Friday, February 15, 2008

Norwegian Math

Yay! it's Friday. Here's a joke for the day.

Norwegian Math
A Norwegian man wants a job, but the foreman won't hire him until he passes a little math test.

"Here's your first question," the foreman said. "Without using numbers, represent the number 9." "Without numbers?" the Norwegian says, "Dat is easy." And he proceeds to draw three trees.

"What's this?" the boss asks. "Ave you got no brain? Tree and tree and tree make nine," says the Norwegian. "Fair enough," says the boss.

"Here's your second question. Use the same rules, but this time the number is 99." The Norwegian stares into space for a while, then picks up the picture that he has just drawn and makes a smudge on each tree "Ere you go."

The boss scratches his head and says, "How on earth do you get that to represent 99?" "Each of da trees is dirty now. So, it's dirty tree, and dirty tree, and dirty tree. Dat is 99."

The boss is getting worried that he's going to actually have to hire this Norwegian, so he says, "All right, last question. Same rules again, but represent the number 100."

The Norwegian stares into space some more, then he picks up the picture again and makes a little mark at the base of each tree and says, "Ere you go. One hundred."

The boss looks at the attempt. "You must be nuts if you think that represents a hundred!" The Norwegian leans forward and points to the marks at the base of each tree and says, "A little dog came along and crap by each tree. So now you got dirty tree and a turd, dirty tree and a turd, and dirty tree and a turd, dat make one hundred. So, when I start?"

Thursday, February 14, 2008

Your Nest is NOT a Nest Egg

I came across this excellent article on Yahoo Finance titled "Why Your Nest is Not Your Nest Egg". The author writes very clearly and gives convincing reasons and examples. It's worth a read.

Our house has appreciated nicely since we bought it. But a house has a tendency to be costly to maintain, as the article points out, and there's bills like that annual property tax bill.

Some people like Dave Ramsey advocate the strategy of paying off your mortgate quickly. I don't agree with that. First, paying the mortgage off may be possible in some states where houses are under \$200K, but it is certainly not possible here in California. Second, I think it is not a wise move to rush and pay off the mortgage, while skipping investing in equities and saving for retirement. Ask yourself, what would happen if you lose your job? What good is it having all your money is in your paid off house? You probably have many monthly bills like gas, water, and food. Are you going to sell off your house to pay those bills?

I think a good compromise is to get a 30 year fixed mortgage, not a 15 year. A 30 year loan gives you a lower monthly payment. So you can have money left over for savings, investing, and for building an emergency fund. If you are married and both are working, and have an emergency fund, then you can afford to pay more principal on the 30 year plan. But if you hit a bad year and maybe one spouse is unemployed for a few months, then it's better to have the lower 30 year payment than a 15 year payment. Don't be in a rush to pay off the mortgage, but remember to think about what would happen if Murphy's Law hits.

My strategy is to invest money in the stock market too, and not just put all my money in paying off my home. I have a fixed amount of income every month, and I allocate it to savings, investments, mortgage, charity, spending, and fun.

Who knows how the housing market or the stock market will perform in the next year, 5 year or 10years? It is not wise to bet everything on real estate. It is wise indeed to put your money in different baskets like stocks and real estate, either property or REITs. That way if there is a crash in the housing market, I still have money in other baskets like stocks, and bonds.

Wednesday, December 19, 2007

Craigslist ipod deal

I love craigslist. I sell and buy things regularly on it. There's always items that people don't need, and others want. So craigslist is a great forum for putting buyer and sellers together.

Today I was able to get an ipod shuffle combo with \$15 itunes card on craigslist. The price was cheaper than retail, and it's brand new too.

There are scammers out there who prey on sellers. Here are some suggestions for setting up a successful transaction on craigslist.

1. Either create a new email address or use a non-work email address. For example, open a gmail account. Some companies are tracking emails, so use non-company email accounts instead.

2. When selling. State the condition of the item. New? used? scratches? original cables and packaging? Still working well? needs new battery?

Why are they selling?
Is it working properly?
Any issues I need to be aware of?

3. When selling, state the price and if you are willing to negotiate. Ex. \$30 firm. \$30 or best offer, or if you want to entertain offers to trade. Maybe you have a wii game and you are willing to trade for another game.

You can also search craigslist and see what prices are for similar items in similar condition. That way you can attract buyers with a fair asking price.

4. If you priced your item correctly, you will have a high probability of getting email inquiries from buyers. You will sometimes get scammers asking about the product you are selling, or some lowballers trying to offer a very low price-- the best thing to do is just ignore these emails, don't even bother to respond.

So both buyer and seller can now negotiate via email on the price and answer questions on the condition of the item. Exchange emails back and forth, then see if you can agree to a deal or not.

5. Beware of scammers. The best rule is to meet with buyers or sellers locally. DONT Ship the item. Don't accept checks. Cash is indeed king.

Scammers will offer to send you a check for hundreds more than your price, and ask you to mail the object, but later the check will bounce, and you will have to pay your bank.

So to avoid this, just meet locally and deal in cash.

6. Meet at a public area with people nearby. Coffee shops are ideal, like a starbucks. Bring a friend if you want extra help.

It's better to meet at a public place, rather than meet at someone's workplace or residence. Because this will require both parties to travel to the place, this shows the commitment of going thru with the deal.

7. Finalize on when and where to meet. There should be an exact date and time to meet. Otherwise one party may flake out.

8. Once you have agreement on the price, location, and time, you can then exchange cell phone numbers. That way you can avoid missing each other, or if there is traffic and you are late.

On the day you are meeting, it would be good to call or email the person a few hours before the meet. Just to confirm, and see if they remembered.

9. Meet and complete the transaction.
a) Get the object and let buyer inspect. Turn on or try the product to see it works.
b) Pay the cash. Let the buyer count the cash.
c) Once both buyer and seller are satisfied. It is complete

Sometimes the buyer will try some tricks like ask if you can lower the price.
So if you are the seller, you have to consider this possibility. If the price is fair, then state that it is a fair price and this is your best price.

For the buyer, if the item is not as described, then the buyer may not be happy with the stated condition versus actuality. So it is important to ask as much questions early on about the condition of the item. If the seller can provide a photo, that's even better.

Both of you need to decide whether to stand firm or work it out.
Both you stand to lose on the time spent travelling to meet. And if you are the seller, you have to repost it again.

Hopefully you can sell or buy the item you want. Good luck.

Monday, December 17, 2007

When I was about 9, I remember my parents opened a savings account for me. And when I got cash from relatives, I would go to the bank and deposit it. The good thing is they taught me the importance of saving money. But the problem is, I don't think I was taught on how to spend it. I pretty much learned about investing and taking risks from personal experience. So I intend to make sure to teach my daughter about money throughout her childhood.

I hope to teach my kid about handling money, from savings accounts, delayed gratification, saving for a goal, making calculated risks, using credit, and more.

My daughter is very young right now, but she is a good student. I tell her that we need to save money for future goals, such as vacations, disneyland, and college. I also tell her that mom and dad works hard to get paid. Then we have money to spend. So she seems to understand this and I look forward to teaching her more as she matures.

I know some friends who have credit card problems. They have 2 kids and a dog. And they have gone into serious credit card debt twice. They have expensive cell phone plans (\$100/month), have the latest Razr phones, has a cleaning lady come in regularly, and wants to buy the most expensive \$300 Christmas photo package at the mall. No wonder they are paying hundreds of dollars in credit card interest. Are all these purchases needed?

So how do I save? I try to save money by using a low cost prepaid cell phone from Virgin Mobile (\$20 minimum for every 90 days), I take photos myself and get Christmas photo cards from winkflash.com (\$25 for 75 photo cards), and we clean our house ourselves. So the end result is we have drastically different situations. I'm not being smug, but I do things to save money. But the money we saved has enabled us to have more options in life, such as going to Hawaii last year, and to enjoy life. We're not perfect, my wife and I go over our budget and we have decided to spend less eating out, and cook more meals.

I want my daughter to be able to manage her money wisely. Because I have seen firsthand the problems stemming from misuse of money.

Faucet deal

We're planning to renovate our bathrooms soon. So it was timely that I found this Danze Melrose faucet for \$40 at Amazon.com. Shipping is free too. The price is great for this brand. Plus it has a drip-free, single handed design. My wife wants to remodel the bathroom, and so she is starting a fund to save for this upcoming project. So far she has put \$2000 for this.

When we renovated our kitchen 2 years ago. We slowly purchased our materials, and I'm now slowly purchasing for our bathroom.

Monday, December 3, 2007

The Experts Speak: Survived 2007? What to do in 2008

Another WSJ article I came across today. Money experts give their opinions on 2008.

Vanguard's John Bogle gives excellent advice:

"Buy and hold a very diversified portfolio, U.S. and global. Minimize trading fees, mutual-fund management fees and sales loads, and investment-bank fees.

Another important lesson: Always hold some bonds. I happen to like short-term bonds better than money markets, because they yield a bit more and they don't fluctuate very much more -- high-quality short-term bonds, 10% to 20% of your portfolio. If you are older, a lot more than that.

Another very clear lesson this year for investors is: avoid complexity. If you don't know what the fund is investing in, don't buy it. Wall Street has created those derivatives and those collateralized debt obligations of very uncertain problems with very high risk, just to earn a little more return. Another lesson is that, if you think you are getting a premium yield, assume that you are taking a premium risk.

Looking ahead to the next year, be risk-averse. I would never tell anybody to get out of the stock market. You want to think of how your account is balanced. For example, if you normally want to be 75% in stocks, I'd rather be 65% than 85%. I believe it's a good time to be a little more cautious."

When I was a newbie investor, I wanted to keep all my investments in stocks. I wanted my money to work harder, not just sit around in cash and bonds.

I read an interesting article today regarding the importance of keeping a percentage of your portfolio in bonds. Bonds may not be as sexy as stocks, but you'll be glad you're holding bonds when a big market correction hits.

The article says that research shows that bonds will lower the volatility and yet capture most of the gains of an all-stock portfolio.

Monday, November 26, 2007

George Foreman Ipod Grill -Whaaat??

This is a strange product I came across today. It's a grill with built in connection for the ipod plus speakers and amp.

Who would buy this frankensteinian grilling gear? I think the market researchers were polling people on April Fools day.

Why would I plug an ipod near a hot, smoking, grease-dripping grill? It's such a bizarre combination. An ipod is the last thing you would want to have near a grill.

Or maybe they hired some monkeys with a dartboard on George Foreman Industries HQ?

I can only imagine what went on at the CEO's office at George Foreman Industries. Just like a Dilbert comic.
"Johnson, my nephew showed me his ipod last night. I want you to build a grill with an Ipod connector."
"But sir, who would buy that?"
"Get it out by Christmas or start packing your cube!"
"Yes sir!"

What's next? a grill with built in Wifi, keyboard and LCD screen? So you can surf while grilling your steak? Maybe also a Wifi router addon, so you can make your grill also function as a hotspot for the neighbors.

Movie Night

I had a chance to watch "No Country For Old Men" last week. I had read that this film was good from RottenTomatoes.com. So I was eager to check it out. This is a movie about a guy who finds a bag filled with millions of dollars. The bad news is that the drug smugglers are also looking for their money. The bad ass dude played by Javier Bardem is one guy you wouldn't want to meet in a dark alley. The story is punctuated by straight-faced comedic moments from the Texan sheriff played by Tommy Lee Jones. Good to see that Tommy is in a role that fits him.

It was an enjoyable movie, with thrilling moments and not the expected ending. I rate it 5 out of 5 stars. I got a good deal for a matinee ticket price of \$7.50.

Tuesday, November 20, 2007

Costco Observations and Crystal Ball

Alakazam! Gaze into my crystal ball...

So I was returning something at Costco last night. And as I was waiting in line I was observing the shopping cart contents of the patrons leaving. This was Monday night around 7pm at a fairly affluent area. Over about 15 minutes, I scanned at least 20 shoppers and I found that around 95% of their shopping carts contained ordinary food stuffs. Cheese, soda, water, fruits, vegetables, and similar items.

The interesting thing I noted was there wasn't any big purchasers of electronics, toys, clothes, tools, or luxury item.

Maybe I'm making a mountain out of a mole hill. But I was expecting at least more shoppers would be be playing Santa and buying something nice for Christmas. The only obvious non-food purchase I saw was a cyber dog with a carrying bag. CRAP alert!

Maybe people are doing serious belt tightening due to the falling stock market, and the rising oil prices, and the falling dollar. Or maybe I was at the store at an odd hour plus it was a weeknight.

Are you looking to spend less for the Christmas list this year?