Advice for the Masses

It is rare that advice should be given to the masses.  Mint.com a great site, came out with top 10 financial rules to live by.  Listed below with caveat.

1) Save at least 10% of your income - Makes no mention to how much you make surely a person with 20k/yr salary will have a different strategy than someone making 80k a year.
2) Have at least three months of living expenses in an emergency fund. - Do you have kids or single makes a difference plus *why not front load your Roth IRA contributions in the year so you can take out if you need if... wait they tell you not to every withdraw out of a retirement account.

3) Get a life insurance policy worth at least 6 times your household income. - See #2, there could be other vehicles of protecting those left behind than traditional life insurance.

4) Use the 20/4/10 rule when buying a vehicle. - Ok wTF came up with this the car sales people?

5) Save 20 times your gross income for a comfortable retirement. - How old are you 25 or 55? What if you spend your money now like a drunken sailor?

6) Put down 20% on a house and don’t borrow more than two times your income. - This one is not too bad but its the same as #4.

7) Subtract your age from 100 to determine what percentage of your portfolio should be in stocks. - What if I don't plan to retire when I'm 70 and what if my health sucks that I will die when I'm 65?

8) Pay off highest interest rate debt first. - Yes but what if the asset with that dept was making positive cash flow?

9) Max the match on your 401(k). - Its free money yes but its often comes with hidden fees and the crappiest investment options.
10) Don’t take out more in student loans than you expect to make your first year on the job. - If everyone followed this then no one would go to school.

Also some thoughts about the web app Mint.com.  

Mint is not for everyone. It can take too much time. It focuses on Accounting before and typically there is little energy to focus on behavior.

Excuse me: Dumping Money in my 401k

I heard some say that if you are working for a company for a while "they will start dumping money into your 401k" and that is incentive to say with that company. 

Assuming you are not on the level of a partnership of ownership at a law or accounting firm and you are just one of 50 or more employee company this phrase just means that you company is matching you paltry 3-6% of your salary at 50-100%.  For a 100k a year worker this is up to 6000 dollars of you saving and the company gives you 6000 dollars because you were a good boy and saved.  Now based on how a company did that year they can exceed those matches and give you more such as an additional 50% for example would mean an extra 3000. (I believe this is what people are referring to when they say dumping money into your 401k).

As great as this sounds and as appreciative as we should be its not anything out of this world.  1) An extra 3k or 1.5k (if you make 50k a year) hardly pays for a set of golf clubs. And 2) every comparable employer does the same thing (sorry if you thought you were special).

"Free shipping", "SALE", "78% Off": When a deal costs you more

We all hear the buzzwords "Foreclosed", "Short-Sale", "REO".  It makes the average investor salivate.  Post 2012, these Bank owned properties have typically fetched a feeding frenzy of buyers that actually lead to higher prices.  This is good for sellers and bad for the buyer who thought they were getting a good deal.

Banks still have a lot of inventory that they need to sell to the market. With the traditional supply/demand curve in mind, if you were the only seller in town such as the banks with these homes you control the supply.  Banks have strategically placed these REO properties by releasing a small supply at a time that will lead to the highest selling price.  This works despite holding costs of keeping homes vacant.  If they released their entire supply to market the prices they would tank.

Natural Chicken???

Double standards in physical culture

Why do people criticize the person who asks for a side salad instead of fries or goes out for jog after the party?  The guy is just trying to take personal resposibility for their health and future well being.

Why are people with cancer and diabetics treated like random victims? Do we not realize there is an association between the sleep/diet/exercise choices we make NOW will affect us in the FUTURE?

Balance

There is this site called http://www.seekingarrangement.com/ where you can find a sugar daddy/momma or find yourself a golddigger.  People find themselves in these predicaments where there is no balance to their lives.  Having to much money and no time or friends and the converse is no ones fault but your own and this lack of balance is due to lack of planning.

Blame the Baby Boomers

Generation Y/Why, Millennia’s, Facebook Generation has recently been taken a lot of flack about being a lazy generation.  This Boomerang generation although educated are predominately unemployed.  According to a recent article in CNN 85% of college graduates choose to delay adulthood and move in with their parents (Source: http://money.cnn.com/2010/10/14/pf/boomerang_kids_move_home/) 

It does make financial sense to move back in with M/D to payoff dep’t and create an emergency fund the problem is when is enough, enough. 

As outlined in http://20somethingfinance.com/moving-in-with-parents/ the three virtues not being demonstrated by these individuals are: responsibility, urgency, and self-respect.

Let me pause there… I believe society blames these young individuals for their predicament.  What everyone fails to see is the parents’ generation yes those Baby Boomers are one again responsible for allowing this post-adolescence period to occur.  I think is safe to say that for the first time in a long time an offspring’s generation will be less privileged than the one before it.

(Source: http://www.nytimes.com/2011/11/17/business/economy/as-graduates-move-back-home-economy-feels-the-pain.html?_r=1)

Look into the eyes of the victim.  It is not a man but a boy in a man’s body there.  21-25 is by no means a responsible adult, heck I see 25-35 year olds act with the financial and problem solving judgment of a teenager. It is the parents fault because of the values instilled in the child.  We need a little more tough love/personal accountability and less bailouts.

Occupy Wall Street

“The next time you find yourself in an argument, rather than defend your position, see if you can see the other point of view first.” – Richard Carlson

Lately there has been much talk about the 99% vs the 1%.  People occupying wall street over the bailouts and excessive executive compensation... basically the poor hating the rich.

In a recent popular blog the writer asked readers the vague question, "How much money do you make and how much money do you have saved".  In the comments people there were two type of responses the haves "I make 70k a yr and have 450k in savings" and have-nots "I work from home and make 20k a year and have 2k in savings".  Then the have-nots got really jealous and stated to rip on the haves.  The post got to explicit and was taken of the site. 

It has been said before but part of the reason the haves are the 1% and in the position they are in is because they are not thinking like the 99% (I say that even though a lot of the 1% are born into wealth).  The 99% percent instead of protesting (camping out and smoking pot with the other jobless) how can you better harness this collaborative effort to something productive and more creative (other than copying your hippy parents' shenanigans).

Another observation is that whats the goal of the occupy wall street?  Productive companies spend massive resources and are very deliberate in defining strategy and vision in order to steer a movement towards a common goal.  It seems to me that there is no goal, end game, or progress towards a greater good with these protests.

Let us disband these misery camps and get out and get some... Ok there might not be any jobs out there so lets go and create them.

BS Flag: Dicks Drive Inn

Why is it that every time I drive past Dicks Drive Inn it is really busy and it looks like a frenzy. The small part of my flocking instinct wants to go over there and stand in line with the rest everyone else just to see what the fuss is all about and have a hamburger so I have something to show for wasting my time. Whats the big deal... the food isin't that great/special and its crap food. Besides from being called "dicks" and appealing to our 13 year old humor... What Dicks has going for them is that there is no inside so everyone is outside contributing to the frenzy-critical point factor. It is no different than a crappy night club that appears busy with a long line outside. Next time you at Dicks count how many people are actually waiting outside and compare that to how many people are comfortable occupying a McDonald's and you will see what a gimmick it is. See look at the lemmings in this video.

Dr. Oz

First of all I don't want to this come out as me being an asshole but I don't really care for doctor Oz. He gives everyone really bad advice, I think he told everyone that to get lycopene folks should have 3 tablespoons of Ketchup everyday(HFCS).

Why are all his staff fat in this video? Maybe they are listening to dr oz and following a moderation diet of low fat diet high in multigrains and walking/jogging everyday. go figure. BS flag.

RS Means = Really Shitty Averages

The estimations in the RS Means book (cost and time estimations for just about every construction related task) are in my opinion optimal times. People are not machines and construction is done by the operator in the backhoe who is taking vacation in two weeks, the carpenter who is going through divorce, and the electrician who sprained his ankle playing basketball. I know there is some buffer built into the RS Mean to account for the human factor but in a shorter non-steady state project the variability is so large. As a construction supervisor I can attest that the human factor is the biggest factor in my project and this can be contributed to the morality of the crew. In all honesty and seriousness a pallet of Gatorade and morning doughnuts does more to increase my team's productivity than a 3rd backhoe or favorable weather conditions. In the field everyday it is a battle to meet production goals but it is amazing how goals are set and how they are achieved at year end. At my company the annual goals are increased by 3% every year where does this come from?

Instead of setting goals/expectations maybe we should not have minimum requirements. People have a way of just getting by and doing the minimum, if there were no goals perhaps we would exceed the current production rates??? Google hires the best and brightest (who are self motivated and over achieve) and they do not have the minimum expectation culture... perhaps this free reign equates to better results.

BS Flag: Sweepstakes

Have you ever been at a Night Club and signed up for a weekend getaway or been at a home show and given you personal info for a chance to win a $20,000 shutter makeover? FYI your phone number is currently being whore-d out to all those cold call sales folk who lost their previous job in 2009. In any case you can expect a call at any time of day and night for the next few years with someone claiming that you have WON! some BS thing but in reality you didn't win anything... they just want you to sell you stuff and waste your time. Time is money and money is time and remember there is no free lunch, if things are too good to be true they probably are.

BS flag: Best Buy Buy Back

Wait a minute let me get this straight, If I buy this shinny new TV and give you 100-200 dollars... In the future I can trade it in for pennies on the dollar to again buy the newer TV? :D Thats perfect because I love to work long hard hours, at a job that I hate, to buy things I don't need, to impress people I don't like.

BS flag: Ikea

In football a penalty flag is thrown when someone has made an illegal play. In life the BS flag is thrown when something is Bullshit.

Ikea gets the BS flag thrown for advertising FREE "oh I love free!" Breakfast on their busiest days to get customers through the door. To the conscience consumers'
dismay, the regular price of this breakfast is 99c. Thank you Ikea.