I'm well aware that the cost of living is going up, as I find myself tightening up the spending but sometimes I wonder if news agencies go out of their way to find the most unsympathetic people to write "woe is me" stories about the economic times:

http://news.yahoo.com/s/ap/20080429/ap_on_bi_ge/cashing_out_the_attic

Quote :

"Struggling with mounting debt and rising prices, faced with the toughest economic times since the early 1990s, Americans are selling prized possessions online and at flea markets at alarming rates."

"Grandpa, tell us about the depression of '93 again."

Quote :

""This is not about downsizing. It's about needing gas money," said Nancy Baughman, founder of eBizAuctions, an online auction service she runs out of her garage in Raleigh, N.C. One former affluent customer is now unemployed and had to unload Hermes leather jackets and Versace jeans and silk shirts."

Perhaps the money spent on $200 jeans would have been better spent saving and investing for the future.

Quote :

"Earlier this decade, people tapped their inflated home equity and credit cards to fuel a buying binge. Now, slumping home values and a credit crisis have sapped sources of cash."

Translation: Earlier this decade, people tapped as much credit as they could in their efforts to prove to their neighbors that they could buy the classiest of hookers for use as dining tables.

Quote :

"Christine Hadley, a 53-year-old registered nurse from Reading, Pa., says she used to be "a clotheshorse," splurging on pricey Dooney & Bourke handbags. But her live-in boyfriend left last year, and she has had trouble finding a job. Piles of unpaid bills forced her to sell more than 80 items, including the handbags, which went for more than $1,000 on a site called AuctionPal.com. Now, except for some artwork and threadbare furniture, her house is looking sparse."

Again, perhaps that money could have been better spent saving for the future, or even paying her bills.

Quote :

"In Alabama, Bateman-Lee said that she only received $30 for her TV and $45 for her DVD player at a local flea market. She doesn't have too much left to sell, but she's going back to "sort through more things." Her $30 water bill is due this week."

A $30 water bill and she doesn't have cash on hand to cover that? Really? Wow.


Now, I have plenty of sympathy for people in serious rough times. The lady whose husband is out of work, I have some sympathy for (though I question the wisdom of selling her tea kettle for $6 on ebay given that after fees and all she probably netted $3.50) but on the whole, all of this is and was avoidable by people planning ahead instead of wasting money on useless overpriced crap.

4/30/2008 8:20:36 PM

but hillary is going to bail them out, so there's no need to worry...

4/30/2008 8:29:14 PM

90% of the economic problems are poor planning and people not living within their means.

4/30/2008 9:06:31 PM

I'd love it if public schools actually taught kids about how credit works and some other basic stuff about personal finance.

4/30/2008 9:09:20 PM

^

YES!!

Or other job/life related skills. My school district has almost completely gotten rid of career education (minus computers) like shop, auto, etc that could give kids a future. US History, Biology, and Algebra aren't for everyone.

4/30/2008 9:11:59 PM

Quote :

"But her live-in boyfriend left last year"

Good move on his part; she was probably spending all of his money.

4/30/2008 9:15:14 PM

Quote :

"I'd love it if public schools actually taught kids about how credit works and some other basic stuff about personal finance."

but ZOMG its not on the fucking english / math test

4/30/2008 10:17:44 PM

no child left behind, right?

4/30/2008 10:20:10 PM

Dave Ramsey should be taught at every middle and high school. That would do this country alot of good.

4/30/2008 10:40:44 PM

I would argue that instead of tightening their belts, they're selling their stuff so they don't have to tighten their belts. Dooney bag woman is probably still getting weekly manicures.

Also, 1337 b4k4, I think you're wrong about some of these folks. Some people did save and invest. They had good jobs, invested a lot, and indulged in luxury items because they could afford it. Then they lost $100,000 in a few weeks and now they're freaking out.

I mean, everybody's getting fucked this time around, even the folks who were smart with their money.

Let's just hope you don't have to pawn your high horse.

4/30/2008 10:54:48 PM

actually, in reality many people put their finances at risk, which is the reason they quickly lost 100K, when if they had invested wisely and not used credit cards, they would probably be in a much better position.

id freak out if i lost 100K in a matter of months, but i would never be in a position to do so

5/1/2008 12:43:37 AM

No, even wise, safe investors lost bunches of dollars.

5/1/2008 1:23:19 AM

sounds like a good time to stock up on cheap flea market items.

5/1/2008 1:38:34 AM

Quote :

"I would argue that instead of tightening their belts, they're selling their stuff so they don't have to tighten their belts. Dooney bag woman is probably still getting weekly manicures. "

Which is exactly how they got to the position they're in in the first place. Poor investing and saving.

Quote :

"Also, 1337 b4k4, I think you're wrong about some of these folks. Some people did save and invest. They had good jobs, invested a lot, and indulged in luxury items because they could afford it. Then they lost $100,000 in a few weeks and now they're freaking out. "

If these people are living life such that a minor down turn in their investments is causing them to have to sell off everything they own to maintain their standard of living, then they didn't invest well and they sure as hell couldn't afford the luxuries. It's not like we're in the middle of some huge financial crisis here, the early 90's weren't exactly the middle of a depression. If these people are selling everything they own now, they're going to be really hurting when the shit does hit the fan.

Quote :

"I mean, everybody's getting fucked this time around, even the folks who were smart with their money. Let's just hope you don't have to pawn your high horse."

Right, but the folks who were smart aren't selling off their possessions, they're cutting back on the number of times a month they eat out. It's not a high horse to call people out for being stupid. If you have the money to afford $200 pairs of jeans and $1000 (second hand) purses, you have the money to build a fund upon which to survive in the event of a financial bump, and that's all this is, a bump.

Quote :

"No, even wise, safe investors lost bunches of dollars."

So why is it that the news only seems able to find stories about over spenders selling off their thousand dollar purses or people who just lost a job and got cancer in a two month period? Where are all the stories of joe middle class who still has his job, is still working and saved and invested well, but still can't make ends meet because the cost of living has shot up? There are no such stories because that joe middle class lives within his means and built a financial safety net for himself so that when times got tough, he didn't have to sell grandma's dentures to get by. And again I remind you, this isn't even really a bad time, it certainly has the potential to get worse.

5/1/2008 7:57:29 AM

^Sorry, I was kind of talking about two different things at once. I think the people in the article are mostly pretty silly.

My main response was generally about your tone. Kinda like this isn't a big deal and the only people who are affected by it are people who didn't plan well. This is a big deal. Not for you and I. I'm 23. But if you're 50 years-old, chugging along to what you think is going to be an early retirement, shit going on right now can fuck everything up.

And that's life. Shit happens. And they aren't going to starve.

But it's a little annoying for some young kid to act like this ain't no thang.



Also, I will point out that the expensive handbags might actually have been one of the better investments out there if she bought the right ones. That's how twisted shit is.

5/1/2008 8:26:38 AM

I agree wholly with this thread.

Dr. Huggard's personal finance class should be taught in every high school. Imagine the difference that would make.

5/1/2008 8:54:28 AM

or you can just watch suze orman for free

its hard to believe the amount of retarded fuckers that call in there week after week

5/1/2008 11:41:54 AM

Brid does have a point about people close to retiring being hurt by the recent downturn in the market. But what she fails to see it was thier decision to assume the risks associated with investing in the stock market. Besides, most people who are closing in on retirement move from stocks to bonds and more secure investments.

5/1/2008 11:48:22 AM

people buy so many things on loans. and then they forget that that interest just keeps building. it's ridiculous...and stupid, i agree.

5/1/2008 12:28:12 PM

Quote :

"But if you're 50 years-old, chugging along to what you think is going to be an early retirement, shit going on right now can fuck everything up."

It's very possible, but one of the basic tenets of personal finance is that by the time you're 50 you've moved the majority of your assets into lower risk investments.

5/1/2008 12:50:23 PM

the government is not and should be designed to protect people from themselves. personal responsibilty seems to be becoming lost idea in this country.

5/1/2008 1:16:51 PM

agreed

5/1/2008 1:31:38 PM

seconded

do any politicians mention that sentiment?

5/1/2008 1:33:33 PM

Brenda's Got a Baby

5/1/2008 1:36:39 PM

brendas barely got a brain.. a damn shame.

5/1/2008 1:39:44 PM

Quote :

"But if you're 50 years-old, chugging along to what you think is going to be an early retirement, shit going on right now can fuck everything up. "

But these articles are never about ma and pa kettle who are losing their retirement funds to the downturn of the market (certainly a sympathetic position) they're about 53 year olds living on their live in boyfriend's income and buying $1000 purses. Which was my real point, that all of these articles trying to promote doom and gloom seem to either go out of their way to find the most unsympathetic "victims" or they really can't find any real victims. Either way it's lousy reporting, and in the latter case, just more fearmongering.

5/1/2008 2:00:02 PM

Quote :

"Kinda like this isn't a big deal and the only people who are affected by it are people who didn't plan well. This is a big deal. Not for you and I. I'm 23. But if you're 50 years-old, chugging along to what you think is going to be an early retirement, shit going on right now can fuck everything up. "

but it's NOT a big deal.

if you are responsible with your money, the first thing you do is put away enough money to survive bumps in the road without getting caught in a pinch.

if you're 50 years old and going for early retirement--well, in that circumstance, you ought to have your investments well enough diversified and with enough money in low-risk/volatility holdings that it doesn't hurt you too badly. in addition, i'm sorry, but retiring at 61 instead of 57 is not a "big deal".

Quote :

"No, even wise, safe investors lost bunches of dollars"

Not out of money that they couldn't afford to temporarily lose--i.e., not out of money that they needed in the near future.

Quote :

"Dave Ramsey should be taught at every middle and high school. That would do this country alot of good. "

I think we should be teaching kids more about money, financial responsibility, and personal finance, but not the diarrhea of the mouth coming from Dave Ramsey.

Quote :

"90% of the economic problems are poor planning and people not living within their means. "

Yep...and the proper planning part is REALLY, REALLY easy to fix. Most people just don't have the discipline to spend their money responsibly and within their means, and most people--as a result of seeing the idiots they're surrounded by--have a skewed idea of what constitutes "within their means." In other words, tons of people don't even realize how fucked they are or sooner or later will be--they think they're doing the right things.

5/1/2008 2:13:42 PM

Quote :

"the government is not and should be designed to protect people from themselves. personal responsibilty seems to be becoming lost idea in this country."

I agree 100%.

I have no problem with some sort of safety net being in place, but it should be extremely spartan and uncomfortable to live on that level. Attempts to ratchet up the level of the existing safety net piss me off quite a bit.

5/1/2008 2:32:01 PM

^I agree Josh.

Duke, you cut me deep with the Ramsey dig...deep man.

Debt is dumb, cash is king!!!

5/1/2008 9:22:27 PM

Quote :

"Debt is dumb, cash is king!!! "

I hope this is some sort of sarcasm that I am missing.

5/1/2008 9:37:27 PM

^its a line dave ramsey uses all the time. I think the whole things goes " Debt is dumb, cash is king, and the paid off mortgage is taking the place of the BMW as the status symbol of choice."

[Edited on May 1, 2008 at 9:47 PM. Reason : .]

5/1/2008 9:47:26 PM

someone should inbed the commercial...


I have a new home....

I have a great family...

Like the car, its new....

I even belong to the local golf club...

How do I do it???



I'm in debt up to my eyeballs...

Somebody help me...







[Edited on May 1, 2008 at 9:56 PM. Reason : http://www.youtube.com/watch?v=hn5EP9StlVA]

5/1/2008 9:52:44 PM

Quote :

"I hope this is some sort of sarcasm that I am missing."

having debt is retarded as fuck.

1. If you have to take on more than 50K in debt to go to school, and you are not making 100K plus IMMEDIATELY after graduation - you can't afford it.

2. If you have debt other than a house payment (or a reasonable car payment - under 300/month) - you cannot afford it and are retarded.

3. If you have any credit card debt that you have ever paid interest on, you are retarded.

4. You can improve your situation through discipline, but until that time, it is not the government's nor my responsibility to bail you out.

5/1/2008 9:56:06 PM

So a billion people have mentioned "secure investments" in response to my scenario.

I'm not a total n00b. I know that as folks age they should move away from riskier choices.

But y'all are failing to acknowledge that there are lots of "secure investments" that ain't so secure right now. People who did the right thing are losing. And no amount of boyish enthusiasm for Dave Ramsey can protect y'all from it happening to you one day.

[Edited on May 1, 2008 at 11:38 PM. Reason : sss]

5/1/2008 11:34:27 PM

you know, JC had pity for the stupid.

think about it

5/1/2008 11:45:56 PM

^^ are you dense. no one is saying that by putting money into less risky investments you won't LOSE money at all. Only that you will lose much LESS which is the goal in an economic downturn.

Losing 2% of your retirement is better than losing 12%.

5/2/2008 12:00:29 AM

Quote :

"seconded do any politicians mention that sentiment?"

Ron Paul FTMFW

[Edited on May 2, 2008 at 12:17 AM. Reason : http://www.ronpaul2008.com/]

5/2/2008 12:17:20 AM

^^^^^

Quote :

"1. If you have to take on more than 50K in debt to go to school, and you are not making 100K plus IMMEDIATELY after graduation - you can't afford it. 2. If you have debt other than a house payment (or a reasonable car payment - under 300/month) - you cannot afford it and are retarded. 3. If you have any credit card debt that you have ever paid interest on, you are retarded. 4. You can improve your situation through discipline, but until that time, it is not the government's nor my responsibility to bail you out."

1. So, what you actually mean to say is that student loan debt is perfectly fine as long as it's at reasonable level compared to prospective future earnings.

2. Nonsense, baseless assertion. If you can get an interest rate that is sufficiently lower than a high interest savings account, likely investment, etc, then you lose money by not using credit. For example, say you have $1000 now, you want to buy a $1000 car, you can get a 1 year loan at 3%, and you can get a return from investments of 6%. If you completely finance the car and invest the $1000, you will have $3 at the end of the year when the load is paid off. If you don't finance, you will have nothing at the end of the year.

The bottom line: If you can do math, you can do better for yourself financially by using credit. Advice to not have debt is advice for stupid people. I would hope that any college graduate would have brains enough to not need this kind of advice.

(Another big negative of paying upfront is that you expose yourself to greater risk. What if you have a medical emergency during the year? Since you spent all of your cash on the car, you have no money immediately on hand to pay for the emergency. You probably will have to borrow the deficit at a higher interest rate. If you finance, you still have most of your money available as an emergency reserve and you have more flexibility to deal with the emergency.)

3. Probably right since credit card rates are high, but again, it depends on the rate.

4. ... therefore, no one should use credit, even the people who are smart enough to manage their finances? As demonstrated above, that's idiotic. If someone is too scared or too ignorant to manage his/her finances, don't project those deficiencies onto everyone. (And I agree, the government certainly shouldn't bail out people who can't manage their finances).

[Edited on May 2, 2008 at 12:23 AM. Reason : No pity for people who use credit wrongly AND people who don't use it at all]

5/2/2008 12:20:18 AM

the thing that differentiates us from monkeys is

nothing.

fuck everyone. I'm smart, fuck you, you other monkeys. I'm smart and I should be able to piss on your face because you are stupid.

right?????????

5/2/2008 12:22:59 AM

1. Yes, student loan debt is OK, it would be short-sighted to say that individuals should not pursue education due to cost, however I think way too many people pursue private schools when they can't afford them. NC public schools are excellent and your parents have paid $Texas for you to go there whether you do or not, so take advantage. There is no reason that your student loan debt should exceed 40K if you go to state or carolina, even if your parents are garbagepeople.

2. I agree, excuse my lack of clarification - business and investment situations are obviously excluded from this assertion. Credit card debt in any form is retarded. But if you can't have emergency money after buying a car (or any other item) then you can't afford it anyway. Save your money...

Getting 6 percent on your money is not always guaranteed either. Id take 5 percent a year forever with 0 risk and retire at 40.

3. Credit card rates are not always about rates. You are still giving money to a third party that you don't have to give money to. It also affects your credit score, which affects your other finances...

4. I am more than smart enough to understand credit, I just choose to be very risk averse, thus the current downturn has not affected me in the least. 90 percent of people do not have common sense (btw, only about 10% of people rule the world, deal with it) and they spend beyond their means.

Shit fucking happens - I lost my job in Feb, have since had many offers and acceped a great job, I had plenty of money saved up and had very few financial obligations. My car is paid for, I have no debt and my house payment is supplemented by a roommate.

Now everything is fine - I have actually come out ahead in this recession...

[Edited on May 2, 2008 at 12:35 AM. Reason : grammar]

5/2/2008 12:34:42 AM

Please keep using your credit cards -- makes my Visa stock go up.

5/2/2008 12:41:57 AM

visa goes up even when i use my 2 visas - they charge for cards to be used

get an amex if you oppose interest

5/2/2008 12:51:10 AM

Quote :

"Duke, you cut me deep with the Ramsey dig...deep man. Debt is dumb, cash is king!!! "

I will concede that what he preaches is less dumb and far less self-destructive than what Joe and Jane Average generally do...but that doesn't make it the best way or really even sound advice.

Quote :

"But y'all are failing to acknowledge that there are lots of "secure investments" that ain't so secure right now. People who did the right thing are losing. And no amount of boyish enthusiasm for Dave Ramsey can protect y'all from it happening to you one day. "

No, I'm saying that it doesn't matter whether or not they're secure, and it doesn't matter whether or not people are losing money if they planned things properly. Step 1 in unfucking your finances (well, aside from paying off certain debts, like credit cards) is to establish a nice, fat wad of cash money as a safety net.

I'm down something like 25% from where I peaked in my stock portfolio. At the worst, I was down 30%, and you know what? I couldn't give a shit less. I hope the stock market takes a huge tumble again, and the bigger and sooner, the better! I've finally accumulated enough free cash to buy into another meaningful stake--I'm just waiting for a slide to do it.

I don't care if it takes weeks or years for the market to recover...I won't be touching any of that money for decades. If I was going to need it sooner, I would have a much larger chunk of money in other holdings like cash and low-risk bonds...then I could expend that money while waiting for the stock market to run up again, at which point I could use my money from there.

The point is that this is simply a hiccup, and not even a big one. If economic downturns (especially a minor one like this) turn your life upside down the way some of these sob stories are going, it's because you were living in a house of cards to begin with.

Quote :

"If you can get an interest rate that is sufficiently lower than a high interest savings account, likely investment, etc, then you lose money by not using credit. For example, say you have $1000 now, you want to buy a $1000 car, you can get a 1 year loan at 3%, and you can get a return from investments of 6%. If you completely finance the car and invest the $1000, you will have $3 at the end of the year when the load is paid off. If you don't finance, you will have nothing at the end of the year. "

Plus the money you make by investing that $1000 you had to start with.

Opportunity cost is the only true cost.

Quote :

"the thing that differentiates us from monkeys is nothing. fuck everyone. I'm smart, fuck you, you other monkeys. I'm smart and I should be able to piss on your face because you are stupid. right????????? "

Wrong.

More like "if you lie flat on your back and piss on your own face, or go diving headfirst into pools of piss, I don't feel sorry for you, and I don't feel obligated to buy you a towel to wipe it off with."

Quote :

"Getting 6 percent on your money is not always guaranteed either. Id take 5 percent a year forever with 0 risk and retire at 40. "

You'd have to TRY to not get 6% return on your money over time, and you'd be a fucking dunce to take 5% per year with zero risk (and you would not retire at 40 on your paltry 5% returns unless you make an absolute raging shit ton of money from now until then, and/or you want to live out your days under a bridge, eating cat food).

Quote :

"I just choose to be very risk averse, thus the current downturn has not affected me in the least."

WHY? You might as well be setting hundred dollar bills on fire. At the age of 28, you need to be balls deep in the stock market, investing aggressively for max returns.

[Edited on May 2, 2008 at 1:01 AM. Reason : asfdads]

5/2/2008 12:59:28 AM

i might be a fucking dunce to take 5 percent per year

but i assure you that i would be better off than 90 percent of everyone else, and that's my goal, to be better than the majority.

id rather be in the top 10 percent guaranteed than have a 10 percent chance to be in the top 1 percent

5/2/2008 1:03:05 AM

but that's not how it works

you would never accumulate any real substantial wealth on 5% returns. Ever.

you are almost guaranteed to get, ohhh, 10% or so over time, if you can handle some temporary downturns (which, at age 28, you can).

[Edited on May 2, 2008 at 1:16 AM. Reason : besting the majority is a terrible goal, esp when it's easy to generate BIG money w/ enough time]

5/2/2008 1:14:37 AM

granted, but lets say i want a fixed income and really do not want to work

assuming wealth of 1.5 mil, if i could make 5 percent, then that's 75K per year income at 15 percent capital gains (assuming constant rate) which is equal to about 90K per year at regular income tax

its not luxury, but it beats the hell out of a real job.

I could live on 90K per year forever and be happy

5/2/2008 1:18:55 AM

I'm not sure in what way you mean better than 90% of others, but that kind of relative performance is a pretty low goal. FYI, an individual making 75k a year (without any investment income at all) is already better than 90% of America (and as theduke can testify, that's not really an extravagant lifestyle.).


Since most engineering grads can probably hit that mark easily without any special financial knowledge, I would hope that someone with supposed discipline and financial sense could do a lot better than 90% of others.

[Edited on May 2, 2008 at 1:21 AM. Reason : .]

5/2/2008 1:19:38 AM

well, unless some socialist wins come november, this country will continue to rely on, and be ruled by the top 10 percent of the popluation.

elections are nominally important, but don't really influence the ruling class

5/2/2008 1:22:25 AM

^^^ OK, but do you have $1.5 million? If not, how exactly do you plan on acquiring this sum of cash?


A theoretical guaranteed 5% annualized return with no risk whatsover is one thing if you're retired and just want income from your nest egg, but you aren't retired, and I suspect that your nest egg, at age 28, doesn't amount to much of anything, relatively speaking.

[Edited on May 2, 2008 at 1:24 AM. Reason : ^^^]

[Edited on May 2, 2008 at 1:31 AM. Reason : and what do you gain by being risk averse at such a young age?]

5/2/2008 1:24:41 AM

http://articles.moneycentral.msn.com/Investing/HomeMortgageSavings/WhyGenerationYIsBroke.aspx

5/2/2008 2:19:28 AM