small AT&T Go Phone. I pay just $25 every 3 months for the service. I don’t talk on the phone often and I don’t like carrying around a big bulky cell phone, so this works well. I don’t really use any of the features on this phone, I just use it to talk.

HP Laptop – HP makes very affordable laptops for the technology that they put into them. I’m not a Mac fan and probably never will be. I think Macs are overpriced and you are paying a lot just to have the Mac brand and style. I also like using Windows since this is pretty much a standard and works well with other computers.

I got a very small (13 inch screen I believe) laptop from HP about a year or two ago that cost $1000. It works very well and I use it whenever I travel. It’s very portable so it isn’t a hassle to lug around, one of the main reasons why I got it. Unfortunately I had to have the motherboard replaced once. I think this might have been because I left it on for too long sometimes while not using it. I should be able to use this laptop for a number of years to come if there aren’t any more significant hardware problems.

Apple iPod Shuffle – I bought one of those tiny iPod shuffles about a year or two ago. It is amazing how small it is. If you haven’t already noticed, I like small tech toys that aren’t a hassle to carry around all over the place, so the shuffle is what I really like. I don’t need a screen on my mp3 player or 50GB of space, so the shuffle is great plus it is very cheap. If you are really into music, I would recommend the $230 iPod touch. It’s just like an iPhone, minus the phone.

Xbox 360 – Yes, I still enjoy playing games I bought this about a year ago for about $200 and still play it often. It’s well worth the money plus the cost of a few good games.

Samsung 23 inch HDTV – I will be honest, this is the one tech toy I couldn’t wait a year or two until the priced dropped. I bought a 23 inch HDTV two years ago when they were fairly new and paid about $700 for it. Now it looks like you can get a similar TV for about $200-$300. I think it was well worth it though. I really enjoy the quality of my TV and have never had even the slightest problem with it.