Hi All,
Nearly forgot. Happy independence day to all of you out there on the internet.
Author Archives: Team Dinks
Our Latest Business Idea
Hi All,
Just a quick posting. I’ve been inspired by some of the other bloggers I’ve read to try and focus more on getting passive income. So, my latest experiment is that I bought content for 150 websites on ebay. There was something like 10 articles per site, so for 1550 article I paid like $10 bucks.
The idea will be host the sites, spruce them up and bit, change some of the content around, add a copyright and then get the sites set up. Hopefully we’ll get more from google’s adsense then was invested in getting the websites set up.
I’ll let you all know how it turns out. Hopefully it is just a first step in a new adventure in creating wealth, and ends up being a great money making opportunity.
Best,
James
DINKs Buying Silver & Bonds
Hi All,
Its Thursday morning. This week has been flying right by. That said, I wanted to take a minute to update you all on my own personal finance moves over the past couple of months. For the past couple of weeks I’ve been focusing on silver and bonds.
I’ve been buying small amounts of silver, mostly American Eagles. My goal for the next few weeks is buy another 10 Ozs and fill up this tube I have, then I’ll switch over and focus more on our other goals. Ideally the long term idea is to have a couple of thousand ounces of silver to pass on to our children when the time is right. They maintain their value over the years and allow for potential wealth building opportunities when the markets are acting in their favor.
(my desk, with silver and cat).
Also, I’ve been letting the dividends from our various stock investments build up in my schwab account. The main idea is that when we get enough to make it worth our while we’ll transfer the funds to my wife Miel’s schwab account. At this point, we are planning on getting $5,000 worth of bonds and $7,000 worth of stocks in the second half of this year to round out our portfolio. At this point we are way long on real estate and while we have a lot of money committed to 401ks and Roth IRAs, these are relatively less flexible, so we’re planning on putting these more liquid funds into assets that can be moved around quickly in case a good opportunity comes up.
So, in terms of bonds, I’m planning on talking my wife Miel into buying the bonds from a selection of those listed on internotes.com.
The reason is that bonds listed on internotes are arranged in a manner such that the company issuing the notes agree to compensate the brokers. This is interesting because most of the time brokers pass higher commissions onto their customers via built in charges. Plus, the notes are issued at face value of $1,000 each, so you don’t have to deal with calculating interest payments. I’m not entirely sure about these products at the minute, but right now they look like a better deal for small investors.
Thanks,
James
Update: This post was featured on The Carnival of Money Stories
How Maths Killed Lehman Brothers
Hi All,
A good friend sent us this story. Its a great piece on the Lehman Brothers bankruptcy. It explains the mechanics of credit default swaps and how the complexity associated with these financial instruments ultimately contributed to last years collapse of the firm.
For what its worth, I don’t understand CDO. My wife and I also try to keep our own personal finance simple. For example, we don’t trade stock short and don’t mess around with reverse convertible bonds or other exotic products. Its all about saving and investing, as simply and as directly as possible. If you do that, you are on the right path for building your wealth.
Link to the story here.
Hat tip to the indefatigable Miles MG.
Best,
James
Are Americans Still Overspending?
The answer appears to be…yes.
A recent examination of consumer debts as a percentage of median income shows that American consumers may still be overspending, despite making recent gains in personal savings and consumer debt reduction. According to Forbes magazine, consumers in 20 key metropolitan areas owe a significant portion of their annual income to credit card issuers, leading a growing number of them to seek out help with credit card debt from credit card debt settlement services, debt consolidation programs, credit counseling, and other debt relief options.
The survey, which compared average household credit card debt to median income, showed that residents of these 20 cities owed between 13.6% and 22.6% of the median household income to credit card issuers. Miami residents, with a median income of $43,333, owed an average of $9,797 to credit card issuers, suggesting that even as some American consumers are paying down debts and increasing personal savings, residents in some areas aren’t weaning themselves from credit card spending and will likely continue to find themselves in need of relief.
Certain cities that made the list also have significant problems with foreclosures and job loss. According to RealtyTrac, Las Vegas is experiencing more foreclosures than any other metropolitan area in the country, with one out of every 56 homes receiving a foreclosure notice in April 2009. In addition, airlines report taking 12% fewer passengers to Las Vegas in March 2009 compared to March 2008. During the same time period, the cost of a hotel room in Las Vegas dropped by nearly one-third, and convention attendance there has decreased by 30%.
Perhaps in part due to the clear downturn in the city’s fortunes, Las Vegas landed at number nine on Forbes’ list of overspent locales. The city has a median income of $56,975 and an average household credit card debt of more than $8,600, meaning that the average resident of Las Vegas owes more than 15% of his or her annual median income to credit card issuers.
The authors of the Forbes study don’t offer suggestions on how to reduce credit card debt but say that the results indicate that some Americans haven’t yet reformed their spending habits. And as a steadily increasing stream of consumers veer toward bankruptcy, foreclosure, and programs that offer promises of debt relief, it’s clear that many Americans are still struggling with debt management and significant amounts of credit card debt.
Click here for the Forbes study.
– Jeff Lawson
California may Issue IOUs
Hi All,
This just in. California may begin issuing IOUs to companies doing business with the state (LATimes).
This is bad news. It means the state government doesn’t have any cash. They are not operating on the same terms as private business.
If you are considering buying state issued California bonds, I’d think twice about it. They may not have the money to pay you.
Best,
James
IRS and SIPC Unresponsive to Madoff Victims
Hi All,
I rarely post videos from TechTicker. Usually their content isn’t worth writing home about. Well, yesterday’s story was about the SEC, the IRS and the SIPC. Evidently these agencies have been slow and inflexible about making Madoff victims whole. They have lost significant portions of their wealth (or all their wealth), yet these agencies are not letting up. Now, don’t you think this is little like kicking somebody after they are down? Its definitely bad manners and probably also bad policy.
Check the video below. –
Dealing with Inflation
Hi All,
So I was sitting on the metro riding home today and was leaving through somebodys leftover USA Today. The finance section had a piece on inflation. The article basically said that because the Feds are racking up huge bills, the government will have a powerful incentive to create inflation.
The thing about it was, that they cited this swiss economist, Marc Faber. Faber is famous for having made the prediction that hyperinflation was a 100% certainty for the US. The thing is, the newspaper was the USA today. I always kinda figured that Faber was only quoted by internet freaks and hard core gold bugs. I was surprised that a reputable paper like the USA Today quoted the guy.
So it seems that the mainstream press, not just bloggers are starting to take the inflation issue seriously.
So, I don’t know what you’re planning on doing about this, but I’ll tell you this much. When and if inflation gets to around 10 to 12% I’m planning on loading up on long term debt instruments. Preferably something like 30 year t bills or an investment along those lines.
The truth is that high levels of inflation are a historically anomaly. For most of the last 70 years interest rates have been way lower than 10%. In fact, a really high interest rate would be a great opportunity, especially if one thinks about it as an opportunity to lock in a high return with low risk. It’s a signficant money making opportunity and one that could greatly enhance our wealth. So, what will be on the menu will be things like 5 year CDs and long term treasury obligations.
Best,
James
Madoff Gets 150 Years
Hi All,
The latest from the HuffingtonPost is that ponzi schemer Bernie Madoff has received a sentence of 150 years in prison. He’s likely to be sent to hard core state insitution in New York. The length of his sentence indicates that, in all probably, he will die a prisoner of the state.
Justice has been served.
Click here for the story.
Best,
James
Money Meetings Help Us Communicate
Communication is a key element of our relationship. We had some problems early on because James really didn’t know how to articulate himself in a healthy and affirming manner to Miel. Now, we meet nearly every Saturday morning to keep things moving forward.
Usually what we do is lounge around in our pjs and drink coffee (yummy!) while we’re talking. Most of the time we discuss finances, but we usually address a whole range of things. For example, a couple of weeks ago, we talked about starting this blog. Also, we’ve chatted about managing our wedding, defined savings goals, reallocated our budgets – pretty much anything that needs discussing.
Sometimes James still doesn’t know how to articulate himself, but at least we DINKS have found a time where we’re both free to keep our communication open.
Here is where we have our meetings (usually its a LOT more messy)!
