Black Coffee: My Favorite Blogs, Money News & Opinions #51 (The Control Your Cash Edition)

I’m on vacation, heading to Connecticut to visit the Honeybee’s side of the family and then spending some time checking out the sites in Washington D.C.   Fortunately, Greg McFarlane, co-founder of Control Your Cash, agreed to fill in for me this week – and next week too! – as the guest writer for my Black Coffee column.  Thank you, my friend!

(And for those who are interested, I’ll give a few quick updates over the coming week or two on how my trip is going.  In the meantime, it’s all yours, Greg!)

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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.

In honor of the 64^th anniversary of Larry King’s Bar Mitzvah, it’s a stream of consciousness Black Coffee!

If you like your bloggers prolific – and hey, who doesn’t? – check out the mysterious TWC at The Writer’s Coin….He writes about The 2 Ways of Making More Money – he didn’t include “marry me and get half my fortune”!…Hey-oh!…Then again, after 8 divorces my fortune is only 1/256 of what it should be…My man Jim at Bargaineering showcases a new promotion from Bank of America…Hard to believe these are the same folks who let you open a checking account without asking for ID…You know, because you might be undocumented. But it turns out they’re offering you $75 if you open an account with them now. With almost no strings attached…If you’re going to be in Houston on June 21, kick off summer with a book signing as Greg McFarlane and his lovely coauthor autograph copies of Control Your Cash: Making Money Make Sense…they’ll be on 1560 The Game with Sean and John around 3:00-4:00 Central that afternoon…details to follow here…also, head to the bargain bin where you might find a copy of my 1995 book, How To Talk To Anyone, Anytime, Anywhere (hint: use lots of ellipses)…I loved all 8 of my wives, but boy howdy, that Laura Rowley from Money and Happiness is one hot piece…Did I mention that the Control Your Cash authors will be in Dallas the next day, June 22? Listen for them on The Wells Report with Jon-David Wells on KSKY 660 between 5 pm – 8 pm Central. Again, details to follow…Hard to believe it’s been 157 years since Millard Fillmore was president…That guy was a class act all around…

Alright, it’s impossible to write like that for more than a few paragraphs – or one long poly-paragraph, as the case may be. This week’s guest blogger isn’t a forgetful old man, it’s a relatively young man with a predilection for talking in the third person. Me. Greg McFarlane.  Co-founder of Control Your Cash, a far less polished competitor to LenPenzo dot Com. Len did me the honor of asking me to fill in while he’s on vacation. Hopefully you won’t notice a difference. (Ha!)

Modesty dictates that we not draw attention to our own blog.  Immodesty, however, dictates that we do.  Here’s our recent post on the foolishness of technical analysis and other stock-picking scams.

Alright, now back to the established blogs.  The irrepressible J-Money at Budgets Are Sexy shows how easy it is to do the exact opposite of controlling your cash.  It’s amazing how many people will celebrate their income increasing 10% by increasing their expenses 15%.

Can’t forget Mr. Ning at MoneyNing.  Incredibly, the guy’s name has nothing to do with the Marc Andreesen-founded micro-social network site.  Ning’s actually been a Ning since birth.  Anyhoo, this week he discusses the lost art of repair.  In brief, he argues that we’ve gotten so rich as a society that we don’t even bother to familiarize ourselves with how things operate and attempt to fix them.  Why should we, when it just costs a few bucks more to buy a new one?  (And a few bucks more than that to finance it, or put in on a credit card and just pay the minimum every month?)  The frustrating part is, he’s 100% right.  The one textile skill I can perform is sewing a button, and even that takes me forever.  When I read about people who make their own clothes, I think that’s more impressive than building one’s own nuclear reactor.

Ryan at Cash Money Life explains the difference between Roth and traditional IRAs.  Do you enjoy delayed gratification?  Are you willing to delay being gratified until you’re 59½ years old?  Are you convinced that if the government promises you that your money will grow tax-free for decades, that a completely new government with a new president and new senators and new representatives and new judges will hold itself to those long-ago promises?  I mean, what if there was an economic crisis?  You know, a once-in-a-lifetime thing?  Like, if we all had to band together to avoid financial catastrophe?  (Or would you prefer to just not care about your fellow, less fortunate Americans?)

#sarcasm

Even though he’s no longer active duty, Jeff Rose continues to serve his country admirably.  He runs Good Financial Cents from a frank perspective, this week explaining how a world economy doesn’t mean an economy that’s similar from one end to the other.  Specifically, a Europe hell-bent on social spending and colossal taxes (and their inevitable result, passing the buck – or the euro) doesn’t necessarily predict what’ll happen in a United States economy where people are still largely responsible for forging their own destiny, more or less.  Mostly less, as of late.

Holy jeez, eh?  Our Canadian friends – and there are more than a few – can benefit from reading the latest post at the cleverly titled Canadian Finance Blog.  Nothing gets us excited quite like a recommendation to prepare for the future, even if the future is just a few months away.  Like, say, Christmas.  So while Len is on holiday, take off your runners, put on your track pants, crack open a pop (use a serviette in case of spills), lean back on the chesterfield (or get comfortable, sitting in the washroom), and fit this article into your “shedule”.

(The farther south you live from the 49^th parallel, the less sense that paragraph will make.)

Can you handle one more? PT Money has a post on a topic that cuts embarrassingly close to home.  It was 14 years ago, but few instances make you feel stupider than having a car repossessed.  In a couple of quick moments you go from shock (My car got stolen!) to anger (Are they still around? I’ll freaking kill them!) to powerlessness (Gotta call the police) to inferiority (“Sir, your car wasn’t stolen. It’s at a repossession yard”) to resignation (Well, it was good while it lasted) to more inferiority (Say, can you give me a ride?  Uh…to the bad part of town.  Behind a barbed-wire fence.)  If you’re close to there, don’t get there.  PT Money gives you some hints for maintaining your dignity, if not your car.

Credits and Debits:

Credit: Redbox.  Anyone who thought that video stores would fall victim to online rentals (which would include yours truly) missed something.  Yes, Movie Gallery is out of business and Blockbuster is waiting for the priest to appear with olive oil and a Bible, but Redbox is thriving.  How?  More importantly, why?

Simple answer, greater sales and no overhead.  Redbox’s only customer service is the directions on the kiosk itself. No employees to pay, and no closing hours.  And, for good measure, let’s put as many kiosks as we can next to a place whose very slogan is “billions and billions served” (Redbox’s original owner.)

Average monthly rental for a retail outlet like a Blockbuster?  A few grand.  Average monthly rental for a kiosk?  Less than whatever’s in your wallet right now.  Redbox discovered what top 40 radio discovered years ago, and what In-N-Out discovered around the same time: despite what people tell you, they hate choice.  You won’t find documentaries about the Crimean War or Japanese black-and-white art films at a Redbox.  Instead, you’ll find nothing but hits. Consistently profitable hits.  Redbox  almost can’t help but make money.  Plus, it’s less work if you’re already in the neighborhood to find a Redbox than to order a movie at home.  Fewer buttons to press.  And it costs one lousy dollar.  “MOMMY MOMMY CAN WE RENT A MOVIE CAN WE CAN WE?!”

Redbox is a subsidiary of the immensely profitable Coinstar.  What do both parent and brainchild have in common (aside from being something I’d never use)?

-captive audience

-negligible overhead

-almost pure profit.

Coinstar takes 9.9% for doing nothing.  If you patronize a company that is almost nakedly stealing from you,…well, I hope it’s worth it to you to have kept that 40-gallon water bottle full of pennies.  Until next time.

Debit: Do the exact opposite of everything this guy does, and you should be alright.  He’s Antoine Walker, current deadbeat and former Boston Celtic, Dallas Maverick, Atlanta Hawk, Boston Celtic (reprise), Miami BTU*, Minnesota Timberwolf and Memphis Grizzly.  (Maybe if he’d negotiated more generous moving expenses throughout his career he wouldn’t have his current problem.)

When we refer to Walker as a deadbeat, we’re not talking about a missed child support payment. Think about the most exorbitant waste of money you were ever personally responsible for. Now, take that to the 3^rd power.  Antoine Walker is only 33, and theoretically might still have some basketball left in him.  But he made $110 million in his career, and blew it all and then some.  According to court documents, his net worth is negative $8.4 million.  (Which hearkens to the story, almost certainly apocryphal, of the overextended early-‘90s Donald Trump being accosted by a beggar on the Boardwalk. Beggar: “Help me, I have nothing!” Trump: “Then you’re $900 million richer than me.”)

Credit: Masincedane Sport and its founder, Neil van Schalkwyk, geniuses of complementary marketing.

For a company that doesn’t even appear to have a website, Masincedane Sport sure is making a lot of noise (sorry).  Van Schalkwyk is the South African popularizer of the vuvuzela, the omnipresent horn at the World Cup that creates a noise more annoying than Rosie Perez’s voice crossed with the music of System of a Down. Put 77,000 vuvuzelae together inside a soccer stadium, and the sound is as deafening as it is annoying.  Apparently someone measured it at 127 decibels, which is Saturn V rocket territory.  The solution?  Special vuvuzela-cancelling earphones, now available at novelty stores throughout Cape Town, Johannesburg and Pretoria.  Those earphones are made and manufactured by…you guessed it.

Debit: House Speaker Nancy Pelosi, testing the limits of how bulletproof her seat representing California’s 8^th congressional district is.

In case you missed it, our country is in something of financial peril.  Whether you support Pelosi or don’t, you have to agree that she’s largely responsible for the spending and tax bills that ultimately become law.  (See her job title.)  If there were ever time to see a gesture of fiscal restraint on the part of an elected representative, no matter how cosmetic, now might be the time.

Instead, Madame Speaker moved into new offices.  Offices that cost $18,736 a month. There are 435 representatives.  Pelosi’s new offices are 77% more expensive than the next most expensive offices on the list.  Seeing as that includes every district in the country, you can’t blame it on Bay Area prices.  She’d been in her previous offices for 20 years, which includes her entire tenure as Speaker. You don’t think the revolution’s coming? Marie Antoinette thinks Pelosi is out of touch with the common folk.

By the Numbers:

0: details Len gave to me about his whereabouts this week

58,475: Control Your Cash’s rank on the Amazon list right now.

39,405: Rank it’ll hold if just a few of you click on that link.

14: Its Amazon price, in dollars.

10: Its price if you buy direct from the source, in dollars.

5,000,000: Possible rate of return on that price, as a percentage, if you apply all the wisdom within (results may vary.)

50: percentage chance of Harry Reid, the architect of much of the untenable spending bills making their way through Congress this session, holding onto his seat this November.

The number is courtesy of InTrade, our favorite non-pornographic site.  InTrade – which isn’t compensating us, we just think it’s supercool – is a futures market.

Say there’s an event you want to wager on the likelihood of: the traditional example is a football game or boxing match, but at InTrade it can be almost anything. You can wager on events as arcane as:

-whether the Freedom Tower will open by 2013

-whether someone will drop out of the Eurozone by the end of the year

-whether the highest marginal tax rate will break 40% by the end of Obama’s (first) term

-whether 2019 will be warmer than 2009 (the kind of bet you could easily forget you made)

-whether British Petroleum’s CEO will quit this year

How does InTrade know where to set the payouts? They don’t. You do. People wager on the likelihood of an event, other people wager on the other side, and InTrade sets the number to offset any difference in money wagered between the two sides.

This is great example of the power of cumulative intelligence. And it’s more powerful than any opinion poll could be. It’s the difference between saying to a poll respondent, “Will you vote for Candidate A in the upcoming election?” and saying “Show me how much money you’re willing to put up to say that Candidate A will win the upcoming election.”

25: Number of states north of Canada.

No, that’s not a typo. Check out a map.

3.83: The average percentage rate for a 5/1 adjustable-rate mortgage this week.

3.83: Your IQ (to the nearest hundredth) if you go for one of these.

100: Number of extra basis points you should pay and get a standard, fixed, 30-year mortgage. (What’s a basis point? If you don’t know, there’s a detailed explanation on p. 178 of Control Your Cash, available in fine bookstores everywhere.)

Other Useless News

If you think Len’s choice of a guest host was a worse idea than having Gary Cherone sing for Van Halen, let him know at Len@LenPenzo.com.  Or you can email me at Greg@ControlYourCash.com.  Be as filthy as you want.

Follow Len on Twitter. And don’t forget to subscribe to his RSS feed.

(The CYC Twitter feed is here. The RSS feed is here.)

*What do you call an individual member of the Heat? We figured it’s either BTU or Calorie.