It’s time to sit back, relax and enjoy a little joe…
Blogs I’ve Been Following This Week
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance. Here’s what caught my attention over the past week…
I’m back from my Las Vegas trip and I’m still financially solvent! As an added bonus, while I was in Sin City I had the pleasure of meeting and spending some time with Greg McFarlane and Betty Kincaid, the authors of Control Your Cash: Making Money Make Sense. I’ll be reviewing the book in the coming weeks, but let me just say it is terrific.
Now let’s get right to this week’s posts:
Deliver Away Debt – O-M-G. Jeff has created an absolute masterpiece here with his post entitled The Mega Money Tip List – 600 Money Saving Tips. How did he come up with 600 tips? Well, he rummaged through all 96 personal finance blogs that are members of the Yakezie and hand-selected his favorite article. It only took me 89 hours to read everybody’s article – but now I am so financially savvy I’m feel like I’m finally ready to teach Ben Bernanke how to run the Fed.
Green Panda Treehouse - In this guest post, MD writes about his best financial moves in college. I have to admit, and just between you and me, I was originally attracted to MD’s post because I though he was sharing his “best moves” in college. I was hoping to score a few bonus points with the Honeybee this evening, if you know what I mean. Hopefully I can still press a few of her hot buttons by sharing a couple of MD’s money tips. (sigh)
Debt Free Adventure – Matt wrote this interesting post on one way to get out of debt – act wealthy! Then again, maybe you’ll want to reconsider that advice if your wealthy role model got that way by being a bit on the hyperfrugal side, like the chap Matt features in his article. (Hmm, my spell check is having a cow. Is hyperfrugal a word? Maybe I should have just said “cheap.”)
Barbara Friedberg Personal Finance - Even though Barb is in the middle of a blogger chick catfight, she had time today to write about the secret to cutting your debt – IMMEDIATELY. (Hey, she’s the one who is yelling there, not me.)
Buy Like Buffett – Meanwhile, Mark asks us to consider how much money we need to be rich. After cruising his blog, I’ve decided I really like this guy. It turns out Mark (who looks a lot like Chris Rock, if you ask me – check out his pic!) has a goal of saving $1 billion dollars. I know what you’re thinking. But, Len, a billion dollars? There are maybe a handful of people in the world who can expect to be able to save a billion dollars over their lifetime. Over a lifetime? Puh-leaze. Mark plans on doing it in 25 years. That’s my man!
Christian Common Cents – Attention K-Mart shoppers – free stuff on aisle 7. Well, almost. It’s free if you can win a contest. Derek recently paid off the last of his non-mortgage debt ($28,000 in 10 months!) and is celebrating with a book giveaway – so check it out and enter, would ya?
Bible Money Matters - Over at Peter’s site, Jason Price shows us how to choose a mutual fund. I found his article a bit disconcerting though because Jason didn’t mention my preferred method: shopping for fund companies on Craig’s List. (What?)
Mint – My gal, the Silicon Valley Blogger wrote a nice piece on how you can get rich with good financial habits. And, no, I didn’t feature this because she was kind enough to include one of my articles in her story. (But it didn’t hurt.)
Control Your Cash – I’ll take Current Events for $1000, Alex… Okay – but don’t call me Alex. How many times could you fill the world’s largest supertanker with the oil that’s spilled since the Deepwater Horizon disaster began? Greg and Betty give the BP oil disaster some much-needed perspective. (They also give you the surprising answer to that question.)
Monevator – Meanwhile, on the other side of the pond, the Investor gives his two cents on whether he thinks BP shares are worth buying right now.
Out of Your Rut – In his article on how to get fit for free, Kevin sagely notes, “Here’s a fundamental fitness reality: before there was exercise equipment, there was plain, old exercise.” Heck, I never even heard of “exercise” until I read Kevin’s article, where he shares tips on how to be fitter than a fifth grader without spending a lot of moolah.
Wealth Pilgrim – Finally, the Car Negotiation Coach wrote a guest post highlighting tips for how to maximize your credit card rewards points. I wonder why my suggestion wasn’t on the list though: Buy lots of stuff on your credit card! That’ll help maximize your points. (Just make sure you pay off the card in full at the end of each month.)
The Way-Back Machine: Past Posts Of Mine You May Have Missed
From June 2009:
The 4 Biggest Ways to Stretch Your Income – Life is only as expensive as we make it. In fact, many people might be surprised to find out that they could uncover some truly significant savings if they even implemented just one of these four valuable tips.
Credits and Debits
Debit: Nassim Taleb, professor and author of the bestselling book “The Black Swan,” says that debt is spreading “like a cancer” and the economic situation is worse today than it was two years ago. According to Taleb, President Obama has been unable to pull the right levers. Taleb notes that his $780 billion stimulus program was a failure – unemployment did not return to 8 percent, as promised – and a second round of government spending would also be futile.
Credit: “It’s not that they make mistakes, it’s that they almost get nothing right,” Taleb told CNBC regarding the Obama administration’s attempts to fix the economy. “Don’t give a junkie more drugs, don’t give a debt junkie more debt.”
Debit: Speaking of getting nothing right, Congress and the Obama administration are plowing ahead with their plans to allow the Bush tax cuts to expire on Jan 1, 2011. Art Laffer writes in the Wall Street Journal that the decision to raise taxes – in the middle of a severe recession, no less – will cause an economic catastrophe in 2011:
“On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush’s tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero… Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there’s always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere. Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be… In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe “double dip” recession.”
Credit: More from Laffer: “In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn’t take effect until Jan. 1, 1983. Reagan’s delayed tax cuts were the mirror image of President Barack Obama’s delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%. But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don’t work until they take effect.”
Debit: Laffer concludes with this ominous warning: “Mr. Obama’s experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011. The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain’t seen nothing yet.” I agree completely. This economy is being badly mismanaged and the tax increases will only exacerbate the problem.
By the Numbers
Some data from my recent trip to Las Vegas, for those of you who might be wondering how things went…
$300 My gambling bankroll. (In other words, this is the amount I had budgeted to lose gambling.)
0 The number of royal flushes I had playing video poker.
6:5 The odds that the downtown Las Vegas casinos were paying for blackjacks at single- and double-deck tables. What a scam.
7 The number of times I got a blackjack. I estimate I played about 125 hands.
$50 The most money I won on a single hand of blackjack. (With the dealer showing a 6, I doubled down with a 7 and 4. Got a face card for 21. The dealer busted.)
$10 The price of the Golden Nugget breakfast buffet.
4 My rating for the Golden Nugget breakfast buffet (on a scale of 0 to 10). For the love of God, stay away from the eggs Benedict.
1 The number of ghosts my cousin Mark encountered in his room at the Golden Nugget – oh yes he did! (If you’re feeling adventurous, ask for Room 412 in the Gold Tower.)
$115 Net gambling loss for the trip. Most of it lost playing blackjack. (Can’t complain though – I managed to keep 62% of my bankroll!)
Letters, I Get Letters
This week’s letter comes courtesy of Julie from Iowa, who wrote in to share a lesson in “Tooth Fairy Economics”:
“The tooth fairy article cited in Black Coffee reminded me of a discussion I had with my five-year-old son a couple of days ago. I had some major dental surgery yesterday which involved removing teeth. Yuk. In preparation for this event, my little Eric informed me that the tooth fairy was going to visit and leave me money!!! for my teeth. Little did he know he was going to get a lesson in Tooth Fairy Economics. I hope he learned that A) you get two sets of teeth; B) the tooth fairy only pays out for the first set, and C) if you lose the second set, you have to pay the tooth fairy. What I want to know is how much dental floss could I have purchased for $250 per molar and $140 per canine/bicuspid (what I had to pay the tooth fairy before they would even take me back to the OR). But I got Vicodin, so it doesn’t seem so bad. If I added up all the dental work my parents or I paid out of pocket since I was 11 (when I got braces), I could have bought a relatively nice car, or had a down payment for a modest house. Or I could have remodeled my kitchen, with granite and stainless. The lesson here is that when the dentist asks if you floss, it is not a rhetorical question. I’d say that the tooth fairy is making a killer profit.”
Great observation, Julie! (By the way, I think I feel a tooth ache coming on. Can I, um, bum a couple Vicodin off you?)
If you have a question you’d like to ask, or a comment you’d like to make regarding some of my irritating opinions, please feel free to drop me an e-mail at: Len@LenPenzo.com
I’ll feature the most interesting question or comment I get each week here on Black Coffee – assuming I get one, that is.
If you’re lucky enough to be the only question in the mail bag I’ll highlight your letter, whether it’s interesting or not.
Other Useless News
Here are the states with the readers who were most likely to leave Len Penzo dot Com after reading only one article (over the past 30 day period)…
Hmmm. Looks like I need to find out why I am boring my friends so badly in South Dakota – not one person from there managed to click on a second page here over the past thirty days. Oh well, my poor showing with them doesn’t change my opinion of that great state. I think South Dakota is extremely beautiful and a great vacation destination. The Black Hills and Custer State Park are absolutely gorgeous! I’ve taken my family there on vacation and they absolutely loved it. I plan on going back soon too.
This week I had articles featured at the following carnivals: