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Monthly Archives: December 2007

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Afghan Refugee Sock Drive

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As the holidays are upon us, giving is certainly on the mind. If you are interested in giving to those in need but are concerned about the money getting to the right place and not being spent on overhead expenses; we have solutions.

My colleagues and I here in Afghanistan are working on the second annual sock drive for internally displaced Afghan refugees. Last year they gave out 3,000 socks to both children and adults at local refugee camps.

To give a bit of context for those who are interested in more of the background, Afghanistan has been plagued by war for the last thirty years. This has caused a huge number of refugees to flee Afghanistan and live out years of their lives in refugee camps along the Pakistan boarder. In recent years these refugee were sent back to Afghanistan but still don’t have homes to return to; due to current violence and political instability.

The conditions for most Afghans are poor, but it is particularly bad at the refugee camps. Despite international aid efforts to alleviate their poor living conditions, the reality is that they live throughout the cold winter and hot summers in large group tents. Many of these are also in disrepair with leaks and so forth.

Socks are a basic item that many in Afghanistan go without. Driving around in the streets of Kabul you will plainly see that many are walking around without socks. As many of our mothers used to say, “I get cold just looking at you!” In the cold and dreary weather these days I can only image how that must feel as I write this with my cozy slippers on.

I know there are many charitable causes out there, but if you are interested in donating socks for refugees we can help to ensure that every last sock goes to a needy pair of feet. The socks were found last year by our local staff about about 30 cents a pair. Thus even five bucks would keep a family of feet warm.

If you are interested, just send me an email and I’ll hook you up with the paypal info. I promise that all of the funds will be used wisely and transparently and that I’ll post photos here for folks to enjoy.

Feel free to let me know if you have any questions.

Happy Holidays,

Miel

Man praying to Allah in Thanks

Why AAV is Tanking

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If you’re a frequent reader of DINKs finance, you know that we own shares in Canadian energy trusts. If you’re following the stock market, you’ll probably know that energy trust shares, and our holdings in Advantage Energy (AAV) in particular, have taken a beating in the past few weeks.

Advantage Energy is a Canadian royalty trust. This means they are in the business of developing oil and natural gas properties, selling the energy and giving the profits to shareholders. By “developing”, I mean they rent or own land in Canada, drill wells and pump out the oil or natural gas. AAV is a relatively new outfit, having been incorporated in 2001. The firms management is mostly a bunch of guys with backgrounds in the oil and natural gas industry in Canada. Its on the smaller side, with about 10 management staff and 135 employees.

So whats the big deal and why are we talking about Advantage? In a word: money. Advantages’ share prices has been under severe pressure and is currently trading at all time lows. Since we DINKs are partial owners of the company we’re naturally interested to see whats going on. Probably you’re interested too, since you’re reading this post.

As near as I can tell, AAVs major problem is debt. Relative to 2006, the company’s bank debt increased by 40%, climbing from 372 to 521 million. For a company that’s worth 1.24 billion on the open market, a debt of 521 million means that for every dollar of assets, the company owes 42 cents. By any reasonable accounting, that’s high. Also, this seems to be impacting AAV’s bottom line – their dividend payout was recently cut by 20% from 15 cents to 12 cents Canadian.

While AAV’s debt is hurting their bottom line, its not whole story. Evidently the debt wasn’t entirely racked up via a series of poor management decisions. Some seems to have been incurred by merging with Sound Energy Trust. The Sound Energy merger cost approximately 17 million AAV shares and 21 million in cash -but it brought along 400,000 acres of undeveloped land. – That’s a little more than half the size of Rhode Island or roughly equivalent to a small mideval kingdom.

Other metrics are okay, but not stellar. For example, their rate of well expiration is fine, production levels are slightly down (1 or 2 % annually) and operating costs have increased marginally from 5,741 to 6,242 thousand. Not great, but certainly not a huge problem. AAV additionally had to take on some high interest convertible debentures (sexy bonds that can convert to stock) to make their merger with Sound Energy happen. This has also dampened the company’s profitability somewhat.

To sum up, AAV is currently saddled with high debt levels. While the Sound Energy merger has increased the asset base of the company, a lot will depend on managements ability to reduce debt and improve operating margins in the near future. At a book value of 10.46 USD per unit, the company appears to be fairly valued – we DINKs are going to hold our 3000 shares.

Happy Investing All!

-James

Giving at the Holidays

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I believe that one of the great things about the holidays is doing a little something extra for those in need. Over the next couple of days leading up to the holidays we’ll share a few ways that you can lend a hand.

In our first case, it is lending a bit of money as a micro-lender. As we’ve posted about in the past, Kiva.org is a micro-lending organizing that works globally and allows you to easily lend your money online to those in need.

We selected a lender a year ago in Kenya doing agriculture and had a 100% repayment. I think this speaks volumes that a poor woman in Africa is more likely to repay her loans than our folks on prosper.com with poor credit.

Now I’ve just lent some money to a Samoan woman named Puapae Perekina doing traditional batik work. She has had four loans since 2004 and has had successfully paid back all of them.

Once our first loan was repaid in full we were then able to loan out the money again, donate it to Kiva.org, or withdraw the funds. It feels good to contribute to the livelihood of other entrepreneurs.

Stay tuned for tomorrow’s post. I’m particularly excited about this one but need to get some photos first.

Have a great one!

Miel

Crazy Russians At It Again

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The Guardian is reporting that Vladamir Putin, the outgoing president of Russia, secretly amassed a fortune of over 20 billion dollars while in office. To make things thicker, its allegedly held in Lichtenstein and Switzerland through a series of blind trusts.

The only thing I’m wondering is – What stocks is he holding?

Click here for the lurid details.

Tracking Spending

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I’ll admit it – I’m feeling a bit discombobulated with my cash finances these days.

It all comes down to the difficulty of tracking my finances these days. Back when I moved to DC in 2004 and was working on paying off some credit card debt I started tracking all of my expenses. It wasn’t an exact science but I basically added up my receipts a couple of times a month.

While this system took some effort on my part (a half hour a month to deal with), it helped me a lot. The thing is, I didn’t really realize how helpful this was until I fell out of habit.

Here in Kabul everything is done on a cash basis. In addition to this, receipts in general are few and far between. Both of these factors obviously make it harder to track my expenses.

In the beginning I thought – that’s ok I’ll just keep track of when I take out money and that will be good enough. That might work for some people, but after having tracked my expenses for so long, it is hard for me not to be able to wrap my head around what my money is going towards.

The other issue is that I’ve been trying to scrimp and not have a great deal of cash available. This means repeated trips to the ATM and makes it harder to know how much is spent in a month.

Thus – I have two resolutions to put myself back on track.

Taking out a set amount of money each month. This feels like a no-brainer. The added benefit is that my work has a system where we can get money deducted from our salary and issued to us in cash here at our office; eliminating a need to go to the ATM on a regular basis. I’m thinking that $350 a month should give me enough with the possibility of some left over funds at the end of the month. I can always challenge myself to save extra by using any excess for R&R spending money. I can also reduce it by a bit if it seems too much over time.

Going old school – mini-notebook. I’m also thinking that having a better knowledge of where my money goes to could be done by taking a quick note when I spend money. Kind of like the ancient days of a checkbook registry. I know this will take a bit of effort but I think it will make me feel better about my financial situation.

Readers: I’d love to here what works for you in terms of tracking money!

Cheers,

Miel

Planet Out

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Hi All,

In my incessant wandering through the internet I occasionally come across some good stuff.

If you have a spare moment, you might visit planetout.com’s section on Money and Careers. Its mostly targeted towards Gays and Lesbians, but since there are few good web resources on finance specifically for the gay & lesbian community, it might be of some use to you. In particular they’re featuring a good interview with a new york cabbie – who happens to be a lesbian.

The interview was done by Nina over at queercents, who one of the webs better bloggers. So if you’re looking for something to do, mosey on over and check it out.

Best,

James

Is Suze Orman Stealing Our Ideas?

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I swear, sometimes I think that Suze Orman reads our blog. I was looking at the yahoo finance news just a moment ago, and I came across her article on getting ready for your 08 taxes. It looks suspiciously like our posting on reducing your federal income taxes. This isn’t the only time we posted on a topic – and then had Suze Orman write about a similar theme a couple of weeks later.

Either she’s cribbing our ideas or its simply that great minds think alike.

I’m not saying either way, I’ll let you guys be the judge.

-James

Compromise can Reduce Financial Conflict

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Today’s postings is on the theme of compromise.

As many of you know, our long term goal is to pay off our second mortgage. To help make this happen, we’ve been brainstorming ways of accelerating the payoff. Since the second mortgage is in the form of a home equity line of payment, we are currently paying a variable 8.84% on a balance of approximately $18,852.45. This means were paying $1,710 per year to the bank.

A strategy we’ve been considering is credit card arbitrage. Yes – that’s when you open a new credit card account with a low interest rate and transfer some your high interest debt to the new card.

When Miel proposed this, I nearly had a heart attack. As many of you know, I’ve been a critic of credit cards and have railed against them in the past (1)(2). However Miel hasn’t agreed and we’ve hashed it out here on our blog. I lost the debate.

So we decided a compromise to the credit card arbitrage issue. First, we agreed locate a zero interest balance transfer card, we’d both review the terms. Second, we also agreed to transfer approximately half of the debt from the 2nd mortgage to our new card. This way, we’ll have limited exposure if the credit company does try something funny. We are still talking, but I think we’ve reached a solution in principle.

The advantages of this would be to save about $850 in interest and break up the debt so we can gain a psychological boost by paying each account off. – Also, this will reduce the long term hassle factor as we’ll be able to dump Washington Mutual more quickly.

To wrap this up, I think its important that when a conflict arises solutions be reached which are comfortable for both parties. For example, if Miel had pushed the issue and I agreed just to make her happy, I’d be less motivated to participate and our payoff would be sabotaged. As it stands, I’m happy with this plan and feel motivated to take ownership of the process.

Thanks,

James

The Nest Finance Resources

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Continuing on the theme of good web resources – I came across an excellent one lately. Many people are aware of theknot.com, as it is the place to search for wedding registries and build your own wedding website (check out ours).

The Knot also has a sister site called thenest.com. This site is targeted at newlyweds starting their lives together as a couple.

Many of their money resources are aimed at folks just starting out in their financial lives, but they are a good starting point for just about anyone interested in improving their financial know-how.

For example, they have good resources on:

Money & Investing Glossary – Simple definitions to all those financial terms you might be too afraid to ask about. Just reading the glossary would give you an improved sense of the investment world.
Monthly Budgeter – Just plug in your after tax income and fill in the blanks. Couldn’t be easier!
Get out of Debt! – This resources help you make a pay-off plan for any debt you might have. There is also a helpful article by the Motley Fool about tips on paying off debt.

The site also has some Q&A from other bloggers we know. Altogether a good site that looks like it has the potential to become a great site over time. Take a look and check it out!

Cheers,

Miel

Thoughts On Role Models

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I was briefly looking at a copy of Larry Winget’s book “You’re Broke Because You Want to Be” last night before going to sleep. On reflection, we DINKs have been blogging for a couple of years now, and we’ve plowed through a lot of personal finance literature. Like many of you we want to get the best advice possible, and sometimes there’s so much information available that its hard to separate the good from the bad.

This brings up an important question: How should you judge the quality of the person who is offering you financial advice? I’m not expert, but here are criteria you might consider.

1) They should be wealthy and self made. Its better if the people who are advising you have proven they can attain wealth using their own skills and talent. Some popular authors like Donald Trump owe much of their position to the money their parents generated. In these cases, its harder to determine if their advice really works.

2) Its better if they’re dead. I’ve blogged about this before, but dead role models have the advantage of having their full records available for posterity. For example, you know how millionaires like John Jacob Astor and Andrew Carnegie turned out. On the other hand, you don’t know whether Bob Kiyosaki or Trump will be indicted for some future shenanigans. -I’m not saying they will – just that the quality of their advice is still an open question.

Of course there are other criteria you might consider, such as ethics or market conditions. You probably would not take advice from someone who is a convicted criminal. Similarly, you would not want to uncritically apply someones advice if how they made their money is inappropriate for your current market environment. For example, fur trading today isn’t the hot industry it was back in Astor’s time.

Best,

James

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