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Monthly Archives: November 2006

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Does K-Fed’s Bling Increase in Value?

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I caught an interview with K-Fed yesterday, (thats Kevin Federline, formerly of Brittney Spears and Kevin Federline marriage). In the interview, Kevin alleged that when he buys bling (jewelry, etc.), its value actually goes up.

Here is a quote from his interview with Salon.com. When asked about his jewels, Kevin answered:

“My watch game is ridiculous — just jewelry in general. It’s an investment. I bought this [points to his watch], and it’s already gone up in value. All the jewelry I’m wearing has already gone up in value“.

To be sure, the guy likes bling, but can it be that when he buys something, its value actually goes up? People in America worship celebrity, even if the celebrity is someone that we don’t always agree with or approve of, perhaps like Kevin Federline. So, it may in fact be the case that because he has owned the jewelry its value has become associated with his celebrity and has therefore increased. Otherwise, bling usually declines in value and is generally a very poor investment.

Best,

James

Fed Issues Smackdown to Payday Lenders

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Heard a great piece this morning on NPR. The story centered around the financial troubles experienced by some members of military. Its not a surprise that many members of armed forces have been sent on extended deployment, a state of affairs that has strained family and individual budgets. To make ends meet, many service members have turned to payday lenders who typically charge excessive interest rates, causing some soldiers and sailors to loose their security clearances.

Apparently the Feds have passed a law regulating the amount of interest that can be charged to military personnel.

As a bit of a pre-script, NPR covered this ongoing problem a few months ago.

Check out the story if you’ve got a few spare moments!

Best,

James

The Wall Street Options Scandal Affects You

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Today’s posting is about the ongoing options scandal on Wall Street.

Stock options are kind of a mysterious thing, but if you own stock directly or through a fund, you should be keeping an eye on how management is running your company. That said, most folks aren’t options experts (including yours truly), so it makes sense to say a few words of explanation.

As defined by Investopedia an option is: a privilege, sold by one party to another, that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed-upon price within a certain period. Typically what happens is that companies agree to award their managers with options as a part of their compensation.

Why you should care: If you’re a shareholder, options affects your bottom line. Stock prices are fundamentally driven by earnings per share. When companies grant options, they need to use their profits to pay for the difference between the market and the option price, affecting earnings.

For example, lets say that a company issues their CEO 5,000 options to sell at a price below market value. For example, lets say the market value of the stock is $40, but the option allows the CEO to sell the stock at $35. This means that the company has to make up the difference between the option price and the market price. In this case its, 5 bucks a share. Multiply $5 by 5,000 and you’ve got how much profit your company didn’t make because they chose to compensate the CEO, e.g. $25,000.

The big deal with the backdating scandal is that the options were being fixed so that the CEO’s made more money. Its a problem, especially when it affects the price of your shares.

You might want to take a look at the list of companies and corporate officers that have been implicated in this scandal. Hopefully none of your stocks are involved.

Happy Thursday and Safe Investing!

-James

DINKS Featured in Voice of San Diego!

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Welcome to all readers coming to our blog from the Voice of San Diego! Among others, we DINKS were featured in today’s opinion column by Catherine Hockmuth! Thank you Catherine for mentioning us!

If you’re not coming from the Voice of San Diego, you might want to cruise on over to her column and check out what she has to say. There are a number of other good blogs mentioned there!

Otherwise, enjoy your Thursday!

Best,

James

Heavy D vs. The Insurance Men

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Insurance companies are a necessary evil. Purchasing insurance is usually a wise idea because it covers you in the event of accident. However, if you do file a claim, sometimes (okay…a lot of the time), the insurance company will try to get out of paying you.

For example, we’ve got Nationwide. This is the same company that is trying to use the court system to get out of paying their obligations to their policyholders after Hurricane Katrina. My wife Miel has filed a claim for some damage to her wedding ring, and right now they’re denying that the ring was covered at all.

But, it not just us! The famous rapper, Heavy D, is also having some problems with his insurance company! Click here for the drama.

Enjoy your evening!

Best,

James

Financial Impact of the Midterm Elections?

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Both of us DINKS have been glued to our computer screens keeping an eye on the elections. In case you haven’t been paying attention, it looks like the Dems have taken control of the house of representatives and are probably going to take the senate as well. This is a significant event, any way one looks at it.

Like many other financially minded people, the impact of the election does make me wonder how this situation will affect the our pocketbook. While most of this is speculation, it looks like the Dems might push the following:

1) An increase in the federal minimum wage

2) Removal of the presidents most recent tax cut

While both of these will have an impact on the nation’s financial health, they probably wouldn’t effect on the average Joe or Jane. For example, if the minimum wage is increased it might impact inflation, but a mechanism such as linking the wage to the consumer price index may somewhat limit this impact. Removal of the presidents tax cuts will also likely be targeted towards the rich, which suggests that it won’t impact the middle class a great deal.

My take: the elections won’t greatly impact the average persons financial situation.

Best,

James

Nickel and Dimed

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The great debate, one of the many, continues in our household. Both being academics with strong opinions, we often like to debate about social issues. James has made several posts recently on poverty being a matter of choice.

I’d like to offer my thoughts on why poverty isn’t solely a matter of choice (not that I disagree that the last video clip had a jack*#! who proves James’ point very well!)

A good read that I picked up about a year ago is called: Nickel and Dimed – On (Not) Getting By in America. by Barbara Ehrenreich.

The basic idea is that as an education middle/upper class American, Barbara decides to give it a go on minimum wage. She gave herself some money to start out and a few ground rules to function from before diving into poverty.

Moving from Florida to Maine to Minnesota, Ehrenreich worked as a waitress, a hotel maid, a cleaning woman, a nursing home aide, and a Wal-Mart sales clerk. Very quickly, she discovered that no job is truly “unskilled,” that even the lowliest occupations require exhausting mental and muscular effort. She also learned that one job is not enough; you need at least two if you intend to live indoors.

Read this book and you will rethink poverty. Let’s put it this way, you wouldn’t want to test yourself to see if you could make it out of poverty.

Where do you stand on this debate?

Best,

Miel

Bad Financial Decision Making

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In a previous posting, I stated that poverty is due to individual decision making. To put a more concrete example to the argument, here is an interview with a guy in Long Island. In the video, the guy explains his reasoning for wanting to take a high interest car loan. Feel free to check it out, and you’ll see my point.

Short of Cash, Try begging

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We DINKS have done a lot of things for money, but we’ve never begged. However, given that my salary is so meager, and that my investments in Canadian energy trusts have taken an ugly pounding, I think I might consider it…

From what this news article says, panhanding can pay up to $200.00 a day. Thats a lot better than a graduate students salary.

Best,

James

p.s. I’m just kidding about the begging thing.

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