Get Rich Slick

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I have a very select shows on TV that I look forward to watching and every Sunday, I made it a point to watch Tim Russert’s Meet the Press.   I’m sorry to see him gone and my condolences to all of Tim’s family.

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I’m taking a vacation this week so I’ll be reposting some of my favorite posts from the past couple of years of blogging.   I’ll likely not be able to respond to comments for the duration of the week and I may be on extensive business travel after that so I’m apologizing before hand if my posts dwindle down over the next few weeks.

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Happy Memorial Day!   It looks like Asia stocks getting slaughtered over the holiday, sound familiar?    Remember that last holiday weekend when the Fed panicked?  Good time to be in cash .

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Amazing…Logged on to my brokerage account as tomorrow is options expiry and was greeted with the following message:

Options Expiration
The last day to trade equity option contracts expiring on Saturday, May 17th is Friday, May 16th. If you do not have sufficient funds/buying power to cover potential exercises or assignments, please deposit funds or close out your position before close of market on Friday, May 16th. Please be aware that TD AMERITRADE reserves the right to close out any option positions at any time on the final trading day prior to expiration that would pose risk if exercised or assigned. Any equity option that is in-the-money by $0.05 or more at expiration will be automatically exercised. Please note that effective June 21st, this threshold will be lowered to $0.01.

I remember the good old days when options in-the-money by $0.75 would be exercised and now it’s dwindled down to a penny!

I guess this is progress!

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There’s something that has been troubling me about shopping malls the past couple of weeks.  The parking lots are packed, people are milling about but retail sales are generally down.

I generally don’t see too many people with shopping bags at the mall but I do see a lot of people walking around.  I see families with kids walking about and I can only conclude that the mall is the cool safe haven to be rather than burning your own AC at home.

I encountered the same thing this week as I stopped to shop at three different malls looking for a specific gift for someone this week.   This ultimately doesn’t bode well for the market over the upcoming summer but we’ll have to wait and see what happens.

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The perpetual debate over whether someone should buy a new car or used car will never end but in honor of Earth Day this week I decided that what I am trying to do is reduce my carbon footprint. So how does buying a new car reduce my carbon footprint?

I purchased my first new car at age 25 and it was a gas guzzling SUV but I did so knowing that I would be getting married soon and hopefully starting a family. Flash forward 11 years later and I still owned that same SUV but it was time to move on to a new car as our family needs changed. So at age 36, I’ve now purchased a new vehicle which I will undoubtedly own for the next ten or eleven years.

At this rate, I will likely buy my next new vehicle at age 46 or 47, then a final one at age 57 or 58 which should last me till I’m 67 or 68. I don’t think I’ll be driving much beyond age 68 and I’m anticipating that cars in the future will likely last more than 10 years anyway so it may have a useful life beyond my own.

So if 10 million Americans purchased a new car today and vowed not to buy a new one for 10 years, I would imagine this would be better than 10 million people buying new cars every 3 to 5 years or used cars every 2 to 4 years.

There will be someone who will claim that buying used cars helps “recycle” them but I find this to be a little disingenuous. In an ideal world, a car that has been used for 10 years should be taken to a recycling center and have all the materials stripped and recycled. There is no point in continuing to operate a 10 year old car with inferior environmental controls and possible environmental hazard: leaky oil, bad gas caskets, etc.

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Buy Green! Switch to Hybrid! Buy! Buy! Buy! Consume! Consume! Consume!

I’m getting tired of seeing those Wal-mart commercials asking us to buy compact fluorescent bulbs promoting so called “environmentalism.” So let’s look at this request from a purely logical point of view:

1. Rip out you existing bulbs which consumed a great deal of resources to make (more on this later).

2. Replace with new compact bulbs and save the world! Easy right?

Let’s review the real process:

1. Elements, such as Mercury, are mined from the ground and processed as a component of compact flourescent bulbs in addition to the glass, copper, and other materials used in making and packaging the bulbs.

2. The finished product (most likely made in China) is placed in a gas-guzzling diesel container ship and shipped to the US.

3. After arriving in the US, the shipment is loaded into a gas-guzzling diesel 18-wheeler where it travels a long way to get to your local Wal-mart.

4. You get into your gas-guzzling vehicle and drive to Wal-mart to buy the product.

5. You get home, rip out the old bulb (repeats step 1 - 4 for resources used to make old bulb), throw away the old bulb and packaging for new (this goes in a landfill or ocean right?)

I left out the steps where the mercury mining company uses a ton of fuel for drilling rigs, transportation, shipping, etc as well as all the other fuel burned to make the product. Ditto for copper, aluminum and glass used in the product.

I checked out Al Gore’s We Can Solve It website and clicked on the Solutions page to find these ideas:

• Wind Power
• Solar Turbine
• Solar Photovoltaics
• Geothermal Power

All of these “solutions” require consumption of more and more materials to be consumed to “save” the environment. If you looked at your Sunday’s newspaper fliers you might have noticed all the “green” products that you could buy to save the environment this week. It is the ultimate irony since there way not a single word on reducing your carbon footprint which would be primarily achieved by buying NOTHING.

Where’s the full page ad asking you to buy NOTHING? What’s next, the Earth Day shopping holiday?

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What tastes bitter in the morning, sweet and delicious in the afternoon but poisonous & fatal in the evening? Hint: In American society, this will ALWAYS be with you regardless of what anyone tells you and it relates to personal finance of course.

The answer is debt.

Most people get themselves in trouble during their youth, typically after college with student loan debt and credit card debt and quickly learn the “bitterness” of debt. Some have such a sour taste in their mouth from their experience that it takes them a long time to finally find the “sweet” taste in debt. They find the sweetness when they utilize debt to purchase their first home, raise children, and send them to school amongst other things. Those that do not take care of managing their debts in their elder years will find debt poisonous and fatal both in a metaphorical and literal sense.

Before anyone tells me that they have ZERO debt, let me emphatically say that the debt-free state does not exist in America. If you own a home, you will always owe property taxes; if you collect social security you will owe income taxes, if own a car, you will owe fees (e.g. taxes) on it. Remember, Webster defines debt as “something owed” and in this country, you will always owe someone (usually the State) something. Even a bum on the street that panhandles will owe taxes on the income he receives even though he may never file a return; The debt is still there, just unpaid. The only exception that I can think of pertains to Native American reservations but that likely doesn’t apply to 99% of the populous.

Someone asked me why my blog was “Intended for Individuals with Net Annual Income of $100,000 or more” as written on the header of every post and the answer is similar to the Riddle of the Sphinx. We are all in different phases in our life with different resources and priorities. Like others, I had my brief troubles with debt in my youth but moved on to understand investing and income generation as a priority. Today, there are plenty of pf bloggers who are wrestling with various issues such as debt and those that have conquered it successfully. Those pf bloggers are much closer to the issues that relate to them from which I am far removed from at this point.

I am at a stage where I find debt as sweet as any candy out there and I find it so because I have the resources and skills to reasonably manage it.

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