Lazy Man and Money

Unbroke: What You Need to Know About Money

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This last Friday, at the dreadful 9PM timeslot, ABC ran a show called “Unbroke: What You Need to Know About Money.” If you follow personal finance blogs, you’ve probably read a lot of reviews. I’ve been busy moving, so here’s my unbiased thoughts on the show… done Bill Simmons diary style.

9:02 – Show starts off strong with a bunch of CNBC types in a board room discussing the economy… and Will Smith saying effectively, “What?!?! You people are boring… Worse yet, I don’t know what you are saying.” The best line was, “Imagine I was a person, how would you talk to me?” When they start to show him slides, he unplugs the projector. The average person doesn’t (and shouldn’t) follow a report with a rolling stock ticker on it… it should be a universal rule of personal finance.

9:03 – Will Smith decides he needs to talk to Mellody Hobson. In my opinion it’s an unusual choice since she is president of Ariel Investments, LLC, a Chicago investment firm managhating over $3 billion in assets (according to Wikipedia)… and she’s on the board of Starbucks… can anyone say latte espresso factor? It doesn’t sound like she’s the average person… plus it seems like she’s the board room type that Will Smith just got fed up with.

9:03 – A flash comes up that Mellody’s walking speed in heels is 9.36 mph. Kristanna Loken didn’t walk that fast without heels in Terminator 3. It’s a good thing that the intro is in slow motion… we wouldn’t see her.

9:04 – Mellody starts out strong… makes the great point that you don’t learn about money in school. Instead you learn how to make bookshelves. Looking at my own experiences, I know how a cam shaft is, how to plane with the grain of the wood, how to create a “well” in my mixing bowl (at least I think that’s what it’s called), and how to thread a bobbin. These are all things that most people could pay others to do if they didn’t carry an average of $8,000 of debt. As Mellody points out, everyone could use personal finance… only a few actually use the wood working skills. I don’t want to trash being handy at all, but personal finance should rank ahead of it.

9:05 – Antonio Banderas and Marisa Tomei talking about credit card debt as if their daughter is on drugs. I love it… great analogy.

9:06 – Cedric the Entertainer comes up with one of the most controversal topics of personal finance… he says that using credit card is a relationship and he strongly implies that using them is bad… this is fine for beginners, but Cedric doesn’t tell people why is bad… there’s no explanation about using it for reward points. I’m sure this is directed to those people with $8,000+ in credit card debt as mentioned above (update a couple of minutes later they say it’s up to $10,000 on average).

9:08 – A survey “on the street” shows that quite a few people have many credit cards… as many as 9. Here’s the thing… number of credit cards should not be a factor to most people. I probably 9 at one point in college. I used them responsibly to get 10% at Structure… oh I just dated myself. The show is focusing on the wrong thing… the number of credit cards alone doesn’t hurt you. Using credit and not paying it all off each month does.

9:12 – Subprime mortages explained by Cedric the Entertainer… Is he talking, because his hands are all over the place as if he’s trying to wave in a plane.

9:14 – Mellody interviews what seems to be 4 or 5 New York City people on spending habits… It’s not exactly a diverse sampling.

9:15 – Seth Green doing “Cribs” on the budget and it just isn’t funny. Good mention of saving money by shopping on Craigs List. There’s no way the car he shows gets 38mpg on the highway as he claims. While everything in the house looks well worn, the kitchen has brand new stainless steel appliances. The stove might even be a Viking.

9:17 – Mellody is back to New York asking people about their emergency fund. No one has a good answer. I don’t really the see the value in this. Of course you can find people in New York City who don’t have emergency funds.

9:18 – Mildly entertaining speed dating skit with Antonio and Marisa. Weren’t they married and talking about their daughter earlier?

9:28 – The show took too much time explain what stocks and bonds are… though the Etrade babies were entertaining.

9:29 – How did they find all these people who don’t know what the S&P 500 was? Maybe it’s just me, but I knew at 13…

9:30 – … and aparently the Jonas brothers do too. Well sort of… there’s no mention that the S&P 500 typically has only bigger companies. There’s no mention of small company indexes like the Russel 2000. Not a peep about the Wilshare 5000. Hmm, Nasdaq has the “newest and coolest companies”, is this a product placement/advertisement?

9:32 – Oscar the Grouch saving up for a dumpster… fantastic!

9:34 – Good call about the biggest risk when it comes to investing is not taking one.

9:40 – Christian Slater and Rosario Dawson talking to companies about 401ks. I’m too distracted about the pairing of personal questions with 401K questions from the audience.Christian Slater’s abs aren’t that impressive – not that mine are better. I think my wife isn’t reading this, so I’ll just say that Ms. Dawson is ridiculously hot.

9:44 – Average Social Security check is $1100 a month. Mellody is right about saving for retirement before saving for kids’ college education. It would be nice if she explained the main reason… no one is going to give you a loan for retirement.

9:50 – Samuel Jackson delivers a great performance playing a financial expert who is broke. America needs Samuel Jackson yelling at them about living within your means.

Overall Wrap-up

The show pushed 4 points:

  • One have one credit card
  • Live in a reasonable home
  • Have an emergency fund
  • Save for Retirement

The show was entertaining, but it’s trying to be too many things to too many people. If you are 60 you might be able to relate to Samuel Jackson, but Oscar the Grouch and the Jonas Brothers won’t connect well with you. If you aren’t into the hip-hop scene, Seth Green’s “Crib’s” is going to seem very out of place.

Despite the fun I pointed here, it was a very good show, and anything that pushes personal finance into the mainsteam media is a good thing.

Glad I Have an Emergency Fund

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If it was a typical week, you’d be reading a well-researched article on identity theft, right now. However this week has been anything but typical. Monday the plan was for my wife and I to meet at a friends’ birthday party after work. However, I got a phone call that something was wrong with our 4-month old puppy, Jake. Being the curious pup that he is, he got into some mischief that isn’t “dog healthy.” My wife rushed him to the vet and I met up with them minutes later.

The good news is that Jake looks like he’s going to be creating mischief in our lives for years to come. The bad news is that the vet bills were $350. (From a cost perspective, getting a Sony Aibo is starting to make more sense.) That isn’t the way to start the week.

On Tuesday, I was on my way to work when I saw something that looked like a soda can or a coffee can. I know there’s a big difference, but sometimes it’s hard to tell. In any event, I thought I could just go over it. It really wasn’t that high. Well I heard it hit the bottom of my car and thought, “That can’t be good.” The next day, I got the dreaded “Service Engine Soon” light. Upon inspection, my mechanic asked me if hit anything with the bottom of my car… Yep. I had knocked out some oxygen detectors which set me back another $200.

This got me thinking how people survive without an emergency fund. I would think that $550 in a couple of days could put a lot of people in financial trouble. I suppose they’d get by with credit cards. Ugh.

Giving a Lasting Gift to a Baby (But Not the Parents)?

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Today, instead of the usual Friday guest post, I’ll be passing forward a question I received yesterday from a frequent commenter. Why no guest post – because I’ve been a grade A gluteus maximus orifice to a lot of personal finance bloggers by not responding (like Pennywise Family – not intentionally, but just that I’ve been too busy to get back to them. New job and another bundle of joy (to be announced soon), plus the wife being out of town have left me exhausted.

I’m going to leave the asker of the question anonymous… I didn’t get a chance to ask if I could mention his name or not. Anyway, his question is:

When friends have babies, is it tacky to want to give the baby a financial gift instead of a toy?

I have friends that have a baby turning 1 year old and I want to get the baby a financial gift. I don’t trust the parents to do the right thing if I give cash, completely unaccountable. What financial products could make for a tangible gift in that situation? How does this all play in the current economic climate (what products would be best right now)?

Let me take them in order:

  • It is not tacky to give the baby a financial gift – Well maybe it is, but I don’t care. I’m didn’t start this website to be Mister Manners, so I’m going to be biased on the side of nurturing a strong, secure, financial future. A young lady about a couple of months ago told me a story that sounded a little like this, “I grew up with every Barbie and accessory you could imagine… I had anything I wanted. However, I got older and found that a car would have been a lot more important to me at 16 than the pile of toys at 7. Same could be said of the security deposit on my first apartment.” I don’t know much about baby safety, but aside from that aspect of it, a paper towel roll could probably be as good as most toys… chances are that everyone else is getting the baby toys anyway. It should have plenty.
  • It’s hard to find a gift that the parents can’t access – My wife’s parents used some money that her grandmother earmarked for my wife’s schooling, so this hits close to home. I think the money should be used for what it was intended, but I can see the side where the parents may have used it with good reason – to get through a difficult economic time. Either way, when I went through this for my nephew I decided to open up a 529 plan in the baby’s name (here’s how I chose it and donate to it every year. This doesn’t work well for my reader though – he wants to give a small one-time gift. He doesn’t want to be custodian in case they aren’t friends in 17-18 years when the baby gets to college. I can understand that.
  • I don’t think today’s economic environment is the big issue here – It seems to me to be a distant second place to worries in the previous question. The good news that I think things will be looking better 17 or 18 years from now than they do today. Maybe not – there could be another down cycle then – I just don’t think we’ll be down quite that long. So this is a case where almost everything is a buy low situation.

With that in mind, I’m really stuck on that second question.

Here are a couple more ideas on that:

  • What about savings bonds or a really long term CD? – They sound good on the surface, but I think the parents could cash them in. I have to admit that I haven’t researched these vehicles well enough – the 529 solved my particular problem.
  • What about forming a corporation? – This one is kind of looney tunes. However imagine that you have a corporation and put money in that. Give out a share or two to each baby you like. Instead of Christmas cards you send out financial statements. I think it could be fun… except that I’m dorky and there is a lot of legal and overhead issues to deal with.
  • My Best Idea is… – To not give the baby the gift… give the parents one. Make the gift a great financial book like Your Money or Your Life. Inside the financial book, I’d write an IOU that says, “When you open up a 529 Plan, I promise to match the first $X you put in there.” (As long as I give the account number, anyone can add money directly into my nephew’s 529 plan from Ohio, so I’m making the assumption it’s the norm – but it’s worth looking into.) Even if it’s a small amount, I think everyone likes free money and it’s the kind of carrot stick that may push the family in the right direction. Yet if the family really is irresponsible, they could just take the 10% penalty and spend the money for unintended purposes.

So this is where you come in… got any ideas to add?

Feeling Poor: Here Are The Two Largest Reasons Why

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In a personal finance forum I frequent, a person posted a link to a survey of what people are looking for in personal finance tools. There were a new member to the forum. Since they hadn’t contributed anything to the forum, I didn’t feel the need to help them out. In fact, I suggested that they pay for a focus group. It turns out that the company is three people looking to bootstrap a business by making a new personal finance tool. I wish them luck… I doubt anyone would give up their financial information to three people who can’t afford a survey.

poor.jpgThe forum thread author went on to say that they found the existing personal finance tools to be deficient. This made me take pause and think about all the tools currently available for personal finance management. There’s Quicken, Microsoft Money, Wesabe, Geezeo, Mint, and my own personal favorite, a simple spreadsheet program. I don’t mean to suggest that all these tools are perfect – they are not. There is plenty of room for new products to enter the space.

I asked myself a simple question, “Are people having problems with their personal finance because the available tools are not helpful?” I would love to believe that better tools could solve people’s money woes. I think most people need to focus on two things to escape a life of little financial worry. Specifically I would cite education and desire to improve as those two most important things. If you are looking for more education, I would recommend this site and those in my blogroll.

If you are looking for a desire to improve, you should simply look at your income and your lifestyle. If you make a good income and still consider yourself poor, you might want to investigate if you are saving money were you can. Too often, I’ve seen people make a lot of money – only to spend it on many little treats or one big one (such as a luxury car or a McMansion). Conversely, people who find themselves on the lower income scale might find that saving money is not enough. For them, I would suggest looking for ways to increase income.

Going back to the team of three people looking to develop a personal finance tool. I often think the most successful tool would be a role playing game (like World of Warcraft) where your character’s abilities are tied to a combination of your financial health and your financial knowledge. I get the feeling that a lot of America would think a lot more about personal finance.

Image Credit: Denislav Stoychev

When the Going Gets Rough, Don’t Spend Money

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Today is one of those days for me. It’s the most depressed I’ve been in easily a year – probably much longer. When I lost my job I was happier. When I was passed over for a well-paying position that was absolutely perfect for me I was happier.

It’s all because of a football game. I read the 7 words of the last sentence over and over again. My mind can’t make sense of why something like a football game matters. The only thing more depressing to me than the result of the football game is realizing that a football game can make me depressed.

Some people might go into a spending spree to take their minds off of it. The mental rush of acquiring a new Wii is tempting to me right now. However, I will choose not to spend money today. Instead I will do the following:

  1. Guard myself against depression. Here are a few tips that have helped me in the past.
  2. Take a Self-Appreciation Day.
  3. Realize how lucky I really am. I wish everyone were as fortunate as me. We should all be so lucky that the result of a football game is the most depressing thing to happen to me in years.

If that doesn’t work, I have two sure-fire ways to chase away the blues.

  • Here Comes the Sun – The Beatles song is depression Kyptonite. I can’t be unhappy when it’s on.
  • Watch a laughing shark – I’ve seen this a hundred times and it still makes me laugh. I never said I was normal.