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The Penner Awards: The 10 Craziest Money Blunders of 2010

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As 2010 comes to a close, I think it is only appropriate that I share my picks for the ten dumbest money stories of the past year, highlighting some of the most dumbfounding displays of numismatical naivete and financial ineptitude known to man. That's right, folks.   Welcome to the inaugural edition of the Penner awards!   Ba-da-bing! Now I know what you're thinking: Hey, Len, so why on earth should you be the one to give out such a prestigious award? Well, as I see it, I have two very good reasons: 1) I've made plenty of stupid money mistakes myself over the years; and 2) It's that barren no-man's land between Christmas and New Year's Day where precious readers are few and far between, and so I'm really desperate for any angle right now that might bring in an extra pair of eyeballs or two.   (So please tell your friends all about this piece, would ya?) Now let's give out some Penners! 1. The Bucket List Blunder Recipient: Dave Ismay Background: The 64-year-old comedian wasn't amused after being told by his doctor that he had an incurable liver disease and only three months to live. Undaunted, he prepared a bucket list and was well on the way to spending his life savings -- including a $40,500 Mercedes -- when 10 weeks later he got the news that the original terminal diagnosis was in error and that his condition was treatable.   Oops. The Moral of the Story: Always be sure to get a second opinion before spending your life savings. 2. The Curse of the Cursed Money Curse (or Something Like That) Recipients: Laura Santini, Rose Santini, an unnamed woman from Park Ridge, Illinois, and an unnamed couple from South Holland, Illinois Background: A mother-and-daughter fortune telling team were arrested after allegedly convincing two, well, to be kind let's just say "unwitting," parties to turn over a combined total of more than $100,000 because their money was supposedly cursed.   The fortune tellers promised that they would "cleanse" the money and then return it.   Instead, they allegedly absconded with the cash and took off to Scottsdale, Arizona.   Imagine that. The Moral of the Story: P.T. Barnum was right. 3. The $10 Million Dollar Man (Not) Recipient: Nick Martin Background: Man inherits $10 million (after taxes) and immediately goes on a spending binge -- for the next ten years.   Today, at age 59, he is now essentially broke and on the verge of bankruptcy. The Moral of the Story: Apparently, ten million dollars doesn't go as far as it used to. 4. And You Thought Government Pensions Were the Bomb Recipients: Robert Rizzo, Randy Adams, Angela Spaccia, Oscar Hernandez, et al. Background: This past summer, in a stunning example of government corruption run amok, the Los Angeles Times revealed that Rizzo was drawing a salary of $800,000 per year as the city manager of tiny Bell, California -- a 2.5 square mile town in Los Angeles County.   The Times also found that Adams was earning $457,000 per year as the police chief, and Spaccia almost $400,000 as the assistant city manager.     Even the city council members were generously paid, with most members earning $100,000 per year for the part-time positions. The Moral of the Story: In a democracy, people get the government they deserve. 5. The IRS Finally Puts "Passenger 57" on Hiatus Recipient: Wesley Snipes Background: After being convicted in 2008 for federal tax evasion, Snipes finally began his three-year prison sentence.     The actor failed to pay any income taxes for a decade, including $38 million in income earned between 1999 and 2004 alone. The Moral of the Story: You can protest the federal income tax law all you want but, if you're smart, you'll still pay up. 6. The Man Who Gambled On His Life -- and Lost Recipient: Jon Matthews Background: After being diagnosed with mesothelioma in April 2006 and told he would be dead by the end of the year, Matthews placed a $160 wager with a British bookie that he would still be alive in June of 2008.   He made it and, at 50-1 odds, won $8000.   Matthews then made another $160 wager, with the same odds, that he'd live to see June 2009.   He did, winning another $8000 in the process.   Feeling pretty good about himself, Matthews then decided to press his luck with another $160 bet -- this time with odds of 100-1 -- that would net him a cool $16,000 assuming he could make it to June 2010.   Unfortunately for Matthews, he died a month short of the payoff date. The Moral of the Story: Kenny Rogers wasn't kidding when he said "you've got to know when to fold 'em." 7. One Focked Up Movie Recipients: Everybody and anybody who was stupid enough to buy a movie ticket to see Little Fockers Background: My father-in-law, Tony, warned us that the movie reviews for Little Fockers were terrible.   Did the Honeybee and I listen to his sage advice?   Nooooooooo!   After plucking down a pretty penny at the theater, we got to see for ourselves that Little Fockers was, indeed, an absolute and embarrassing stink bomb.   At press time, Rotten Tomatoes' tomatometer for Little Fockers was only at 11 percent.   Eleven percent!   In hindsight it's all so obvious; a movie franchise usually jumps the shark by the second sequel anyway.   I think movie reviewer Matt Brunson said it best when he noted that, "Enough is enough. This franchise has run its course and made its millions, but now it's time for it to fock off."   Amen, brother. The Moral of the Story: When it comes to movie reviews, never doubt the tomatometer -- or your father-in-law.   Never. 8. Creative Ways to Lose Your Life Savings (Part 1) Recipient: An unnamed 68 year old man from Southend, Essex, Britain Background: A man lost approximately $120,000 when he placed it on the roof of his car and then drove off.   The man used to keep the money under his bed, but eventually decided the car was more secure.   According to the man, "We found some of the small bags empty in the street, so it’s pretty certain someone found it. I don’t hold out much hope of getting it back."   Heh.   Ya think? The Moral of the Story: It's official.   Storing your life savings under the bed is definitely much safer than keeping it on the roof of your car -- especially if you plan on driving anywhere. 9. Creative Ways to Lose Your Life Savings (Part 2) Recipients: An unnamed elderly couple from Melbourne, Australia Background: A man sewed his life savings of approximately $90,000 into the lining of an old suitcase, but didn't tell his wife.   His wife ultimately donated the suitcase to a Salvation Army store.   By the time the husband found out what happened, the suitcase was already sold.     Thankfully, most of the money was eventually recovered. The Moral of the Story: It never pays to keep secrets from the wife.     Just sayin'. 10. The $1500 Wiener Wager Recipient: Colin Moffatt Background: This past May, Moffatt lost a $1500 bet after his friend successfully downed 450 hot dogs in a single month.   For the record, his friend ended up spending about $400 on hot dogs and buns. The Moral of the Story: It's probably safe to say Moffatt didn't relish paying the money but, hey, a bet is a bet. ...

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Why Baseball’s Jayson Werth Is Worth $126 Million (and You’re Not)

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This is a guest post from my good friend, Mr. Credit Card, from www.askmrcreditcard.com.   For the past three years, his Philadelphia Phillies have been the nemesis of my beloved Los Angeles Dodgers. I certainly feel we can learn a lot from how baseball teams run their franchises and how they develop, buy, and trade players, and then apply that to our financial lives. The Rumors and Free Agent Market - Baseball season is over and fans and aficionados are now eagerly watching the free agent market to see which players go where and who buys who.   There are several top free agents in the market, but I want to highlight two in particular. Firstly, Jayson Werth, who is the right outfielder for the Phillies the last three years is a free agent this season.   Actually, he was a free agent until he signed a $126 million, 7-year contract with the Washington Nationals earlier this month.   As the top right-handed outfielder in the free agency market this year, folks justifiably expected him to demand top wages and a fat contract, and he got it.   As a point of reference, Matt Holiday landed a seven-year, $120 million contract the Cardinals last off season. Cliff Lee is also another huge free agent in the market this year.   He was acquired by the Phillies in 2009, but was traded this past season because it was perceived he wanted to test the free market! He moved to the Seattle Mariners and was later traded to the Texas Rangers before the trade deadline this year.   He was obviously a big factor in the Rangers charge to the World Series. Over the past three seasons, Lee was 48-25 with a 2.98 ERA, 17 complete games in 93 starts, five shutouts, 667 1/3 innings pitched, a 1.122 WHIP. Lee is 7-2 with a 2.13 ERA, three complete games in 10 starts in the post season. Although Werth is now off the market, baseball clubs still have to make a decision as to whether or not to bid for Cliff Lee and, if so, what they're willing to pay him.   As I eagerly watch the free agent season play out, I can't help but see the parallel between the financial decisions baseball clubs make and personal finance decisions us fans make.   Here's my take. Never Settle For Being Average - Because Top Guys Get Paid A Lot More - Some of you might be astounded by the numbers that Werth and Lee can command. Well, that is reality folks. The top guys in any industry, whether it is the CEO, company founders, music artist, make a heck of a lot more than the average Joe in the same industry. The top hedge fund owners with billions under asset management take home a lot more than the small ones with a "couple of hundred million in assets."   Likewise, top music artists rake in a lot more than than average ones, and the top movie superstars make lots more than their supporting cast mates and even the people actually producing the films!   Yes, that's life. Open a pizza shop in your neighborhood and you are still an employee for yourself and making employee wages! Open a few more stores, and your rewards go up!   Franchise your restaurant nationwide and you will become a really wealthy -- and if the world world likes your product, then the gap between your wealth and that of the common folks widens to astronomical levels. So never settle being second best.   Always strive to be the best in your work, your career because the rewards for moving up the ladder are exponential indeed. Live Within Your Means - From the players, let's move back to the baseball organizations.   Yes, Jayson Werth got a huge contract.   So why didn't my Phillies sign him?   It's because they already have a $146 million payroll.   Even they need to "budget" just like the rest of us.   If they signed Werth, they would almost certainly have had to sell or trade a highly paid player to make room for Werth's salary. On the other hand, the Pittsburgh Pirates are not exactly an elite team.   In fact, their payroll was only $36 million for 2010.   Contrast that to the New York Yankees ($200 million) and there is a vast gap in their resources.   Since the Pirates are certainly not playoff contenders, they have to settle for much less if they want to operate with their finances in the black. The bottom line here is, whether we are millionaires, a billionaires or thousandaires, we all have to live within our means because, unlike the federal government, we cannot print money! Always Consider Long Terms Costs And Obligations - There is always considerable debate as to how long a contract any club should offer a free agent.   Lee and Werth are obviously valuable now, but the big question is will they still be good players down the road. In our own personal finance lives, we have to consider long-term expenses as well.   For example, trying to decide how big a house can we afford.   Even if we can "afford" one based on our "present income", bear in mind that our "future income" may not be the same.   It could be lower! This is not to say you should not take on any long term financial obligations. But you have to make sure you are getting great value out of it and not overpay for these items. There Are Different Paths For Different People - The Yankees are the biggest franchise in baseball.   Their huge fan base allows them to get even bigger, spend more on very good free agents and keep winning.   Their strategy has always been to be the biggest franchise. This is the same strategy followed by other big sports club like the Los Angeles Lakers and Manchester United. The Yankees do not mind paying up for a free agent because they dislike trading their farm system. Compare them to the Pittsburgh Pirates, who are obviously not a household name.   For them, being the best baseball team and having the largest franchise is not realistic.   So their approach on free agents is different from high-payroll teams like the Yankees and Phillies.     Since the Pirates cannot afford top-tier talent they rely almost soley on their farm system. We as individuals also have to plan our personal finances around our goals, objectives and means.   For instance, should we open a joint account? Should we save our money or use it to pay down debt? How much should we put aside for retirement?   No one can answer those questions for us; we have to do what is right for us.   For example, some people can afford the annual fees and perhaps benefit from carrying an American Express Platinum or a Chase Sapphire credit card, while other folks may simply choose not to carry one at all because it might lead to overspending and credit card debt. Be Creative And Seek Value - The Phillies didn't decide to sign Werth to a long term contract, but they can still be creative and perhaps find a way to offload another player like Raul Ibanez, and then   rely on Ben Francisco and Dominic Brown to platoon right field. We face similar decisions in our financial lives as well.   Which house should we buy?   Which car should we buy?   Should our kids go to public or private school?   If money is no object, then there is no decision to make, but for most people money is a constraint, so we have to prioritize and decide which choice provides the most value. Treat Your Household Finances As A Business - When a baseball player gets traded against his will, or if a club does not want to renew his contract, he usually says "it's only business."   Yes, it is business; a baseball organization has to do what is right for the franchise.   It is the same with our household personal finances.   We have to approach them like a general manager of a baseball club. We need to plan ahead and make decisions that are right for our individual situation. ...

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Consumer Alert: Qualia Free Coffee E-mail is a Scam

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Any time I get an email offering me a free anything just for clicking on a link, I get suspicious. I know.   I'm just paranoid that way, but it usually saves me a lot of heartache down the road. Not five minutes ago I got an email from "J" who sent me a free coffee from Qualia coffee courtesy of "The Home Run Team."   All I had to do was click on the link! The first flag was that I never even heard of Qualia coffee.   The second flag was the guy (or gal) who supposedly sent me the email had an email address that I didn't recognize. So I instantly googled "Qualia Home Run scam" and I discovered that, guess what?   It's essentially a scam! Whatever you do, please don't click on the link or you'll be started down a process that ultimately ends up launching a program that contacts every member in your email address book with the same slimy deal - and that's really no way to treat your friends, people.   You'll also be asked to give your credit card number.   (Why would you need to do that for a free coffee?) I'll spare you the dirty details, but the bottom line is you should just stay away from this "deal" -- whether you might ultimately end up with a free coffee or not. If you're interested in reading a little more on this topic, click on this helpful link: What's the Deal with Home Run? We now return you to our regularly scheduled program... ...

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The 5 Worst Jobs For Teenagers

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With summer here, schools are now on hiatus for vacation in most places around the country and teenagers are scurrying to find temporary jobs to earn some extra money. With that in mind, some parents may be interested to know that the National Consumers League (NCL) has once again selected their Five Worst Teen Jobs that teenagers are advised to avoid at all possible costs. With the help of the Child Labor Coalition, the League bases its rankings on government statistics, reports from state labor officials and news accounts of injuries and deaths. Parents living in the heartland of America may be particularly interested to know that an agriculture job tops the list for the third consecutive year. According to the League, here are the Five Worst Teen Jobs: 5. Landscaping, grounds keeping and lawn service 4. Door-to-door sales 3. Driving forklifts, tractors and ATVs 2. Construction, especially at heights 1. Crop harvesting Just how dangerous are these jobs? Well, according to the NCL: "... (in the US) a worker under 18 dies every ten days. In 2006, there were an estimated 52,600 work-related injuries and illnesses among youth 15 to 17 years of age requiring treatment in hospital emergency departments -- that’s a hospital visit every 10 minutes for a teen worker." By the way, the League also took the liberty of including a "Bonus Worst Teen Job" this year. Their dubious selection for this category was "working in illegal meatpacking plants." Call me crazy, but doesn't this selection fall squarely into the duh! category? Of course, this got me to thinking. I would be doing my readers a disservice if I failed to include several other "Bonus Worst Teen Jobs" of my own (obvious as they may be) that I believe the NCL has egregiously managed to overlook. And so, parents, it is probably best if your teens also stay away from these extremely dangerous summer jobs as well: - Tornado Storm Chaser Intern - Police Explorer Cadet: Bomb Squad Division - Apprentice line-cook for Chef Gordon Ramsey I'm sure I'm overlooking a few others. Let me know if you think of anything else. In the meantime continue to encourage your kids to look for a summer job. Just make sure they stay away from the local meatpacking plant. If you liked this article, please be sure to subscribe to my RSS feed! ...

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Inflation: Why You Should Fear It, And Why The US Wants It

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Ronald Reagan accurately warned us in 1984 to be vigilant against inflation because it can come, "like a thief in the night to rob our savings, rob our earnings, and take the bread off our tables." For this reason, the government is usually on guard against the threat of inflation.   In the simplest terms, this is normally done by controlling the amount of money in circulation.   It's really a matter of supply and demand.   If everybody has more money in their pocket to spend, then too much money chases too few goods and the currency becomes devalued.     This, in turn, drives up the cost of everything from gasoline and furniture to food and the price of a ticket to Disneyland. President Obama's proposed budgets over the next two years call for spending on an unprecedented scale.   His proposed budget has a funding shortfall of almost three trillion dollars over the next two years, an amount equal to a staggering 12% of the entire US gross domestic product and twice the size of the worst deficits on record.   Indeed, President Obama's own budget people are predicting budget deficits during his time in office to exceed that of all the other presidents combined from George Washington. So, Len, just how does the government plan on paying for all of this? In essence, the government has two choices, massive tax increases or high inflation.     Naturally, the government is going to take the political path of least resistance. Indeed, in order to pay its massive bills the United States will have no choice but to abandon its commitment to fight inflation and ramp up the output of the Treasury printing presses.     This, of course, will end up flooding the economy with trillions of additional dollars that will not only drive up the prices of goods and services, but also punish fiscally responsible individuals by diluting the value of their dollar-denominated savings and retirement accounts. Simply put, inflation is taxation without representation. Alan Schram uses the example of a man earning 5% on his savings account, who ends up in exactly the same financial position whether he pays 100% tax on his interest income with zero inflation, or zero income taxes with 5% inflation.  And Schram correctly observes that if Congress tried to pass a 100% tax on anything, the public would be marching on the Capitol steps with pitchforks and torches. The US government's unfettered spending plan is clearly unsustainable with respect to current taxation rates.   But instead of suffering the consequences that would come with overtly increasing the taxes necessary to support these insane budgets and associated bailouts, Congress will be content with letting inflation do its dirty work.   For that reason I believe inflation rates exceeding those seen during the mid to late 1970s are inevitable. If you liked this article, please be sure to subscribe to my RSS feed. ...

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