The Kindle Edition is also available:

-WR

First, J. Money never fails to impress. I feel smart and frugal after checking out his list of money wasters.

Second, I am not qualified to link to this page (or any other for that matter) but here are few good links anyway…

Need a deal, check out The Krazy Coupon Lady.

Oh, if we had all started this young.

Wise Bread has some good tips for us older folks on how to fight debt.

$1.99 Organic whole chicken? I am heading to Whole Foods on Friday!

Bargain Briana (and IKEA) just gave me a free breakfast!

-WR

A phrase so overused it has become synonymous with the word ‘apathy’. There are good reasons for this. We have become accustomed to viewing our world and our place in it as sort of a reality show of strengths and weaknesses. If we are good at something, it is said, we should pursue it. Encourage it! Put our best foot forward.

Sometimes our best foot is the wrong foot.

When we focus only on our strengths we can refine them. A world class ballerina, bodybuilder or bowler must focus on little else than his or her craft in order to attain such greatness. These are narrow niches. If you want to be the best swimmer in a well defined pool you have to have talent, strength and focus.

However, when the challenge becomes more complex, the answer becomes more nuanced. The line between art and science becomes muddled. You can no longer focus on a well-defined discipline and hope to achieve greatness as those before you. What you need, usually, is a healthy dose of balance.

Pity the artist who does not understand business.

Pity the businessman who does not contemplate art.

Pity the athlete who does not read.

Pity the bookworm who does not sweat.

There is great value in the embracing the parade of opposites, doing that which you simply don’t do, embracing things you do not like. This is life. In order to fully understand art you must know business. On a more basic level, in order to fully appreciate joy you must, unfortunately, experience sorrow. These are the pairs of opposites that drive our lives.

Start by defining your passions, the things you love to do. List your talents, desires and skills.

Then ask,”What is the opposite of this?”

This will most likely be your hate list.

By doing what you hate, you actually liberate yourself to do what yo love, to do what you are.

Are you a wordsmith, unencumbered by numerical or financial idiosyncrasies? Watch a Khan Academy course on Algebra. Take an accounting class. Do Sudoku. This will not erase your love of language but rather enhance your ability to share it with the world.

Are you a technologist, A pure engineer kind of  fearful of pursuing social relationships or speaking in front of groups? Join a local Toastmasters International club and become friends with a group of people who are eminently respectful and interested in your success as a leader and public speaker. This will not inhibit your technological talent but rather enable you to share your gift with the world.

The examples are too numerous, the challenge is yours.

Do what you hate and you can do what you love.

-WR

I have solved the debt ceiling problem and frankly I am surprised that the Tea Party and the White House have not contacted me yet.

Here are a few of my best ideas (yes, there were worse ones):

1. Sell Nebraska, Iowa, Kansas and Missouri to China for 5 Trillion dollars. This new Chinese province situated right in the center of the continental U.S. could be the grand hub for all of our Chinese needs. They could open a Foxconn factory, hire the native population and make Ipads and sell them from fake Apple stores.

2. Hire obese people to hand deliver tweets. Tweets would be printed out on fortune cookie paper, given to a tweet-walker (or tweet-biker) who would use human power to deliver the 140 character (or less) message throughout a nationwide network (except of course, the big new China in the middle, no social media goes in there). This would dramatically reduce healthcare costs and put millions of people to work.

3. Sell the National Parks to Disney. It’s a small world, after all.

4. Open a string of Government Run Social Security Casinos. Require seniors to pick up their S.S. money on site in the form of chips. Odds are always on the house!

Do you have any ideas?

While China, Japan and the U.S. make up the top 3 creditors, we hold a lions share of U.S. debt:

The U.S. owes the U.S most

Here is a breakdown of all of the creditors to the U.S. :

Who we owe

source: Business Insider

The Wall Street Journal has a live blog of the debt debate that is worth checking out.

Question: What changes have you made in your personal finances as a result of the ongoing debt debate?

I have reduced my exposure to equities recently and have increased cash. I could miss out on some gain and dividends but the market uncertainty leading up to the artificial debt deadline could precipitate a big correction or crash. Nobody knows.

I do hope they sort this out soon, though, it is really a dangerous political sideshow that is doing grave harm to our reputation around the world.

-WR

As we head into the final furlong of the debt debate it may be perplexing that our economy seems to be doing so poorly in terms of housing, joblessness, consumer confidence and myriad other ‘coal mine canaries’. I thought it would be interesting to understand why the stock market seems to be riding so high.

What do the following organizations have in common?

If you answered that they are all American companies you’d be right, technically. There is a slight problem with these companies in particular though. They happen to be the 30 companies that make up the Dow Jones Industrial Average. When newsies say “The Dow is up” or “The Dow is down” what they are saying is the average price of these 30 companies stock has gone up or down. (The actual calculation is slightly more complicated, it is the sum of the prices of all 30 stocks divided by the ‘Dow Divisor‘, a magic number used to take into account company changes such as stock splits or spinoff companies but the effect is the same.)

So what’s the problem?

When you read or hear something like this: “U.S. blue-chip stocks are riding high and the Dow Jones Industrial Average finished its best month of the year.” You’d be inclined to infer that the health of the U.S. Economy is somehow tied to the Dow. You’d be wrong. While all of the companies are technically American organizations, many of them are actually multinationals with a majority of employees and sales abroad.

Things that make you say MMM

When a company such as 3M (Originally called the Minnesota Mining and Manufacturing company. You can’t get more apple pie and baseball than that) has only 34% of sales in the U.S you could say, “Hey, great. They are selling stuff on the global market.” When you come to find out that only 33% of their employees are in the U.S. then you might start to wonder if they should really qualify as an American company at all, much less be listed prominently on the DOW.

Caution:Rant

Perhaps this is why the DOW is sky high yet people can’t find jobs or buy houses around the country. Incidentally, how does the U.S. Federal Reserve lending $45 billion to european banks help U.S. citizens? Many bankers and the people inside our own Fed are increasingly proving to be dirty, despicable people. Banks got a big bailout yet won’t lend to small businesses or American people. Maybe we shoulda let them fail.

/Rant

Which other companies on that list should perhaps not be there?

What should we use instead to measure the overall health of American enterprise?

When Tim Geithner says “We’re almost out of runway” it might be time to be very concerned.

please let me know what you think.

And here are a few excellent personal finance posts:

The Simple Dollar has Ten Pieces of Inspiration

Money Saving Mom shows us how to Tweet and get 5 bucks worth of Amazon Video

What Can Harry Potter teach us about personal finance? Wise Bread has the scoop.

What should I do about it?

What is a market correction, anyway?

Why is it going to happen?

Well, I believe there are 3 big reasons why we are going to see a major correction sometime soon.

But first, let’s answer the big question. What exactly is a market correction? In pure ‘big finance’ terms a market correction is a drop of 5-20% in stock values in a relatively short amount of time. A quick market dip of sorts. Not quite as quick as the flash crash but not nearly as long as a true bear market. I like the term ‘correction’ here because it implies, usually rightly so, that stock prices are artificially high and need to be corrected to their fundamental values.

For an idea of what these fundamental values are and how to find them take a look at “The Intelligent Investor” by Benjamin Graham.

For our purposes just suffice it to say that there has been a rapid run-up in stock prices that are not driven by the values of the underlying securities. said differently. Stock indexes are high because of undue optimism, government fiddling and other stuff that is not based on the actual value of the companies whose stocks make up the index.

So what are the 3 reasons a market correction is imminent?

1. June 30 marks the end of QE2. QE2 is the government policy of quantitative easing that was essentially the Federal Reserve’s program to buy a ton ($600 billion= a ton)  of  bonds. this was supposed to grease the skids by holding down long term interest rate in effect making mortgages cheaper for people to get and reduce the cost of new projects for businesses. The big problem here is that if this hail mary pass gets fumbled, the result will be that inflation will kick in and kill the fledgling recovery. To use another metaphor, the Fed is pushing the economic jalopy one last time hoping that businesses and consumers will pop the clutch and drive off into the sunset.

2. The smart money is heading to safer ground. What are billionaires doing? they are putting their assets in currency (i.e cold, hard cash). This is a fear/wait and see what is going to happen response. Cash is not a good investment because inflation will eat it up. Everyone knows this. Billionaires know this and are still fleeing to cash. Why? Perhaps they know something.
3. How are house prices still going down? Impossible! Interest rates are at an all-time low and there is a glut of empty homes on the market. Home prices and interest rates are low, right? Not quite so fast. We are actually nowhere near the bottom in the U.S. housing market. Check out the Case Shiller.

Home Values Index Case Shiller

The collusion and corruption that artificially inflated home values has only been barely touched so far. After 1999 home prices took off not because homes started to become so well built and wonderful (quite the opposite) It was because incentives were in place for banks to screw us and politicians to look the other way. Unfortunately, Our fine public servants and regulators seem to still be in bed with Wall Street. Sad. Home prices will need to get to pre-1999 levels before growth in this sector picks up again. The economics of this are rather simple. The only way a middle-class family can afford to buy a home with the new, stricter lending rules in place is to buy a cheaper one. Requiring 20% down, for example, is good policy since it puts the buyers skin in the game and requires financial discipline to achieve. The downside for now is that 20% of $400,000 is $80,000. Way more than most families have at their disposal. With job security looking shaky for many and dropping prices all around people are afraid to get in. Even folks with the requisite 20% down and interested in buying have an incentive to wait for the bottom.

So, as an investor, what are my options?

It really depends on how you personally read the tea leaves. If you think that there will in fact be a major overall stock market drop of 20% or more then rebalancing your 401k/IRA dollars into cash or cash equivalents in the short term might be prudent. There are 2 major things coming up that are sure to create uncertainty in the marketplace: QE2 ending in late June and the debt ceiling being reached early August. Shifting from equities to cash for a few months might not be a bad idea.

But what if stocks keep going up? What if you are wrong and the DOW goes to 15,000?
Rule # 1: As soon as you opt out of any investment it will take off like the Space Shuttle (or at least appear to). Right now stocks are close to an all-time high. If you stay fully invested in the stock market (assuming your positions are in index funds) you could possibly eek out another 2-4 %.

If the DOW climbs steadily to 15K then I’ll eat my hat.

If a correction happens it will be brief, don’t try to time the bottom since the bounce back up will be sudden. get back into equities and ride it all the way back up.

In the 2004 Berkshire Hathaway chairman’s letter, Warren buffet quipped, “Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.” (emphasis mine)

Thoughts?

WR

1. Why is this even legal? O.K. Not PF but damn! How can that be kosher?

2. Does it hurt when you hit the debt ceiling? Why yes. Yes it does.

3. I have a BIG pile waiting for a place to call home.

4. Don’t think you qualify to refinance? Think again.

Let me know what you think.

-WR