March 2009 - Page 5 of 6

Obama Criticizes Finance Bloggers

Posted on March 9, 2009 - 11:09 pm by Team Dinks

Hi All,

President Barack Obama was quote in the New York Times as saying the following about finance bloggers:

“Mr. Obama rode to the White House partly on his savvy use of new technology, and he has a staff-written blog on his presidential Web site. Even so, he said he did not find blogs to be reliable, citing the economy as one example.

“Part of the reason we don’t spend a lot of time looking at blogs,” he said, “is because if you haven’t looked at it very carefully, then you may be under the impression that somehow there’s a clean answer one way or another — well, you just nationalize all the banks, or you just leave them alone and they’ll be fine.” (NYT).

To be entirely fair, the president is under a great deal of strain – between two wars, a collapsing economy, and attacks from his political enemies – he has a tremendous amount on his plate. He may even be correct in his assessment of bloggers generally. However, we DINKS spend a great deal of time on creating good content, and I personally find the president’s comments in this regard to less than encouraging.

Best,

James

Woah – Is that a Tax Protest?

Posted on March 9, 2009 - 1:10 am by Team Dinks

Hi All,

Just saw this on the web, it hasn’t been getting a lot of media play, but evidently this weekend saw a rather sizable protest against a new tax initiative in California.

The story is that California’s budget has been drowning in a sea of red ink, and the governors office and the legislature have been wrestling to close a budget gap of over 40 billion. The Government of California’s solution has been proposition 1A. Proposition 1A is a ballot initiative that raises fuel & vehicle fees, as well as extends sales taxes and decreases the impact of income tax deductions. People are sick of losing money because of the high tax responsibilities. It’s hard to build wealth when well over 50% of your income is going to the government.

Check out the protest videos on you tube. Its a genuine tax protest in full effect, they’ve got angry rhetoric, chanting, a lively crowd, they even cut off Governor Schwarzenegger’s head in effigy. I’ve generally been optimistic about the future of the US economy, but tax protests suggest that we’re not out of the woods yet.

WaMu Strikes From Beyond the Grave

Posted on March 7, 2009 - 3:14 pm by Team Dinks

Hi All,

What is about some bad banks? Even after they go bankruptcy, they still send you junk mail. I opened up our box this morning and found yet another insurance come on from Washington Mutual. Its frankly incredible that the bank has gone under, destroyed billions of dollars of shareholder equity, been the recipient of dozens of lawsuits, made its customers lives a nightmare…yet still manages to send junk mail?!

Seriously, Washington Mutual is like Frankenstein’s monster. Its dead, but it still won’t die.

Getting By on $400,000 a Year

Posted on March 7, 2009 - 11:51 am by Team Dinks

Hi All,

If you’re interested in learning how the recession is affecting the wealthy, you might consider popping over to MSN Money’s series on how the recession is impacting the wealthy.

Evidently, even those with incomes over $400,000 are getting pinched in the recession as well. Maybe someone should have lived a little more frugal? ; )

Click here for the link.

Best,

James

Nothing to Buy

Posted on March 7, 2009 - 4:58 am by Team Dinks

Want to know an easy way to save money?

Be someplace where there is nothing to buy!

It may seem simplistic, but I tell you – it works!

Here in Bujumbura, Burundi I was excited to make it to the big city. Thinking that I might be able to buy a couple of things that I couldn’t find in DRCongo. Turns out that there is jack squat to buy here! I went in search of some treats for colleagues still back in DRC and came up with a measly pack of M&Ms! At least I know I’m not missing out on anything.

Another bonus is that the everyday items from the states were really expensive. When I looked at cheap brand of shampoo costing $15 it made me want to conserve the 2 oz that I brought for my initial month here!

Obviously you want to learn to resist the temptation of consumerism while you are inundated by it – but an easy way to save money is to retreat altogether.

This can be for a short weekend of going on a spending hiatus or a longer period of time.

For example, between high school and college I worked at Crater Lake Lodge. This was a fabulous way to save lots of money as there was nothing to buy even if I wanted to. It’s easy to save money and live frugal when you don’t really have a choice!

Keep in mind for this to work that you can’t spend a bunch of money in preparation of being somewhere where you can’t buy things! Otherwise you might not end up ahead at the end of the day.

Cheers,

Miel

Unemployment Up, Reason for Optimism

Posted on March 6, 2009 - 10:39 am by Team Dinks

Hi All,

The latest numbers from the Labor Department are out. The US economy lost 651,000 jobs last month. The unemployment rate is now at 8.1% (1). This in increase over last months numbers and suggests the economy isn’t getting better anytime soon.

Despite this, there is still some reason for optimism. While macro economic conditions have continued to deteriorate, a couple of positive signs are emerging.

First, the panic has stopped. In an interview yesterday, Liz Ann Sonders – a really excellent Schwab analyst btw, noted three things:

1) Stock market selling is becoming less indiscriminate
2) Eight of 10 S&P sectors are outperforming the index this year, most of the bloodletting has been confined to industrials and financials
3) Investment grade credit it starting to come back

If Sonders is right (1), then this indicates that the economic panic is starting to subside. This is really good news, because it means that the business climate will start to return to rationality.

Second, federal dollars are starting to trickle down into the economy. Now, regardless of what you think of Federal spending – I take a rather dim view of it – governments can stimulate aggregate demand, and there are a LOT of federal dollars that are starting to trick down into local economies. For example, the media here on the east coast is reporting that funding for transportation and infrastructure projects is starting to hit city and county balance sheets.

Of course for individuals, its probably still a good idea to think about getting or increasing your emergency fund as well as adhering to good personal finance basics such as living frugally. We’re not out of the woods yet.

Thanks,

James

2009 Consumer Action Handbook

Posted on March 5, 2009 - 5:23 pm by Team Dinks

Hi All,

Just wanted to let you know that the 2009 consumer action handbook is out. The handbook contains several good discussions on credit, buying a car, the risks of investing, and identity protection among others. Its written with the interests of the consumer in mind, so unlike a lot of crud on the web, there isn’t a hidden agenda.

If you want to get up to speed on some basics of any of these topics, this would be a good starting point. Its especially good for teens or young adults.

Click here for the handbook.

Best,

James

p.s. hat tip to Jim at Bargaineering.com.

Why So Many Politicans With Tax Problems?

Posted on March 5, 2009 - 11:19 am by Team Dinks

Hi All,

If you’ve been following the headlines, you’ve probably noticed that a LOT of political appointees have been failing to fully pay their taxes. Most famously Timothy Geitner experienced widespread criticism when he blamed Turbo Tax for making a 42,000 mistake on his income taxes (1). More recently apointees like Ron Kirk, Tom Daschle, Nancy Killefer and Hilda Solis also faced problems with their nominations due to tax issues (1). Now, to top it all off, its being reported today that 22 Georgia legislators have failed to pay their taxes (1).

Why is all this happening? Have politicians suddenly become mathematically illiterate?

Probably a more realistic interpretation is that the tax code is too complicated.

According to IRS estimates (1), it takes the average American family, including itemization, 28 hours to complete their income taxes. Assuming you work an 8 hour day that’s three and a half days of work, just to complete your returns. Think of all the wealth that Americans could retain if they did not have to spend billions a year paying tax preparers? Then think of how you could invest that wealth! But unfortunately we are stuck with this complex tax code. The increased complexity is reflected in the forms themselves, check out this 1040 from 1913 and compare it to the 2008 version.

Now compare it to the same form in 2008.

And that’s just the first page of the 2008 forms! If you’ve filed yourself, you know there are several more to fill out.

So just to wrap this up, the reason why many politicians are having tax issues block their appointments is the complexity of the IRS code. By and large, politicians tend to have more complicated income arrangements than the average person, and the complex rules of the tax system itself are making it increasing difficult to properly account for the money.

Best,

James