It's time to sit back, relax and enjoy a little joe ...
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.
Let's get right to it this week ...
Continue reading Black Coffee: Kabuki Theater and Ever-Optimistic Markets
Black Coffee: Doggie Bags, Burger King, and Bogus Bucks
It's time to sit back, relax and enjoy a little joe ...
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.
Let's get right to it this week ...
Continue reading Black Coffee: Doggie Bags, Burger King, and Bogus Bucks
Black Coffee: Um, Would You Like Fries with That?
It's time to sit back, relax and enjoy a little joe ...
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.
I just got back from a business trip to Boston, so I've got an espresso edition of Black Coffee for you this week. I know what you're thinking but, ounce for ounce, I promise it packs the same punch as the regular fare -- or your money back.
I love visiting Boston, especially in springtime. It is one of America's great cities and, I've been there more than two dozen times now. Needless to say, because Boston has an extremely rich history, there is a lot of stuff to see and do. My favorite section of Boston is the North End, which is the city's Italian enclave and home of Paul Revere.
What? You didn't know Paul Revere was Italian?
All joking aside, I usually can't leave Boston without making at least one trip to the North End for a taste of the authentic Italian cuisine there.
Okay, time to get to it. Off we go ...
Credits and Debits
Debit: I see some fast food workers across America walked off the job last Thursday. A fry-cook spokesman for a group in Oakland deadpanned that his unskilled entry-level position is worth $15 per hour. Heh. If more money is his goal, he should try a career in comedy.
Debit: I wonder if the strikers in Oakland are willing to move to Switzerland. On Sunday, the Swiss are voting to raise the minimum wage there for burger flippers and other unskilled labor to $25 per hour. I know.
Credit: Perhaps we should all be rooting for the oafs in Oakland and the misguided Swiss socialists. If being able to say, "Would you like fries with that?" is worth somewhere between $30,000 and $50,000 per year, then how much are skilled jobs really worth?
Credit: Here's some good news: Federal receipts hit an all-time high last month. Through April, US Treasury revenue in 2014 is already more than $1.75 trillion. That's a lot of dough. Remember that the next time your Congressman claims taxes are too low.
Debit: Now the bad news: Despite the record influx of cash into Treasury coffers, the government is still running a fiscal deficit in 2014; it's currently more than $600 billion -- and counting.
Credit: That's just more proof that America's fiscal problems aren't due to a lack of revenue -- it's because of too much spending.
Debit: Of course, unlike businesses in the private-sector, the government can print money out of thin air -- so it has no real incentive to cut costs. Otherwise, far less than $5 billion would have been spent on the implementation of Obamacare websites. (So far.)
Debit: "Unpossible!" you say? There's been so much mismanagement and waste, the government has spent $474 million just to develop and implement four (count 'em, four) broken (yes, broken) Obamacare exchanges: Massachusetts, Oregon, Nevada, and Maryland. And ... it's gone.
Debit: Then there's Hawaii. So far, they've spent $100 million in taxpayer funds to develop their Obamacare exchange -- and almost 10,000 people have signed up! (Um, before you get too excited ... that comes out to $10,000 per enrollee. Unbelievable.)
Credit: Cue the "Len is a heartless crackpot!" cries from folks who have never met a Big Government politician they didn't like in three, two, one ...
Debit: Thankfully, Obamacare is such a great idea, everybody is clamoring to sign up -- otherwise the government might feel compelled to waste $700 million on a marketing campaign that tries to convince people why they should enroll, even though it makes zero financial sense. Oh wait ...
Credit: I guess $700 million doesn't buy what it used to. After all, that's what it cost to build the Freedom Tower's brand new 9/11 Memorial and plaza. As for the marketing campaign for Obamacare ... well, it gave us Pajama Boy.
Credit: By the way, if you think all of that Obamacare incompetence, waste, fraud and abuse is bad, then just imagine what we're in for once these same bureaucrats start managing our healthcare. Forward!
Debit: The staggering costs being spent to prop up the Obamacare debacle is yet another sign that the good ship America hit its economic iceberg awhile ago. You can spend your time rearranging deck chairs -- or you can find a lifeboat while there's still time.
By the Numbers
Hey! It's only money -- they can always print more. The enormous costs of state Obamacare exchanges:
$51 million Amount of federal grants that Nevada has spent on their system -- so far.
$57 million Amount that Massachusetts has acknowledged spending. (And they're asking for an additional $121 million! Hey, why not?)
$118 million The price to build Maryland's crippled exchange. They're attempting to switch to the technology that runs Connecticut's exchange.
$248 million Money spent to build Oregon's healthcare exchange. It has since been abandoned in favor of the federal website.
$4.7 billion (That's billion, with a 'b'.) Amount the federal government has doled out to states for Obamacare exchange development.
Source: Politico
Other Useless News
Here are the top -- and bottom -- five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1.British Columbia (2.42 pages/visit)
2. Prince Edward Island (2.33)
3. Saskatchewan (2.05)
4.Ontario (1.87)
5. Alberta (1.79)
9. Manitoba (1.68)
10. New Brunswick (1.67)
11. Quebec (1.64)
12. Northwest Territories (1.50)
13. Nunavut (1.00)
Whether you happen to enjoy what you're reading (like those cold and crazy canucks in British Columbia, eh) -- or not (you hosers living on the frozen Nunavut tundra) -- please don't forget to:
1. Click on that Like button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!
2. Make sure you follow me on Twitter! And last, but not least...
3. Don't forget to subscribe via email too! Thank you.
Last Week's Poll Result
How much money do you have in your wallet right now?
$21 - $50 (29%)
$1 - $20 (24%)
More than $100. (18%)
$51 - $100 (15%)
$0 (14%)
More than 400 people answered this week's survey question. Guess what. Two out of three people who took the survey had $50 or less in their wallet -- including 14% who carried no cash at all. Then again, almost one in five had enough spare cash in their wallet to make change for a $100 bill. I try to keep the amount of cash in my wallet between $50 and $100. Right now, however, I've got just two bills in my wallet that total exactly $25 -- and that means it's time for me to ask the Honeybee for a cash recharge.
The Question of the Week
Letters, I Get Letters
Every week I feature the most interesting question or comment -- assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it's interesting or not! You can reach me at: Len@LenPenzo.com
This week, Jack sent me an email with the subject "Black Coffee". Apparently a man of few words, he got right to the point:
"You complain too much."
Hold on, Jack ... I'm not complaining; I'm just telling the truth.
I'm Len Penzo and I approved this message.
Photo Credit: brendan-c ...
Continue reading Black Coffee: Um, Would You Like Fries with That?
Black Coffee: All the Newspeak That’s Fit to Print
It's time to sit back, relax and enjoy a little joe ...
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.
I'm getting some terrific feedback from ...
Continue reading Black Coffee: All the Newspeak That’s Fit to Print
Black Coffee: Get Ready for My Grand Reopening!
It's time to sit back, relax and enjoy a little joe ...
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.
Sometime over the weekend I will unveil my ...
Continue reading Black Coffee: Get Ready for My Grand Reopening!
Looking Back at My Magic 8-Ball’s Predictions for 2012
For the past three years, I've been using my trusty Magic 8-Ball to predict the future. I know.
Laugh all you want, folks, but it's been quite successful over the years. In 2010, my Magic 8-Ball had an astounding 70% success rate. The following ...
Continue reading Looking Back at My Magic 8-Ball’s Predictions for 2012
The End of the World & Other Magic 8-Ball Predictions for 2012
Happy new year, readers!
Like last year, I'm kicking off the start of 2012 with more fearless predictions from my old friend, the Magic 8-Ball.
In case you missed it, the Magic 8-Ball ended 2010 with an astounding 70 percent success rate, and I'm happy to say the predictions for 2011 were almost as good, as the 8-ball was accurate 66 percent of the time.
Of course, this year the 8-ball was pelted with questions from readers and fellow bloggers looking to get a leg up regarding what's in store for 2012. (I know. I can't believe it either.)
Anyway, let's get right to them. Tradition dictates that the Financial Samurai always gets to ask the first question, and here it is:
Q: Will real estate continue to rebound in major cities such as San Francisco and New York?
A: Ask again later.
I'm asking you now.
A: Outlook not so good.
I have to agree with you on this one, 8-Ball. The market is clearly being artificially propped up by government subsidized mortgages, ridiculously low interest rates and banks that are still withholding large backlogs of foreclosed properties from entering the market.
On a related note, I see Jennifer from Little House in the Valley has a follow-up question:
Q: Will the housing market continue its spiraling descent in 2012?
A: Outlook good.
Okay, but obviously "good" is a poor choice of words.
The next set of questions come from Maggie at Square Pennies:
Q: Will Ron Paul win the presidency?
A: Better not tell you now.
Okay. Thankfully, Maggie also asked the question from a different angle. Let's see if that will get you to open up.
Q: Will Newt Gingrich win the Republican nomination?
A: Cannot predict now.
Well, this is embarrassing. I guess even my 8-ball can suffer from a little performance anxiety every now and then. I'll take some pressure off by getting a bit less specific:
Q: Will a Republican be elected president in 2012?
A: Cannot predict now.
Oh, really? Get this: I suggest you try again, 8-Ball, or I'll outsource the rest of these predictions to a tarot card reader while you find yourself sitting on a flimsy card table at our next garage sale. So let's try it again:
Q: Will a Republican be elected president in 2012?
A: It is certain.
Thank you. Meanwhile, Nelson from Financial Uproar wants to know:
Q: Will the European Union break up?
A: You may rely on it.
Agreed. I suspect the EU will stay together in some form, although it will probably be sans many entitlement-heavy nations.
On a related note comes this question from Average Joe:
Q: Will Italy and Greece finally default on their debt?
A: Very doubtful.
Time will tell. I believe a default by Greece is inevitable -- the only question is when. My bet is that Greece defaults in 2012 and that will then precipitate a partial breakup of the EU.
Let's lighten things up a bit. My friend Paula from Afford Anything asks:
Q: Will Prince William and Kate Middleton announce a pregnancy?
A: Without a doubt.
I just hope the pregnancy they'll be announcing is their own.
Switching to the world of sports, Erin is dying to know:
Q: Will the Green Bay Packers win the Super Bowl in 2012?
A: My reply is no.
I'm with you, 8-Ball. Although I'm no football expert, I suspect the Pack won't even make it to the big game this year.
Jacob has another sports-related question, but this one is on golf:
Q: Will Tiger Woods win a major in 2012?
A: Most likely.
I think the 8-ball is wrong here. Tiger's fortunes have sunk so low that, even TMZ found it newsworthy when he finally broke a two-year victory drought in December 2011.
Next up are two questions from folks concerned about Apple stock. First up is Bill, who wants to know:
Q: Will Apples stock price end 2012 higher than its closing price on the day Steve Jobs died?
A: You may rely on it.
We'll see. The day Job's death was announced, Apple's closing share price was $377.37; it's starting 2012 at $405.
Meanwhile, Hank from Money Q&A wonders:
Q: Will Apple finally begin issuing a dividend in 2012?
A: Outlook good.
The 8-Ball's response confirms rampant rumors that Apple, which is currently sitting on billions of dollars in cash, will indeed reward stockholders by reintroducing stock dividends this year, after originally dropping them during leaner times in 1995.
Becky asks:
Q: Will savings account interest rates rise in 2012?
A: My sources say no.
That isn't good news for senior citizens and others who are living on fixed incomes -- especially, if inflation continues to be worse than the government keeps telling us.
My good friend, Dr. Dean from the Millionaire Nurse Blog was kind enough to play straight-man today by offering this follow-up:
Q: Will inflation hit 4 percent in 2012?
A: Very doubtful.
If we're going to use the official government statistics -- and we are -- I think the 8-ball is correct.
The next two questions take us back to the stock market. First up is my friend, Crystal from Budgeting in the Fun Stuff:
Q: Will the Dow break 13,500?
A: My reply is no.
I think the 8-ball is right on this one. In fact, I suspect the Dow will finish 2012 in the red, although it will experience a sharp rebound in the latter half of the fourth quarter.
And it looks like Dr. Dean is hoping the 8-ball will be kind enough to give him a hot tip for the new year:
Q: Will Microsoft hit 30 bucks in 2012?
A: As I see it, yes.
With this stock starting the new year at $25.96, that would represent a hefty return for 2012. I think the 8-ball is all wet.
Switching to the unemployment picture, Kay Lynn from Bucksome Boomer asks:
Q: Will the unemployment rate fall to 7 percent?
A: Yes.
I think the only way this is going to happen, 8-Ball, is if the number of people actively looking for work continues dropping, since the government doesn't count them as unemployed. But we'll see.
I see Jacob is back and this time he has precious metals on his mind:
Q: Will gold top $2000?
A: Signs point to yes.
That's good news for the gold bugs. If you ask me, though, I think silver will be the biggest mover of the two in 2012.
Geoff, better known as the Car Negotiation Coach, had an interesting query:
Q: Will online poker become legalized in the U.S. in 2012 (and make the government billions in taxes)?
A: It is certain.
Somehow, I doubt that.
For the second year in a row, Pamela wants some insight into Jennifer Aniston's love life:
Q: Will Jennifer Aniston get engaged in 2012?
A: Outlook good.
Fascinating. Who needs People when we've got the Magic 8-Ball?
Meanwhile, my friend Greg from Control Your Cash wants to know:
Q: Will the components of the Dow stay unchanged in 2012? (Bank of America is in, while Google and Apple are on the outside?)
A: Outlook not so good.
I should note that, last year, Greg correctly predicted here that student loans would be the focus of a government bail out in 2011. It'll be interesting to see if he's similarly prescient in 2012 with respect to the Dow.
Finally, Chris wraps up our annual prediction party with a question that is, for many people, perhaps the biggest concern of the new year:
Q: Will the world end in 2012?
A: Don't count on it.
Uh huh. I don't believe in all that hokey Mayan prophecy either, 8-Ball. Hopefully your comforting prediction will be good enough to finally put such an absurdly unfounded fear to rest for good.
Oops. I guess I spoke too soon. Jennifer from Little House is back and she still wants to know:
Q: When the world finally does end, will zombies make a comeback?
A: Reply hazy, try again.
Heh. I don't think so.
Photo Credit: Andrew Malone ...
Continue reading The End of the World & Other Magic 8-Ball Predictions for 2012
The Penner Awards: The 10 Craziest Money Blunders of 2011
As 2011 finally comes to a close, it's time for the second annual Penner Awards, a celebration of the year's ten most dumbfounding displays of numismatical naivete and financial ineptitude known to man.
So why am I giving out such a dubiously ...
Continue reading The Penner Awards: The 10 Craziest Money Blunders of 2011
100 Words On: My 10 Most Popular 100-Word Posts of 2011
Since starting in January, this breakout weekly series has gotten a lot of attention. Its most-popular posts:
1. Why Financial Freedom Requires Very Little Money
2. A Surefire Way to Beat the Lottery -- Guaranteed!
3. Why You Should Never ...
Continue reading 100 Words On: My 10 Most Popular 100-Word Posts of 2011
A Look Back at My Magic 8-Ball’s Predictions for 2011
Have you noticed all the end-of-the-year customs that are currently on display almost everywhere you look?
For example, I've been inviting my readers to provide questions regarding the future that they'd like to ask my Magic 8-Ball since way back ...
Continue reading A Look Back at My Magic 8-Ball’s Predictions for 2011
Black Coffee: A Little Fun with My Dog and Some Peanut Butter
It's time to sit back, relax and enjoy a little joe
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of whats been going on in the world of money and personal finance. Heres what caught my attention over the past week
Next time you parents with kids need an idea for a clever birthday party game that kids under age eight - or guys like me - will surely get a kick out of, try this: ask everyone to predict how many times the dog will lick its chops after you give him a big glob of peanut butter.
My daughter Nina and I like to do this for fun every once in awhile. I don't know why, but I think watching a dog eat peanut butter is one of the funniest things on earth.
The only rule is that you officially stop counting once the dog has gone at least 10 seconds without licking. Today, our Rhodesian Ridgeback, Major, licked his chops 84 times. Meanwhile, Nina and I were laughing for at least 2 minutes.
I know. I need help.
Blogs I've Been Following This Week
Free From Broke - Financial Krav Maga: Personal Finance Self-Defense for the Modern Era. I know what you're thinking. WTF is Krav Maga? Until I read this very clever article I thought Krav Maga was one of Godzilla's over-sized insect foes. Silly me.
Control Your Cash - Lower Fees Through Prevarication. Ten bonus points for those of you who don't have to look up the word "prevarication." I didn't! Okay, yes I did.
Watson Inc. - Is Extreme Frugality for You? Well, if you ask a Freegan who read Shawn's article, he'd say "extreme" is definitely in the eye of the beholder. Crushed possum roadkill can be mighty tasty when seasoned with condiments raided from the local greedy corporate fast food joint, and accompanied with a little stale bread and out-of-date lima beans (from dented cans, of course) fished out of a grocery store dumpster. It also has to be skillfully prepared, outside an abandoned parking lot lean-to, over a trash can fire started by rubbing together two sticks from a dead chestnut tree, and cooked in a rusty old paint can for a pot. Mmm. When do we eat? I know, right after the lecture on how capitalism makes life unbearably rotten for humans everywhere.
Kiplinger - 10 Surprising Ways Your State May Tax You Next. Still not on the list: taxing toilet flushes. Yet.
Money Beagle - 5 Ways to Save at the Beach. Aside: I once had a secretary who owned a beagle named Bagel.
Debt Consolidation Care - (An interview with some goofy guy named Len Penzo.) Thanks, Sarah!
Debt Vigilante - 8 Ways I Cut Costs Down to Have More Fun. Those lovable Freegans might have a problem with this list because the Vigilante didn't mention dumpster diving and eating roadkill for dinner.
...And Here's Some Other Posts You Might Enjoy:
Hope to Prosper - Trillion Dollar Public Pension Shortfall.
Personal Finance By the Book - New Laws Rock the Debt Settlement World.
Budgets Are Sexy - 5 Things to Always Keep In Your Car.
Eventual Millionaire - I Must Do the Thing I Think I Cannot Do.
Wealth Informatics - Borrowing from 401k for First Time Home Down Payment.
Personal Finance Firewall - Have You Experienced What Financial Freedom Tastes Like?
Oblivious Investor - Dealing With Investment Confusion.
Green Panda Tree House - The Ultimate Way to Manage Your E-Mail.
Barbara Friedberg Personal Finance - Need Extra Money? Do Not Do This!
Sweating the Big Stuff - 5 Main Money Gobblers.
Beating Broke - Balanced Billing: Budget Helper.
The Way-Back Machine: Past Posts Of Mine You May Have Missed
From August 2009:
Personal Finance Decisions: The Good, The Bad, and The Ugly - If the world of personal finance was a spaghetti western, this is what it would look like.
Credits and Debits
Debit: Approximately one half-million people filed new applications for unemployment benefits last week. That represents a nine-month high for initial claims, and suggests the so-called "summer of recovery" is anything but.
Debit: The reason employers aren't hiring is simple - there is just too much economic uncertainty brought about by President Obama's anti-business policies that, some say, is our economic Katrina.
Debit: With all this uncertainty, I'm not the only one who expects this country to flounder - or worse - until we reverse the economically destructive liberal policies that this Congress and President Obama are foisting on the United States. But there are some who say "bah!" to that because, they say, the only thing we're really uncertain about is, well, uncertainty. At best, that's a glass-half-full opinion, if you ask me.
Credit: I'm normally a glass-half-full guy myself. Unfortunately, that view becomes delusional when the glass is clearly three-quarters empty.
Debit: My friends at Political Calculations recently did a couple of very enlightening studies that shed light on President Obama's tax future and spending future based upon his budget plans, where they concluded: "What we find is that even after adjusting for inflation, President Obama intends to permanently increase the federal government's spending by an average of $576.4 billion during the years from 2010 through 2013. We also see that he doesn't plan to stop there, as he would plan to spend even more money in 2014 and 2015, the last year for which he projects spending in his Fiscal Year 2011 budget."
Debit: Even worse, and as Political Calculations showed, although the tax burden will rise significantly for everyone, starting in 2011 and beyond, the deficits will just continue to get even bigger. There is no way you can spin that by saying the glass is half-full.
Debit: Two big issues contributing to our deficit problems are the absurd pay and benefits enjoyed by public sector employees, which prompted the Freeman's George Leef to observe, "Karl Marx was right - sort of. He was right in saying that society is driven by class warfare, but he got the classes wrong. Its not the case that capitalists exploit workers, but rather that tax consumers exploit taxpayers."
Credit: If this country is going to survive in its present form, we must drastically reduce the size of the federal government and its spending. Don't make the mistake of thinking that's Tea Party hyperbole either. We need to elect true fiscal conservatives this November, regardless of their party affiliation. Otherwise, I fear our country will soon be destroyed from within.
Credit: Meanwhile, in a bit of positive news, MSNBC reports that some architects and real estate websites have declared that the era of the McMansion is all but over. If true, it's good to see that most people have finally woken up and realized that a 3000 square foot house for a family of four - or less - is not only excessive, but also a potentially unnecessary strain on their pocket book.
Debit: Then again, after gasoline jumped to $5 per gallon a couple years ago, I thought the era of the over-sized SUV and monster truck was over too. Oops.
Debit: In other news, the World Health Organization (WHO) called on Friday for the monitoring of a new superbug that is resistant to nearly all antibiotics. This is the same organization that warned us all in 2007 about an H5N1 bird flu pandemic that never came, resulting in millions of wasted dollars for hastily-created vaccines that were never needed. Through 2009, there were only 263 deaths from 447 total cases worldwide. Well, they were close.
Credit: This just in: the World Health Organization just sent out another press release today predicting that, in 2011, the Washington Generals will wrest the NBA title from the Los Angeles Lakers and Billy Bob Thornton will be voted People Magazine's Sexiest Man Alive!
By the Numbers
Some fun statistics, courtesy of Wikipedia, on the Washington Generals and their Achilles' heel, the world famous Harlem Globetrotters.
5 The number of alternate team names for the Generals. To give the appearance that the Globetrotters play more than one team, the Generals have also donned uniforms representing the Boston Shamrocks, the New Jersey Reds, the Baltimore Rockets, the New York Nationals, and the Atlantic City Sea Gulls.
6 Between 1953 and 1995, the number of times the Generals have beaten the Harlem Globetrotters.
13,000+ The number of times the Globetrotters have beaten the Generals.
2,499 The Globetrotters' longest winning streak. The streak came to an end on January 5, 1971 when the Generals (playing as the New Jersey Reds) won in overtime 100-99. It was the Globetrotters' only loss between 1962 and 1995. According to Wikipedia, Generals' team owner Louis "Red" Klotz said that after the game the fans, "Looked at us like we killed Santa Claus."
Other Useless News
Here are the Top 5 Referring sites so far during the month of August (excluding search engines and aggregators).
1. MSN: Smart Spending
2. Time Magazine: It's Your Money
3. Wisebread
4. Cheap Healthy Good
5. Mint
Thanks to everyone who has linked to me over the past month! I truly appreciate it. I'll be highlighting the Top 25 referring sites at the end of the month.
Oh yes, and here's another friendly reminder for ya: if you happen to enjoy what you're reading - or not - please make sure you follow me on Twitter. And, if you'll be so kind, don't forget to subscribe to my RSS feed too! :-)
Carnival News
This week I had articles featured at the following carnivals:
The Carnival of Personal Finance @ Live Real Now ...
Continue reading Black Coffee: A Little Fun with My Dog and Some Peanut Butter
Should Low-Income Drivers Receive Subsidies to Use Toll Express Lanes?
Every day on my way home from work I zip by tens of thousands of people behind the wheels of cars stuck in hopelessly gridlocked traffic because they didn't want to pay the toll (usually between $2 and $10, depending on the direction and time of day) for the open express lanes.
For me, the money spent every day for the right to avoid 10 miles of traffic hell is money well-spent. I currently spend about $1000 each year for the privilege of driving unimpeded and, truth be told, I would gladly spend double that if I had to.
Those express toll lanes are a beautiful thing - without them I would not be able to endure my daily 38 mile commute and I would most likely be forced to leave my employer of many years to take a much lower paying job closer to home.
Not everybody thinks they are a good deal.
In fact, a lot of people argue that paid toll lanes are inherently unfair to low-income drivers. They wonder why those who make less money should have to endure a hellish commute while others who can afford to pay for it get to whiz by in relative comfort.
A joint study conducted in 2008 by UCLA and USC actually seems to disprove that line of thought.
According to the study, pay-as-you-go transportation options like toll express lanes are actually fairer to all income levels than paying for road improvements such as additional express lanes through sales taxes alone.
While the study found that toll express lanes are disproportionately used by middle- and upper-middle-income households, it also found that those same drivers would have ended up paying less each year if the lanes would have been funded via their sales taxes.
What troubles me is the study authors' suggestion that policymakers worried about low-income peak-period commuters could provide discounted subsidy pricing based on income levels, or provide travel credits to lower-income commuters.
Of course, such a suggestion poses another problem.
Since the only way to keep the express lanes flowing smoothly is to raise the prices during times of peak use, the implementation of subsidies would result in other drivers being priced out of the lanes in favor of the subsidized lower-income drivers. How fair is that?
As usual, when it comes to subsidies and hand-outs there is no free lunch.
Somebody is always going to have to pay. ...
Continue reading Should Low-Income Drivers Receive Subsidies to Use Toll Express Lanes?
The Redistribution of Health: Excuse Me, But I Think I’m Gonna Be Sick
You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time. - Abraham Lincoln
I don't feel so good.
The United States Congress stuck their middle finger ...
Continue reading The Redistribution of Health: Excuse Me, But I Think I’m Gonna Be Sick
The (Dead)Beat Generation
Should you walk away from your mortgage just because your home depreciated?
So you refinanced. Or bought too much house. You divided the mortgage payments by your income, and decided you could swing something a few percentage points higher than the recommended 2533 because the market was rising and your house would make you rich just by existing.
You relied on speculation as an investment strategy (not even your own speculation, but other peoples.) But your house got cheaper, maybe cheaper than what you bought it for. Thats called losing money on an investment, which happens all the time, but people think it oughtnt when your bedroom and kitchen are inside the investment.
The market might bounce back. If youre 7 years in, lots can happen in the remaining 23 on a 30-year mortgage.
When you lose money on a stock, your (invisible) bank account gets wiped out. Owe more than your vehicle is worth, and it might get repoed. But stop making payments on a house, and theres a letter from the constable on the door, maybe some yellow tape involved hard to keep that quiet from the neighbors. Also, people getting forcibly removed from their house (its yours and not the banks only after you pay the entire mortgage) make for striking photo and political opportunities. After all, bankers are evil. Meanwhile, its the working stiffs just trying to make ends meet who get raked over the coals. (Wow, a sentence composed entirely of idioms. Mike Lupica approves.)
Some people who make enough to cover the mortgage dump the house anyway the strategic default. They assume investment values only move in one direction. According to Experian, that includes 20% of defaulters.
This is hiding behind the law. Stop making payments, and its not like youll be evicted that week. It takes months, even years. The idea here is to take the mortgage payments and put them toward, say, your credit card balance, figuring the lender will gladly renegotiate a contract you signed in order to get some sort of return on its investment.
Some borrowers think this is fine because if the lender kicks you out, itll be tough for them to sell the house to someone else in a down market anyway. The lender at least wants the house to stay lived in.
This is nonsense. Strategic defaults hurt everyone.
A strategic default does to your credit score what O.J. did to Nicole. Youll never be able to borrow either a) again, or b) until Congress and the White House decide that so many people need to improve their credit score that it just wouldnt be nice to let something as insidious as that have such power over their lives.
Whats the solution? Well, no politician of either party wants the other accusing them of standing by while old ladies and cripples are being kicked out of their houses. The government would then essentially renegotiate mortgage contracts, setting caps on future ones and insisting the lenders take less. Under this type of forced renegotiation, the borrowers dont even have to sack up and face the lenders themselves.
Besides, neighbors, professors, and the blonde lady on TV say defaulting is fine. And for PR reasons, lenders are hunting down deficient borrowers about as aggressively as the federal government goes after illegal immigrants.
Say you walk away from your mortgage, mail your keys to your lender (this is how its done), then rent somewhere. Your (old) neighbor follows, then a third. No matter how swank a neighborhood you deserted, the lawns turn brown and the pools green because no ones living in the houses. Which reduces the value of the remaining houses. Now the people who stayed behind and havent (yet) defaulted watch their homes values decline. Which means theyll likely owe more than their houses are worth, making it more likely that those folks will default. Continue like this, and you end up withDetroit.
When you declare bankruptcy, you can renegotiate to protect yourself from creditors. But strategically defaulting is the opposite you keep all your assets except the house and mortgage.
So what to do? Four choices:
1. Man up, economize and make your payments. Youre obligated to the lender, yourself (to preserve your credit), any kids of yours (unless you dont think you need to set an example) and society. If you steal from your lender, it doesnt directly affect the rest of us, but it makes civilization incrementally more difficult to live inthe broken window theory.
You dont like that answer? Its a house, for crying out loud. You need somewhere to live. No matter how much value it loses, its still better than renting and never building a dime of equity. Stop assuming that because your $100,000 house lost 10% of its value last year, itll lose a similar amount next year and by 2021 will be worth -$10,000.
2. Short sale. If you know you cant make your payments, and youve exhausted every possible way of earning or otherwise securing money, call the lender and come clean AS SOON AS POSSIBLE. Theyll sell the house at a loss, just to get you out of there and collect their money. Youll still be on the hook until the bank resells the house, but that wont last forever and at least you can stop throwing good money after bad.
3. Ask for a loan modification. Its begging, but your pride already left a while ago.
4. The Deed in Lieu of Foreclosure. Tell the lender, Look, I cant make the payments. Lets not short sell, Ill just give you the damn thing to get out of this debt. This hurts your credit rating the least, and tells the lender not to worry about you being one of those evictees who pours concrete in the toilets and makes off with the copper wire.
And next time, get a vanilla 30-year fixed-rate mortgage.
About the Author
Greg McFarlane lives in Las Vegas, winters in Maui, travels the globe and hates working for other people. He recently wrote Control Your Cash: Making Money Make Sense, a financial primer for people in their 20s and 30s who know nothing about money. You can buy the book here and reach Greg at greg@ControlYourCash.com. ...
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What Perpetual Motion Machines and the Entitlement Mentality Have in Common
This is a guest post from authors Steven and Debra Wallace.
Len extended us the great honor of guest hosting at Len Penzo dot com and it is an opportunity that we feel most privileged to accept.
The inspiration for our topic is credited to the ...
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One-Year (Belated) Anniversary
Earlier this month, on December 11th to be exact, my blog had its first anniversary. Thank you to everybody who has helped make this site grow over the past year!
I originally started this blog as a little diversion to keep me busy. In July of ...
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It’s Time Unemployed People Start Working For Free
Okay, not all unemployed people, but definitely some of them. Let me explain.
Last month the U.S. House of Representatives passed another 13-week extension of unemployment benefits on top of the current California maximum of 79 weeks. And just last week, Senate Majority Leader Harry Reid (D‐Nevada) introduced a proposal to extend unemployment insurance by up to 14 additional weeks for jobless workers in all 50 states. The proposal would also extend benefits for an extra 6 weeks in high unemployment states.
Assuming these provisions survive and eventually get signed into law by President Obama, it means qualifying individuals in California will be eligible to receive unemployment benefits for up to 99 weeks. (UPDATE: In April 2010, President Obama signed the bill into law after the Democratic majority in Congress passed the legislation on what was essentially a party-line vote in both the House 289-112 and Senate 59-38.)
The cost of this extension is estimated to be on the order of $70 billion. Of course, U.S. lawmakers have not figured out whether or how to pay for that, so they'll just cover it in a manner that requires the least amount of political courage. That is, they'll just print more money - damn the torpedoes and thank you very much.
That being said, for now let's forget about the financial impacts and just focus on the magnitude of time, shall we?
Ninety-nine weeks.
If we're going to talk about the length of time that certain people should be getting paid unemployment benefits, I have to insist on raising a bit of a stink. Come on, that's almost two whole years.
Hey, I have nothing against the number 99 per se.
Ninety-nine is a terrific number if you're the greatest hockey player who ever lived. Or a secret agent.
But 99 is a ridiculous number when it comes to the number of weeks the government allots some people to find a job while enjoying the luxury of a safety net. To be more specific, I have no doubt this is a big reason there are now a growing number of people who characterize themselves as being happily "funemployed."
According to this expose by the Los Angeles Times, the funemployed are "usually single, in their 20s and 30s and find that life without work agrees with them."
This story by CBS News asks, "If the economy is so dismal, why are victims of the recession smiling?"
I'll tell you why: Because a lot of people are collecting $475 per week in California or $900 per week in Massachusetts for doing absolutely nothing!
Most of those smiling people are single, under 35 and either have a low mortgage payment or are renting an apartment.
One of my coworkers was telling me about a friend of his who fits that profile who absolutely refuses to look for a job until his jobless benefits run out. He's having a blast and the Unemployment Office isn't paying enough attention to notice that he isn't really looking for work anyway.
And who can blame the guy? Why work for $10 bucks an hour stacking boxes when you earn $11.88 per hour sitting at the beach or skiing at Mammoth Mountain?
If the government is going to continue to extend unemployment benefits, then the state unemployment offices need to do a better job policing those who are receiving them.
I say that before anybody receives a single cent of extended unemployment benefits resulting from the Federal Emergency Unemployment Compensation program, they should have to prove they are making a good-faith effort at finding a job. After 52 weeks, and until they can show otherwise, people that have failed to meet such a modest requirement should be required to do community service for 20 hours per week in order to continue to receive further unemployment benefits.
After 72 weeks, the community service requirement for failing to demonstrate a good-faith effort to find a job should increase to 40 hours per week.
No community service, no check.
If you want to stay "funemployed," be my guest, Skippy - just don't expect the taxpayers to subsidize you.
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Yes, Al Gore, There Is Such A Thing as Global Warming
DEAR EDITOR:
I am 61 years old.
Many people continue to say there is no such thing as global warming.
My wife Tipper says, 'If you see it in Len Penzo dot Com, it's so.'
So please tell me the truth; is there such a thing as global warming?
Al ...
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Bernard Madoff Starts His 150-year Sentence
Good. ...
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Celebrating My 100th Post!
You know, they say a milestone is anything that gives you a personal sense of accomplishment and helps you move forward. Amazingly enough, after just over six months I reached an important blogging milestone of my own today: post number 100! ...
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