…the SEC’s handling of the Madoff scandal.
Monthly Archives: December 2008
How To Start Integrating Your Finances
Since one goal of Dual Income No Kids is to discuss finance within relationships, Today’s posting contains some thoughts on getting started merging your finances. Anyone who is married or in a long term relationship will say you’ll need to begin integrating your finances with your significant other at some point.
David Bach has come good tips* on how to start this process:
1) Get Organized: The best thing to do is sit down and start going over your files. Throw out old ones and set up new ones. Just the act of getting organized can spur your significant other to get motivated as well.
2) Be Diplomatic: Motivating your partner can be tricky. According to David Bach, the thing to do is emphasize the importance of working on your joint goals. Whats also key about this is being diplomatic. In other words, you should avoiding blaming or condemning your partner for current difficulties.
3) Achieve Small Successes: Bach says that achieving small successes are important for getting started. Minor successes like meeting to discuss joint goals or to organize your finances can help build positive momentum. For my part, it gives me a lot of confidence that my wife Miel and I have been able to achieve small success, even when our relationship hasn’t been the most harmonious.Good luck merging your finances!
Best,
James
*From Smart Couples Finish Rich, by David Bach, pages 68-69.
America’s Most Frugal Family
Hi All,
This is going to be a quicker posting than usual, Miel is traveling and I’m swamped at the University. But –singaporewatch.org has a great 7 part review of the book Americas Cheapest Family.
Evidently, on an income of $35,000 per year the family did the following:
1) Paid off a house in 9 years.
2) Bought their cars with all cash
3) Fed a family of 5 on $350 per month
4) Remodeled their kitchen without borrowing
Apparently living frugal can go a LONG way. Here is a family with hard physical proof that being frugal can still allow you to live a comfortable life.
Click here to get a summary of how they did it.
Best,
James
From the Horses Mouth
Hi All,
You probably know this already, but the Federal Reserves released the following during its last meeting after cutting interest rates to 1/4.
“Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further. (here) “
Great.
When I die, I want to Come Back As Me
Hi All,
In case you haven’t heard of Mark Cuban, he’s a maverick billionaire living in Dallas and he’s my new hero. Why do I like this guy? A ton of reasons…
He’s a great entrepreneur. He got a start selling software in the 1990s. When the internet hit it big, his company Broadcast.com was acquired by yahoo for billions. He’s since diversified and has purchased a string of movie theatres, the Dallas Mavericks basketball team and a number of media companies. Forbes says he’s worth nearly 3 billion. Its all on Wikipedia
Second, he’s got a blog. Obviously he’s cool.
Third, Cuban’s promotion free markets and muckraking is quite refreshing. His blog has highlighted a ton of good stuff about the Securities and Exchange Commission including; porn use by SEC employees, lack of internal controls preventing insider trading by SEC employees and evidence that the SEC engaged in a retaliatory investigation of a company reporting insider trading (here). Given that the disgraced ponzi scammer Bernie Madoff was an SEC advisor, none of this is surprising.
Fourth, Cuban is the owner of sharesleuth.com. The story with sharesleuth is Cuban hired a couple of investigative journalists to research companies that were potentially fraudulent. Once they do find a company, Cuban sells the stock short, and then releases the information on the web.
Sound problematic? Most private crime fighting is. But seriously, check out some of the companies they’ve investigated. One is called Energy Exploration International. Cuban’s reporters went by the place and found the joint was totally empty – in the middle of the day. They also revealed EEI’s shares were being marketed out of a phone bank in Asia, all classic signs of a scam. Check it out the highly suspicious video here.
He’s great.
The title of this posting is from a Cuban interview with Techcrunch.
Best,
James
How Religion Impacts Wealth
Earlier this year, we blogged about the large impact of religion on wealth. Well, here is more on this for your reading pleasure. Evidently one Duke University researcher argues religious communities impact wealth through goal defining, building competencies and providing networking opportunities. The result is higher levels of wealth for Jewish people and lower levels for conservative protestants. It is interesting to see the likelihood of building wealth depending on one’s religious affiliation, something that seemingly would have negligible impact.
Here is the summary of Keister’s research:
Researchers have documented extreme inequalities in wealth ownership, but the processes that create these inequalities are not well understood. One important contributing factor that attracts little attention is religion. This study explores the relationship between religious participation, religious affiliation, and patterns of wealth accumulation. I argue that religion affects wealth ownership indirectly by shaping demographic behaviors. I also argue that religion directly influences wealth accumulation by identifying valuable goals, by providing a set of competencies that direct strategies of action, and by contributing to social contacts that provide information and opportunities that can enhance wealth ownership. The findings suggest that Jews enjoy tremendous gains in wealth ownership, while conservative Protestants accumulate relatively little wealth. In contrast, mainline Protestants and Catholics are indistinguishable from each other and from the general population. The results demonstrate the importance of family processes in shaping wealth accumulation, and they underscore the importance of culture in shaping economic behavior and ultimately in creating social inequality.
Click here for the specifics.
Best,
James
Your Daily Dose of Free Market Economics
Hi All
For those of you who are interested, here is your daily dose of free market economics…
Did Madoff Have Help?
For the past week, Wall Street and the press have been riveted by the Madoff scandal. The scale and scope of the 50 billion dollar Ponzi fraud is shocking and astounding. The initial press reports are that Madoff acted alone. However, on critical reflection this seems problematic.
Consider the following:
1) Staffing: A legitimate investment fund with billions of dollars under management would have necessitated a staff of at least 50 to 70. There is a great deal of clerical and administrative work that goes into managing funds of that size. The reports and distributions of Madoffs fake “investment gains” alone would have necessitated work for several co-conspirators.
2) Madoff’s Busy Personal Life: By all accounts, Madoff lead an active personal life. He was a frequent attendant at several country clubs and was a board member of at least two prestigious universities. In addition, he was head of his brokerage firm Madoff Investment Securities, LLC and acted as a consultant to the SEC on transparency issues. In short, Madoff was a busy guy. Busy to the point that it would have been difficult for him to produce all the false paperwork and manage all the fraudulent accounts on his own.
In the view of this humble blogger, the sheer amount of work it would take to carry out a fraud of this scale and the competing demands on Madoff’s time strongly indicate he was aided in perpetrating the fraud.
But wait you might say, the press said Madoff acted alone?! Well, while the New York Times is reporting that he acted alone and has been cooperative with investigators (1), however its clear from his past conduct that his statements are not trustworthy. Right now most of whats know comes from Madoffs own admission to FBI investigators. When all the details on this sad affair are brought to light, its entirely possible that Madoff will have had accomplices.
Best,
James
Some Visuals of Madoff’s Victims
Hi All,
Well, the list of victims from the Madoff scandal continues to grow. To sum it up, someone clever over at Clusterstock.com has put together a nice visual with snapshots of the people Madoff has fleeced. Most of them are super rich.
Check it out here.
Best,
James
How To Prevent Financial Infidelity In Your Relationship
Today we have a guest post from Trisha Wagner:
You don’t have to have an affair to be guilty of an infidelity that can ruin your relationship with your spouse. Perhaps you are not married but instead you are involved in a committed, monogamous relationship which involves co-habitation. In either case if you are sharing your life with a significant other and that life includes matters of the wallet as well as matters of the heart, you can be guilty of another form of infidelity that can be just as damaging to the foundation you are building upon. Financial infidelity is best described as the secretive act of spending money, possessing or opening credit card accounts, incurring debt, borrowing money or stashing cash behind your spouses back. In addition to potential financial ruin, this behavior also destroys trust and therefore intimacy in your relationship. Here are three simple steps to prevent or perhaps recover from financial infidelity.
Break the silence and talk about about money issues. With money or lack of it being one of the leading causes of divorce and the reason a significant part of the population loses sleep at night, it is hard to believe that discussing money is still not a priority in relationships. People manage to talk to one another and even to strangers about their jobs, children, dreams or frustrations yet having a meaningful discussion about personal finances seems to remain a bit taboo. If you truly intend on weathering life’s storms with your partner, being able to discuss money matters opening and honestly is imperative to the success of your relationship. Understanding what money means to each other, the views you were raised to have about money and what your financial goals as a couple are should be something you can sit down and talk about.
Set a limit that you both agree on. After you have an understanding of each other’s view on money management in the household, agree to a number that you are both comfortable with. This figure will be the amount of money either of you can spend without consulting the other. It is important that you both feel comfortable with this number if you expect this plan to work.
Follow the agreement. In some cases, especially when you are dealing with two different “money personalities” sticking to the plan and not going over the agreed upon number can be the most difficult yet important part of the agreement. If you find yourself tempted to go over that number on one or more occasions, take the time to sit down with your partner again and have another discussion. It is better to renegotiate the plan to ensure everyone is comfortable with it than to go behind your partners back by spending more than you agreed upon.
By facing the issue and getting it out in the open you have a better chance at being able to tackle money issues as they arise in your relationship. As time goes on your financial situation and responsibilities will change as well, so be sure to remember to keep the lines of communication open to prevent future issues.
Trisha Wagner is a freelance writer for DestroyDebt.com, a debt community featuring debt forums. Trisha writes regularly on the topics of getting out of debt and personal finance.