YOUR FUTURE JOB....
You need to ask yourself whether your job will be affected in the future by the "China" economic revolution. In the new
Chinese economy workers make about .35 cents an hour and no benefits. What are you making? Always keep an eye over your shoulder and constantly update your skill sets.
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Friday, June 23, 2006
How the Monthly Mentality Messes Up Your Wealth
by Laura Rowley
I recently read an article by Laura Rowley on “How the Month Mentality Messes Up Your Wealth” and came to reflect on some distant family members who “fit the bill.” I strongly recommend you read the summary below and make any necessary corrections in your lifestyle so your “future retirement” willl work.
In summary:
“There are increasingly more people who look at only the “monthly payment” and not the total cost of ownership. “
“From housing to autos to material goods, Americans are bombarded with the notion that if you can afford the monthly payment, you can afford the thing you're buying. What's never discussed is the princely opportunity cost of living on borrowed money -- and how devastating the monthly mentality can be to long-term wealth.”
“The philosophy is obvious in the home market as more buyers stretch to get their piece of the American dream. According to a recent Harvard study, in just two years, interest-only loans went from a relatively obscure product to an estimated 20 percent of the dollar value of all loans and 37 percent of adjustable-rate loans originated last year. Option ARMs, in which the borrowers can pay even less than the monthly interest due on the loan and roll the balance forward, accounted for nearly 10 percent of last year's loan originations.”
Mortgage lenders are now offering new-fangled option ARMs to defer the pain for borrowers whacked by paying principal for the first time in a rising interest-rate environment,. IndyMac Bancorp., for instance, offers an extended fixed-rate period before interest charges reset, and the ability to defer repayment of principal for a longer period of time. IndyMac's head of mortgage products says it's the bank's fastest-growing new product. “
"Manageable" Debt Levels?
The Federal Reserve's Flow of Funds report, as homeowners sucked out more equity out of their properties amid rising real estate values. Overall, household debt rose at an annual rate of 11.6 percent, up 0.5 percent from the previous quarter.
Mortgage delinquencies declined slightly in the first quarter, as the strong economy and job growth offset rising interest rates and higher energy prices. Some 4.41 percent of residential mortgages were delinquent, down 0.29 percent from the previous quarter, according to the Mortgage Bankers Association. About 1 percent of mortgages are in foreclosure, virtually flat from the previous quarter.
“Maybe I'm a little behind the times, but I have a different definition of "managing your personal finances well". It would include things like paying off your mortgage early -- vs. avoiding delinquency and foreclosure. It would include saving for larger purchases in advance and paying cash -- vs. buying items with "manageable" credit-card debt.
The Fed reported that consumer credit soared $10.6 billion in April, to a record $2.170 trillion -- more than three times Wall Street estimates. Credit grew at a seasonally adjusted annual rate of 5.9 percent -- the fastest pace in a year. (The data exclude home mortgages and other real estate-secured loans.)
Upside-Down Borrowers
The monthly mentality is also evident in the auto market. Some 29 percent of U.S. vehicle buyers were "upside-down" in their loans in May -- meaning they owe more than the trade-in value of their cars. That's the second-highest level in four years, according to Jesse Toprak, executive director of industry analysis for Edmunds.com. The average amount of negative equity was $3,789.
The reason? Borrowers who otherwise can't afford the cars they want are opting for mega-term loans: In January, 2002, the average loan term was 57.3 months. Now it's 63.6 months. Toprak says 72 months is becoming the norm.
"Unfortunately, we still often see people going to the dealer and saying, 'I want to pay $400 a month,' despite the fact that it's a really bad way to buy a car," Toprak explains. "Extended terms become the only way to get the car they want. They don't see the consequences two years down the road."
Toprak says he's seen a new trend in leasing among upside-down borrowers because it allows them to finance up to 115% of the vehicle's sticker price, whereas a traditional purchase only provides 100% financing. Thus, borrowers can trade in their vehicle and add their negative equity to the lease. It results in higher monthly payments, but at the end of the lease the negative equity is gone. Of course, they don't own anything at the end of the lease, either.
Coming Home to Roost
The monthly mentality certainly opens the door to a more comfortable monthly life. But I suspect that deep down, it inspires a level of discomfort about what may happen if the monthly nut can't be paid.
And here's where the monthly mentality finally comes home to roost: When you can't work anymore. A new study from the Center for Retirement Research at Boston College found that 43 percent of working-age households are at risk of not having enough to maintain their standard of living in retirement. Pensions are disappearing, people are living longer, and savings rates are weak. In 2004, the typical household head approaching retirement had only $60,000 in 401(k) and IRA accounts, which translates into less than $400 per month in retirement, the study noted.
The good news: This situation can be turned around if people work until age 67, rather than retiring at 65 or earlier, and if they save more -- putting aside even 3 percent of income can make a difference over time. But making that happen isn't going to be easy in a culture that glorifies the monthly mentality.”
Thank you Laura for this important life-style reminder.....
-----------------------------------
by Laura Rowley
I recently read an article by Laura Rowley on “How the Month Mentality Messes Up Your Wealth” and came to reflect on some distant family members who “fit the bill.” I strongly recommend you read the summary below and make any necessary corrections in your lifestyle so your “future retirement” willl work.
In summary:
“There are increasingly more people who look at only the “monthly payment” and not the total cost of ownership. “
“From housing to autos to material goods, Americans are bombarded with the notion that if you can afford the monthly payment, you can afford the thing you're buying. What's never discussed is the princely opportunity cost of living on borrowed money -- and how devastating the monthly mentality can be to long-term wealth.”
“The philosophy is obvious in the home market as more buyers stretch to get their piece of the American dream. According to a recent Harvard study, in just two years, interest-only loans went from a relatively obscure product to an estimated 20 percent of the dollar value of all loans and 37 percent of adjustable-rate loans originated last year. Option ARMs, in which the borrowers can pay even less than the monthly interest due on the loan and roll the balance forward, accounted for nearly 10 percent of last year's loan originations.”
Mortgage lenders are now offering new-fangled option ARMs to defer the pain for borrowers whacked by paying principal for the first time in a rising interest-rate environment,. IndyMac Bancorp., for instance, offers an extended fixed-rate period before interest charges reset, and the ability to defer repayment of principal for a longer period of time. IndyMac's head of mortgage products says it's the bank's fastest-growing new product. “
"Manageable" Debt Levels?
The Federal Reserve's Flow of Funds report, as homeowners sucked out more equity out of their properties amid rising real estate values. Overall, household debt rose at an annual rate of 11.6 percent, up 0.5 percent from the previous quarter.
Mortgage delinquencies declined slightly in the first quarter, as the strong economy and job growth offset rising interest rates and higher energy prices. Some 4.41 percent of residential mortgages were delinquent, down 0.29 percent from the previous quarter, according to the Mortgage Bankers Association. About 1 percent of mortgages are in foreclosure, virtually flat from the previous quarter.
“Maybe I'm a little behind the times, but I have a different definition of "managing your personal finances well". It would include things like paying off your mortgage early -- vs. avoiding delinquency and foreclosure. It would include saving for larger purchases in advance and paying cash -- vs. buying items with "manageable" credit-card debt.
The Fed reported that consumer credit soared $10.6 billion in April, to a record $2.170 trillion -- more than three times Wall Street estimates. Credit grew at a seasonally adjusted annual rate of 5.9 percent -- the fastest pace in a year. (The data exclude home mortgages and other real estate-secured loans.)
Upside-Down Borrowers
The monthly mentality is also evident in the auto market. Some 29 percent of U.S. vehicle buyers were "upside-down" in their loans in May -- meaning they owe more than the trade-in value of their cars. That's the second-highest level in four years, according to Jesse Toprak, executive director of industry analysis for Edmunds.com. The average amount of negative equity was $3,789.
The reason? Borrowers who otherwise can't afford the cars they want are opting for mega-term loans: In January, 2002, the average loan term was 57.3 months. Now it's 63.6 months. Toprak says 72 months is becoming the norm.
"Unfortunately, we still often see people going to the dealer and saying, 'I want to pay $400 a month,' despite the fact that it's a really bad way to buy a car," Toprak explains. "Extended terms become the only way to get the car they want. They don't see the consequences two years down the road."
Toprak says he's seen a new trend in leasing among upside-down borrowers because it allows them to finance up to 115% of the vehicle's sticker price, whereas a traditional purchase only provides 100% financing. Thus, borrowers can trade in their vehicle and add their negative equity to the lease. It results in higher monthly payments, but at the end of the lease the negative equity is gone. Of course, they don't own anything at the end of the lease, either.
Coming Home to Roost
The monthly mentality certainly opens the door to a more comfortable monthly life. But I suspect that deep down, it inspires a level of discomfort about what may happen if the monthly nut can't be paid.
And here's where the monthly mentality finally comes home to roost: When you can't work anymore. A new study from the Center for Retirement Research at Boston College found that 43 percent of working-age households are at risk of not having enough to maintain their standard of living in retirement. Pensions are disappearing, people are living longer, and savings rates are weak. In 2004, the typical household head approaching retirement had only $60,000 in 401(k) and IRA accounts, which translates into less than $400 per month in retirement, the study noted.
The good news: This situation can be turned around if people work until age 67, rather than retiring at 65 or earlier, and if they save more -- putting aside even 3 percent of income can make a difference over time. But making that happen isn't going to be easy in a culture that glorifies the monthly mentality.”
Thank you Laura for this important life-style reminder.....
-----------------------------------
Tuesday, June 20, 2006
Life's Potholes....
Periodically life reminds you of the frality of life with "potholes" in your life journey. There is seldom a warning of the "event(s)" nor ever the "understanding" you expect from others.
That being said, life goes on....and what you have learned from the last "pothole" should benefit you at the next pothole but only if your astute, calm, and perceptive.
-----------------------
Periodically life reminds you of the frality of life with "potholes" in your life journey. There is seldom a warning of the "event(s)" nor ever the "understanding" you expect from others.
That being said, life goes on....and what you have learned from the last "pothole" should benefit you at the next pothole but only if your astute, calm, and perceptive.
-----------------------
Sunday, June 18, 2006
ANOTHER BUSH INHUMANITY PROPOSAL
LET 'EM EAT....
I have always considered that President George Bush one of the most selfish Presidents in our country's history. The following article from the AARP merely illustrates one such trait.
Let 'em Eat…a Balanced Budget
Surplus food for low-income older Americans is on the federal budget chopping block.
By Susan Q. Stranahan
June 2006
When her food stamps run out each month, Rita Mash of Nelsonville, Ohio, turns to a box of surplus food delivered under a federal program. With the canned vegetables and fruit, cheese, cereal, peanut butter and evaporated milk, she feeds her husband and four grandchildren. "This way, we are able to have groceries for the last week of the month," Mash says. "This program is vital to us."
Yet President Bush's budget proposals for fiscal 2007 would eliminate the program (the Commodity Supplemental Food Program, or CSFP, started in 1968), which serves 420,000 low-income older Americans in 32 states and the District of Columbia. Total projected savings: $107 million—out of a $2.8 trillion budget.
"It's unconscionable," says Lisa Hamler-Fugitt, director of the Ohio Association of Second Harvest Foodbanks. Her group and other charities deliver 12,000 food boxes a month and have a waiting list of thousands.
"If we can't sustain these seniors in independent living, they're going to move into nursing homes and increase the costs to government," Hamler-Fugitt says. "Do we want to give them CSFP food boxes valued at about $150 a year or spend $50,000 a year to put them in a nursing home?"
The Bush administration says it wants to eliminate the food distribution program, which also helps low-income women and young children, because its effectiveness has not been demonstrated and because it overlaps with the food stamp and WIC (Women, Infants, and Children) programs. Instead, more of the older recipients will be encouraged to apply for food stamps if they don't already receive them.
The administration's claim that food stamps will replace the surplus food is "a poor excuse" for eliminating the program, says Richard Noriega of the South Texas Food Bank, which has about 5,000 people enrolled in CSFP.
Noriega estimates the retail value of the monthly food deliveries at $55 a box. The monthly food stamp benefit for an older individual is less than $20, often as little as $10, and the program has more restrictive eligibility requirements. In addition, Noriega says, the recipients "then have to pay someone $10 for gas to get them to the grocery store to buy the food."
The consternation is shared by Sen. Herb Kohl of Wisconsin, the ranking Democrat on the Senate Appropriations Subcommittee on Agriculture. "It really does come under the category, in the most extreme way, of balancing the budget on the backs of those who are most needy," Kohl said earlier this year after Bush's plan became public.
Will Congress go along with Bush's proposal? Not likely. In early budget deliberations, the House Appropriations Committee voted to increase funding for CSFP to $118 million.
----------------------------------
LET 'EM EAT....
I have always considered that President George Bush one of the most selfish Presidents in our country's history. The following article from the AARP merely illustrates one such trait.
Let 'em Eat…a Balanced Budget
Surplus food for low-income older Americans is on the federal budget chopping block.
By Susan Q. Stranahan
June 2006
When her food stamps run out each month, Rita Mash of Nelsonville, Ohio, turns to a box of surplus food delivered under a federal program. With the canned vegetables and fruit, cheese, cereal, peanut butter and evaporated milk, she feeds her husband and four grandchildren. "This way, we are able to have groceries for the last week of the month," Mash says. "This program is vital to us."
Yet President Bush's budget proposals for fiscal 2007 would eliminate the program (the Commodity Supplemental Food Program, or CSFP, started in 1968), which serves 420,000 low-income older Americans in 32 states and the District of Columbia. Total projected savings: $107 million—out of a $2.8 trillion budget.
"It's unconscionable," says Lisa Hamler-Fugitt, director of the Ohio Association of Second Harvest Foodbanks. Her group and other charities deliver 12,000 food boxes a month and have a waiting list of thousands.
"If we can't sustain these seniors in independent living, they're going to move into nursing homes and increase the costs to government," Hamler-Fugitt says. "Do we want to give them CSFP food boxes valued at about $150 a year or spend $50,000 a year to put them in a nursing home?"
The Bush administration says it wants to eliminate the food distribution program, which also helps low-income women and young children, because its effectiveness has not been demonstrated and because it overlaps with the food stamp and WIC (Women, Infants, and Children) programs. Instead, more of the older recipients will be encouraged to apply for food stamps if they don't already receive them.
The administration's claim that food stamps will replace the surplus food is "a poor excuse" for eliminating the program, says Richard Noriega of the South Texas Food Bank, which has about 5,000 people enrolled in CSFP.
Noriega estimates the retail value of the monthly food deliveries at $55 a box. The monthly food stamp benefit for an older individual is less than $20, often as little as $10, and the program has more restrictive eligibility requirements. In addition, Noriega says, the recipients "then have to pay someone $10 for gas to get them to the grocery store to buy the food."
The consternation is shared by Sen. Herb Kohl of Wisconsin, the ranking Democrat on the Senate Appropriations Subcommittee on Agriculture. "It really does come under the category, in the most extreme way, of balancing the budget on the backs of those who are most needy," Kohl said earlier this year after Bush's plan became public.
Will Congress go along with Bush's proposal? Not likely. In early budget deliberations, the House Appropriations Committee voted to increase funding for CSFP to $118 million.
----------------------------------
Saturday, June 17, 2006
Instruction....
Teachers....
Everyone who remembers his own educational experience remember teachers, not methods and instructional techniques.
Everyone who remembers his own educational experience remember teachers, not methods and instructional techniques.
Wednesday, June 14, 2006
"Theory of Learning Immunization"
A BASIC CONCEPT OF LEARNING (Training)....
I used to have a supervisor who constantly fought with his superiors to spend more on staff training and LESS on hardware. Unfortunately, his supervisors could not grasp the importance of this concept.
His supervisors believed in the "Theory of Learning Immunization" - that is, if you provide a "training" session (shot) that should provide a long-term solution to the probelm.
As any classroom teacher can tell you (from experience) training and learning is a long drawn out process - it is not immunization.
All "training" requires a well thought out plan with frequent "retraining" on a regular basis.
-----------------------
I used to have a supervisor who constantly fought with his superiors to spend more on staff training and LESS on hardware. Unfortunately, his supervisors could not grasp the importance of this concept.
His supervisors believed in the "Theory of Learning Immunization" - that is, if you provide a "training" session (shot) that should provide a long-term solution to the probelm.
As any classroom teacher can tell you (from experience) training and learning is a long drawn out process - it is not immunization.
All "training" requires a well thought out plan with frequent "retraining" on a regular basis.
-----------------------
Tuesday, June 06, 2006
MARRIAGE....
Is certainly one on the most important choices you will make in your life. The selection of a mate not only is a great "emotional" decision but an economic one as well.
A relative is in midst of making elaborate wedding plans and unfortunately has decided to place themselves into future bankrupcy by "borrowing" for this event.
It is always interesting that people who have very little will "over-compensate" in their "public-display" with expensive events, cars, etc. attempting to win "public-recognition."
Live within your income, be consistent, - and start early!
--------------------------
Is certainly one on the most important choices you will make in your life. The selection of a mate not only is a great "emotional" decision but an economic one as well.
A relative is in midst of making elaborate wedding plans and unfortunately has decided to place themselves into future bankrupcy by "borrowing" for this event.
It is always interesting that people who have very little will "over-compensate" in their "public-display" with expensive events, cars, etc. attempting to win "public-recognition."
Live within your income, be consistent, - and start early!
--------------------------
Thursday, June 01, 2006
SWEATING THE SMALL STUFF....
I have always marveled at how people can ignore the "small stuff" in life. It is the accumulation of many "small things" which become the "big things" that overwhelm people.
I do "sweat" the "small stuff" everyday of my life and make no amends for it - neither should you.
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I have always marveled at how people can ignore the "small stuff" in life. It is the accumulation of many "small things" which become the "big things" that overwhelm people.
I do "sweat" the "small stuff" everyday of my life and make no amends for it - neither should you.
--------------------
BACKING UP.....
for years I kept a favorite IT cartoon on my wall. It showed two IT managers in conversation at a party. The one IT manager said to the other "You know you really have to have a backup." In back of him were TWO WIVES, TWO DOGS, TWO CHILDREN, TWO CATS.....
I mention this because even after retirement (from IT) I periodically have people call me seeking advice about their problems. And while I always direct them to their HELP DESK I always smile because in most cases PREVENTION on their parts would have saved them their immediate grief.
Yesterday a friend called and told me that all her e-mail had disappeared. While I told her it COULD be reconstructed (via her Help Desk) SHE needed to be more proactive in the future. I steered her to established an email account at Yahoo or Google to forward "copies" of all her correspondence/files. No matter what IT people tell you "stuff happens" and it will always be at a time you need it to happen.
---------------------------------
for years I kept a favorite IT cartoon on my wall. It showed two IT managers in conversation at a party. The one IT manager said to the other "You know you really have to have a backup." In back of him were TWO WIVES, TWO DOGS, TWO CHILDREN, TWO CATS.....
I mention this because even after retirement (from IT) I periodically have people call me seeking advice about their problems. And while I always direct them to their HELP DESK I always smile because in most cases PREVENTION on their parts would have saved them their immediate grief.
Yesterday a friend called and told me that all her e-mail had disappeared. While I told her it COULD be reconstructed (via her Help Desk) SHE needed to be more proactive in the future. I steered her to established an email account at Yahoo or Google to forward "copies" of all her correspondence/files. No matter what IT people tell you "stuff happens" and it will always be at a time you need it to happen.
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