Posted by Frugal on 29th August 2008
Labor day weekend is here. Are you travelling less due to the higher gas prices?
I used not to think about the cost of gasoline. But nowadays, I am a lot more conscious about where I travel. Indeed, I find myself travelling shorter distances to everywhere. It just makes more dollar sense. I’m increasingly opting for local restaurants than places far away, and same for travel destinations. More and more people are doing staycation (staying at home), rather than vacation.
What are some good and cheap alternatives for not travelling? Probably renting DVDs to catch up the movies that you missed is one of the cheapest way to spend your hours. The next on the list would be going to a movie. Or simply have a good barbecue or picnic with friends is good. Dining out at a more expensive restaurant that you don’t usually go to is pretty cheap, relative to the cost of a long travel. Hiking or biking in a nearby regional park is pretty good too if you haven’t done it for awhile. Probably the single most important thing about vacation is simply having a relaxed mind-set.
Anyway, I will see you all next Tuesday. I need this break, since I have been just too busy working day and night for almost last month already.
Posted in Frugal Ways | 3 Comments »
Posted by Frugal on 27th August 2008
From reuters: “I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses,” Chairman Sheila Bair said in an interview with the paper.
First of all, do you really think that FDIC can sell the assets of the failed bank at the prices that FDIC think they can fetch? So far, FDIC has been paying 50% of the uninsured deposits immediately. I think that’s simply ridiculuous, especially in the case of IndyMac. For some banks, their net worth can be negative. There may be nothing left but debts after selling everything off.
So what does that mean when FDIC borrows from Treasury? Since Treasury is the only agency with the power of issuing debts (up to the debt ceiling approved by Congress), it is the same as printing more IOUs on the back of taxpayers to bail out the bank depositors. Obviously, it’s the banks who are at fault, who lended money to those housing speculators and fraudsters, but it will be every citizen in this country who will share the burden.
I don’t know whether there will be any financial reactions to FDIC borrowing money from Treasury. But to me, it is just another sign that the whole system is broken. All bailouts and debts eventually lead to Treasury issuing bonds. And at the point when there is more borrowing need than foreigners willing to buy, Federal Reserve will need to come in and monetize the debt (print the money out of thin air). Supposedly, we should see an increase of Treasury paper holding at the Federal Reserve, but I doubt that is going to ever be shown to public. I think we will see an increase of debt issuing, coupled with lower percentage of foreign banks taking up the debts.
And by the way, we will all be on the hook for the 5 trillion debts that is owed by Fannie and Freddie, whose values are back by the homes going down in value or going into foreclosure. Effectively speaking, US federal government will own close to 50% of all the US housing market (debt). I guess we’re on track of nationalization of the US housing market. Think about it. What is the difference between communism where the government provides housing to everyone, and a failed capitalism where the government lends the necessary money for everyone to buy the homes? In both cases, the government effectively speaking owns the homes.
Posted in Investing | 4 Comments »
Posted by Frugal on 26th August 2008
For those who don’t have a new flat panel TV with the new digital TV receivers, or simply has an old analog TV lying around, you may want to get your converter box as soon as you can.
I’ve got mine converter box earlier in the year with a government coupon. It looks like the coupon is still available. Since there is a limited funding for the coupon, you may want to apply for it ASAP. You can apply for the coupon here. With the $40 coupon, you probably just need to pay $10 plus tax on $50 converter box. I got my RCA brand at Walmart, and it works pretty good. Here is a list of all eligible converter boxes.
Of course, if you have cable or satellite receivers, you won’t need it. But $10 out of pocket is quite cheap. In fact, you may consider dropping your cable/satellite subscription after trying out the digital TV broadcast, which often gives you a much superior picture quality.
Posted in Investing | 1 Comment »
Posted by Frugal on 25th August 2008
Reading through the stories posted at StudentLoanJustice.Org, I feel that these people have been totally abused by the student loan system. Debts that cannot be discharged through bankruptcy are simply nightmares. Why do we even have such things?
This story is under-covered by media and politicians. There is obviously no money in helping these poor people who are in a perpetual debt of student loans. And so, most people don’t cover it. I wonder how many percentage of young people’s lives are screwed because of this corrupted loan system.
Reading through the stories of victims at StudentLoanJustice.Org, my heart goes to everyone of them. Many of them have paid tens of thousands of interest dollars towards the loan already, and yet the balance of the loan is still in tens of thousands. And there are some people who had paid off the loan years ago, or had the debt dissolved as part of the bankruptcy proceeding due to extreme hardship, only to find out several years later that the debt is back, AND with huge amount of interest and penalty. Unable to prove the discharge of the debt or the paid-off statement on their debt, they are stuck with collection agency and wage garnishment.
Here is one example in a victim’s own words:
In 1982 took a student loan out for 2000.00
1989 filed bankruptcy chap.7 included student loan and credit card.
in 1998 filled bankruptcy again , part of process was search for all outstanding debts…..1982 student loan did not show.
2005 ECMC sends notice of collecting $10,000 wage garnishment fees and interest.
Here is why this is evil….this debt was first dissolved in legal federal bankruptcy….verified in a search for debts years later, then surfaced mysteriously in 2005 ???
WHY? here is why…..
I have worked for Government for 6 years now and am 4 years from retirement.
I already have a wage garnishment that take almost half my pay (arrears)
I am a homeless father of 5, who cannot afford to rent a room where my children can visit me.
I am a 20% service connected disabled veteran of the USMC
I cant do anything but try to appeal to God and websites like this to stop
this evil, greedy, and attacks.
If an anytime along the way I knew I HAD to pay this I would have made arrangements to do so rather than let the interest grow
but THEY HID THE DEBT SO PAPERWORK ON IT COULD BET LOST AND INTEREST COULD GROW So Bankruptcys on Student loans back in 1989, was a sleeper scam.
I think we should legally and mathematically define what is financial hardship and limit the amount of time for repayment, or else these student loans can never be discharged. To be paying a student loan for more than 15 years is destroying someone’s life. The money should have never been lent in the first place (so that colleges or professional schools couldn’t profit from innocent youth) and these people won’t be made as working slaves to Sallie Mae.
Posted in Investing | 21 Comments »
Posted by Frugal on 22nd August 2008
Isn’t it great to run a “charity” organization? The people will always thank you, while your “real boss” the taxpayers have no way to get to you, or simply at sleep.
Here is a snippet from press release from the head of FDIC Sheila Blair for loan modications at IndyMac FSB:
What modification options will be available to borrowers?
Under the IndyMac Federal program, eligible mortgages would be modified into sustainable mortgages permanently capped at the current Freddie Mac survey rate for conforming mortgages (now about 6.5%). Modifications would be designed to achieve sustainable payments at a 38 percent debt-to-income (DTI) ratio of principal, interest, taxes and insurance. To reach this metric for affordable payments, modifications could adopt a combination of interest rate reductions, extended amortization, and principal forbearance.
If, consistent with maximizing the net present value of the mortgage, an interest rate reduction below the current Freddie Mac survey rate is necessary to achieve a 38% DTI, then IndyMac Federal could reduce the rate further for five years. After five years, the interest rate would increase by no more than 1% per year until it capped at the Freddie Mac survey rate where it would remain for the balance of the loan term. Other modification features could be combined with an interest rate reduction, as necessary and consistent with maximizing the value of the mortgage, to achieve sustainable payments.
It is important to remember that there are no fees or other charges for this modification. All unpaid late charges will be waived.
How does IndyMac Federal determine whether the modified mortgage is affordable to the borrower?
IndyMac Federal determines whether a modification proposal is affordable based on income information received from the borrower. Modifications would be designed to achieve sustainable payments at a 38 percent housing debt-to-income (DTI) ratio of principal, interest, taxes and insurance. To reach this metric for affordable payments, modifications could adopt a combination of interest rate reductions, extended amortization, and/or principal forbearance.
That is just so “great”! Now that just really makes me PISSED! The current money that Sheila gives out is still collected from the insurance money that banks pay in. But given the current level of FDIC funding, it will probably run out ALL the money once it shuts down just a couple of bigger bank like Downey or Washington Mutual. What a great non-profit organization! All those people who shouldn’t have bought the homes in the first place are now getting rent-free in “their” home. More time thru loan-mod, and then default, and then back for loan-mod, the better for them. For all the responsible homeowners and renters, we are subsidizing the rent for these liars who lied on their no-doc or low-doc loan, one way or the other.
I know personally a very diligent and frugal tour guide who worked and saved all his life, just to lose some $180,000 at IndyMac bank after FDIC shut down the bank. He is so depressed about losing the money, and I hope that he doesn’t see this news. Yeah, these irresponsible leeches of the society are using his money, rent-free for many months to come.
For the first time, I feel strongly about wanting to default on my mortgage loan. When will this country jail the homeowners who commits perjury on their loan docs, people who rates AAA on the toxic Alt-A junk bonds, and all those greedy bankers who originates and sell these toxic bonds to every pension fund on earth? There is zero credibility in the US government and US dollar.
Posted in Investing | 8 Comments »
Posted by Frugal on 20th August 2008
Market is too complacent about financial sectors and economy for the next year. The participants seem to be like Wile Coyote to me.
Thanks to AnimationArtGallery.com
I’m ready to increase my short positions.
Posted in Investing | 1 Comment »
Posted by Frugal on 19th August 2008
The story of Rodrigues family in money magazine reaching a potential networth of $2.9 million by 40 is the prime example of how “easy” one can become a millionaire.
How does that work? Gina and John Rodrigues have a combined income of $174000. But that is not the biggest reason that they will make it to 7 digits, from their current net worth of $380000 at age of 27. After all taxes and expenses, they save $91000 a year! As I have repeated many times, it’s not how much you earn, but how much you save that counts. Their frugality is certainly beyond any ordinary couples would undertake. However, at the rate of almost $100K saving a year, you can become a millionaire in about 10 years, even assuming that your money compounds at close to 0%.
Obviously, if you have kids, you will be in an entirely different league of saving competition. So don’t feel too upset about your own saving level.
The pre-requisite to a high saving amount is certainly a high income. Dual income usually helps, if you can justify the visible childcare and tax expenses, and invisible human cost. Otherwise, a career in doctors, lawyers, accountants, architects, engineers, and financial industries are usually a faster track to a high income.
For obvious reasons, Rodrigues will most certainly exceed my net worth at the age of 40. This will be an ongoing trend partly due to inflation. It will simply be easier and easier to become a millionaire for the people whose wage rides on the inflationary wave. Probably 90% plus of the people cannot grow their net worth at a rate that exceeds inflation rate due to taxes and other reasons. Therefore, a new fresh graduate in the right career will always have a much better chance in joining the millionaire status and beating the older people who may have not accumulated and grown their assets faster. For those people who are in their twenties, grab your chance and make your own heydays. There will be people who are left behind. Don’t be one of them.
Posted in Investing | 12 Comments »
Posted by Frugal on 18th August 2008
Social networking + Instant Messaging + GPS ?
I can see this company (loopt.com) becomes the next youtube, if not bigger. If you are lucky to join this company because of my post, please give me some IPO shares when you get rich, .
This is another Stanford’s start-up (after Google and Yahoo), where I graduated too. I don’t mean to glorify Stanford, but it is a school with a lot of great high-tech start-up.
You can get loopt’s service already. Their service allows you to keep in contact with your friends & family constantly without calling everybody. Surrenpidity becomes a routine of life. Yeah, how about running into your friends constantly at will. Or even better, locate your dream girl through her friend’s loopt?
I also thought about this idea of locating your friends & family thru GPS services independently. But ideas are cheap, and mean nothing in the world of entrepeneurship. Only actions count.
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Posted by Frugal on 15th August 2008
As of yesterday afternoon, US mint stops producing gold eagle coins. No more sale until further notice. This is not to mention an existing silver eagle coinc shortage.
Yes, both gold & silver prices are breaking new low on Thursday in Asian market. But barely any major dealers are selling them. How weird? On silver, tulving.com ran out ALL kinds of silver products. ColoradoGold.com ran out everything except 10 oz silver. There are still some gold products left. But I imagine that they may run out very quickly. I’ve bought some recently at prices above $15. But it’s really hard to get any. First of all, you can barely get through the phone lines. And then, the silver products are usually running out in 2 days at tulving.com.
I don’t know what is going on. But if they are LOTS of sellers as shown from the spot market. They should be LOTS of physical products available. The fact is most of those are running out quite quickly. Silver eagles are rationed among all precious metal dealers since March of this year. If you can get them, the premium over spot on the buy price is increasing all the time. And as in a free market, the premium over spot when you sell back is ALSO increasing now. The only thing that doesn’t increase is the actual spot price. But where the hell are the goods?
I have tried my local dealer, and practically everything runs out and they run out very fast. No gold or silver eagles. Nothing.
I think monex.com still have eagles. Their prices are higher. But if that’s the only place that I can get, I may just get it from them.
I have been observing the recent drops in the US markets. About 95% of the sharp drops occur either at about 1 hour before/after the market opens, or at 12pm EST. Again, such market actions doesn’t make much sense, especially centering at a certain time. Even stocks are not this volatile.
Anyway. I’m definitely going to scoop up some if I can. I have also planned to transport my physical gold & silver back to Asia where I think it would be safer from the Big Brothers, when I go back home to visit my parents. By custom laws, one can take out $10,000 per person. So I think I should be okay.
Posted in Investing | 4 Comments »
Posted by Frugal on 13th August 2008
My preferred techinical indicator is MACD which is more reliable in detecting the trend. Here are just two charts that I’m looking at, both have a bullish cross in MACD:
Financials are over-bought & turning down. Natural gas stocks are over-sold & turning up.
P.S. I hold positions in the above charts through the component stocks and/or call/put of the options.
Posted in Investing | 2 Comments »