Expenses

Apart from the issues I had with the last upgrade of Quicken, I really find this tool useful.  It's the end of the year once again and I've been running Quicken reports like crazy to see how I did with my expenses in 2007.  Here's what I've learned so far...

I've been very fortunate to not have any significant unplanned auto expenses this year.  Aside from needing to replace two tires on the Acura, I've been able to keep to my normal oil change and car tag expenses.  I've gone two years now without a major auto expense.

Child birth expenses were about the same this year as last year.  Overall, however, because of our quality health insurance from work, the affordability factor is pretty high for having children.  This is one expense, however, that we won't be incurring again.

Fuel charges were about $200 more this year due to higher gas prices and a couple long trips we took.  I'm paying about $2,000/year in fuel which equates to about $166/month.  There is definitely room for improvement here.

Our movie expense category was cut more than 60% thanks to NetFlix.  No more trips to Blockbuster.  This was a great idea Dayna had.  We're only paying about nine bucks a month and we're still watching as many movies as we have in the past.

I've managed to keep my Starbucks habit to about $78 a year.  I'm still working to eliminate this habit though.

Home improvement costs were cut in half this year since I didn't have much time for house projects because of my time demands from the kids.

These are the things that stand out this year.  Overall, it's been a very good year considering all the chaos introduced with another child and everything that goes along with it.

College Bowl Season

The College Bowl Season kicks off tomorrow.  I've tweaked the formula a bit this year for my College Bowl Pickem entries.  I'm now factoring in Offensive 3rd Down Conversion Rates.  So, here is the revised formula for this year...

Team A Offensive Rushing Rank versus Team B Defensive Rushing Rank ( weight = 35% )

Team A Offensive Passing Rank versus Team B Defensive Passing Rank ( weight = 35% )

Team A Turnover Margin Rank versus Team B Turnover Margin Rank ( weight = 15% )

Team A Offensive Third-down Conversion Rank versus Team B Offensive Third-down Conversion Rank ( weight = 15% )

Scott's College Bowl Pickem Formula and Picks

Good luck this year and enjoy the games !!!

Financial Industry Regulatory Authority

I stumbled across a really good site this evening.  Just thought I'd pass the info on to you in the event you may find something useful here.

Financial Industry Regulatory Authority

Investigate Brokers

Mutual Fund Expense Analyzer

I hate fees!

I primarily only use one credit card.  I've used the same State Farm Bank credit card for 20 years now.  I pay off my balance each month and always avoid late fees and finance charges.

I have one other credit card that serves as a backup.  I rarely use it, but several weeks ago I used it at a car wash that cost me eight bucks.  That eight dollars was the only charge I had on the card for the month.  Since that card is not frequently on my mind, I was about 3 days late with my payment.  I then find out that US Bank charged me a $23 late fee!!!

That small car wash cost me $31 !!!

This is precisely what so frequently happens to people.  We look back and ask ourselves "where did all the money go?".  Being diligent in the smallest details of our finances can save us a lot heartache and money.

At this time, banks are severely escalating their fee schedules.  They are doing this in an attempt to recoup the money lost in the mortgage crisis.  This is a perfect example how EVERYONE pays the price when a few cannot meet their obligations.

Fight back and avoid fees by...

Not using your ATM card

Don't have credit card late fees

Keep minimum amount in checking/savings so as to avoid service fees

2008 Goals

2007 was a good finance year.  I fell short of only 1 goal.  With Parker's birth and Dayna's Student Loan out of the way, I look forward to directing some of my 2008 funds into additional investments.  I make goals every year, but I also have a five year plan in place.  I'm currently beginning year three of the five year cycle.  The next five year cycle basically begins when Morgan starts kindergarten.  The five year plans will fall as follows...2006 - 2010, 2011 - 2015, etc.

2007 Goals ( Save/Invest $22,000 -- [Actual] = $18,000 )...

Fund 401K ( $4,000 ) -- [ Actual = $4,000 ]

Achieve 401K Company Match ( $4,000 ) -- [ Actual = $4,000 ]

Fund Roth IRA ( $4,000 ) -- [ Actual = $4,000 ]

Payoff Dayna's Student Loan ( $4,000 )

Purchase Vanguard PrimeCap Core Fund ( $10,000 ) -- [ Actual = $6,000 ]

Parker's Birth ( $2,000 )

Dividends ( $5,000 ) -- [ Actual = $7,200 ]

2008 Goals ( Save/Invest $33,000 )...

Fund 401K ( $4,000 )

Achieve 401K Company Match ( $4,000 )

Fund Roth IRA ( $5,000 )

Purchase Vanguard PrimeCap Core Fund ( $10,000 )

Purchase TBD New Fund ( $10,000 )

Dividends ( $10,000 )

There is so little kindness in the world today.

Oh, I'm not talking about the obligatory pink ribbon corporate campaign in the world.  I would not put that in the category of kindness and grace.  That falls more into the "we're the corporate world and we are going to dupe the general public into pumping money into 'research' and line executive's pockets with a huge percent of the proceeds" category.

I pray that Dayna and I can instill a true loving kindness in our children.  My work just wears on me day in and day out as I have to be subjected to so many others that have bought into the corporate machine that is America.  There is so little concern for having a reasonable and "human" conversation about things.  So much of the corporate world is just not a healthy life-style.

The most important job I have that inspires me each day is watching my children develop and having the opportunity to be part of their little lives for such a short time on this earth.  I have to work really hard to shut everything else out and not allow things of this world to detract from the quality of time I can share with my family.

The Wall Street Journal Complete Personal Finance Guidebook

I really like The Wall Street Journal Complete Personal Finance Guidebook's wording when detailing the significance of carrying a lot of credit card debt.

If you could pay cash for what you want and are certain you'll pay the credit card in full each month, but you're using a card for a perk that ultimately improves your finances, then the debt is likely benign.

If you can't pay cash for what you want even if you raid your checking account, and you know you'll have to carry a balance on your card for a couple months to repay the purchase, then the debt is malevolent and your finances will suffer over time.

Term Life Insurance

Life Insurance should not be viewed as an investment.  Its purpose is to insure.

It's always best to buy Term Life Insurance, not Whole Life Insurance.  Term is much cheaper.  By not buying Whole Life Insurance, the money you save can be invested in more appropriate and lucrative ways.

Also, remember that the cost of Life Insurance increases substantially as you get older.  The intent is to retain Life Insurance during your younger years while your obligations ( i.e. protecting your wife and kids, covering your mortage, replacing your income ) are greater.  As you get older and your Net worth increases and your responsibilities decrease ( i.e. mortgage payments, kids move out, etc ), you can begin moving away from Life Insurance.

Your goal should be to get your Net Worth to a point where it's significant enough to take care of what you leave behind.  Hopefully, your Net Worth will be your legacy, not the Life Insurance funds.

Susan Feitelberg's - The Net Worth Workout

According to Susan Feitelberg in her book The Net Worth Workout , the average American works 44 years, then retires with a $46,000 net worth ( excluding home equity ).  That represents just $1,000 for every year worked.  Yet, if that person were properly investing $1,000 every year for 44 years in the S&P 500 ( average annual growth of 10% ), then they would have $378,000+.  If that is true, what goes wrong with individual's savings over these 44 years?  I think this tells us that folks are continually dipping into their money without letting it compound properly.  A perfect example is when folks borrow against their 401K plan.  This is perhaps one of the worst things you can do for your long-term financial stability.  I know this is popular and I have made the same mistake myself once, but it's really a poor idea unless it's an absolute emergency.

Reverend Billy

Yes, Reverend Billy comes across as entertainment, but the message is dead serious.  Instead of proliferating a culture that insists that physical gift giving is the most meaningful thing these holidays, why not focus on giving our time and love to family and friends.  I know, you and my wife, Dayna, believe that I'm absolutely crazy with regard to my passion to see all consumerism diminished, but I stand by my convictions that this American culture is way out of control with its belief that "buying stuff" is the meaning of life.

America Saves

With the holidays fast approaching, everyone could use some helpful money saving tips ( I know I can ).  Here's a good website with some ideas.  The thoughts on the websites are for year round savings, not just holiday ideas.

America Saves

Also, the contents of the book is coming along.  I continue to pull together a comprehensive list of topics I want to cover.

Morgan Talking

For our three year anniversary I bought Dayna a microphone for her iPod.  I think we'll find many uses for it, but mostly for capturing the kids on audio for our family and friends to enjoy.

Morgan Laughing ( 18 months old )  
Morgan Talking ( 18 months old )  

The Book

Work continues on the book as I begin assembling the topics I want to include.  The list may grow and/or shrink as I get comfortable with the things I want to convey.  One thing is for sure...there is no shortage of topic options that can be included.

Personal Finance Book

I've finally compiled enough information to begin working on a personal finance book.  This is something that I've had in my head now for about the last 3 years.  I'll be creating a new link here so folks can view my drafts and, ultimately, the final version.  Today, there are so many great avenues for folks who wish to publish a book.  I hope to work with one of the reputable online companies where I can have several hundred books printed up for friends and for maybe getting out to the local bookstores and on the web.  The book will revolve around a one page visual aid that displays the phases by which one passes through toward financial security.  You can find the links to the book at the top of this page.

Kid's Pictures

I finally got around to updating the kid's pictures.  I'm still behind on the growth trackers, but hope to get to those this weekend.

Morgan
Parker

Enjoy !!!

Roth IRA

OK, I've decided to stop being pissy for a while.  The blog was beginning to look like an infantile rant page you might find on myspace.  Anyway, let's get back to something constructive - MONEY.

October is in full swing and we're in the last quarter of the year.  Time to start thinking about end of year planning in anticipation of tax time and the new year coming up.  As I do every year, I'll sing the praises of the ROTH IRA.  Fortunately, next year, the contribution limits go up $1,000 to $5,000 for those under 50 years old and $6,000 for those 50 and older.  It's a beautiful thing you need to look into.

Next Generation

I don't like to do this on the blog since most of you could give a flip about software development tools, but I've been on this cantankerous kick of venting all my pet peeves lately.

Do you have any idea how many times in the last 17 years of my technology career that I've had to put up with the bullshit marketing tag line "next generation" ?  Well, let's chalk up another one.  Microsoft has their goofy little new product called Silverlight and, yes, it's the tool for delivering NEXT GENERATION media!!!.  Hmmm, funny, I worked with an IDE ( Internet Development Environment ) back in 1998 called SilverStream.

Geez, it all gets so tiresome sometimes.  It's just so refreshing when one experiences something truely original.  Boy, those times are so far and few between.  We live in a society filled with a bunch of robots who do/say the same things everyday.  Fortunately, we do have the Independent Film Channel and Sundance to occassionally get our fill of something a bit new and original.

Speaking of something original, Dayna gave me the gift of watching the kids on my birthday so I could go see the movie 3:10 to Yuma.  There were many scenes in the movie that reflected stolen ideas from past westerns, but for the most part, the storyline was quite unique.  Man, I really enjoyed the movie with its basis surrounding the relationship between a father and son.  There is obviously a good bit of violence, but this film had some authentic character to it.

Unique Ideas

I get so entertained by the notion that people today in software development think they are the first one to come up with a unique idea.  It's amazing how this society can recycle the same ol crap time and time again and the people doing the recycling truely believe they are the first one to have that idea.  As I observe people in my field, I'm flabbergasted at the arrogance they show as they attempt to convince the world that they are the originator of an idea.  Whatever.

I remember when I first started my career out of college.  I remember thinking to myself that the people who had been there for years were dinosaurs and their ideas simply were not relevant anymore.  Geez, what a fool I was.  So much of what they did in their days has just been continually re-invented under different labels and "cooler" marketing efforts.

Too much time and money...

I'm lucky if I get to spend more than 2.5 hours each night during the week with the kids before they go to bed at 8 pm.  I find it baffling that 40 year old men with children devote so much time to gaming and neglect time with their families.  Apparently, Halo 3 came out and there were people at work leaving early to buy it and begin playing the thing.

First off, I don't see the fascination with gaming when one is a full grown adult.  My days and evenings are instantly filled with much more constructive things than to be wasting my time playing a video game.

I've been observing this behavior in others for some time now and pondering upon this phenomenon.  I think the thing that comes to mind is the need for many of these people to impose their will on others. Whether it's going against a fictional character in a game or playing against another human opponent, the type of people I see involved in this behavior at a ripe age seem to reflect this in their nature toward others in real life.

Not only does this interest chew up a huge amount of one's time, but the dollars spent on this activity is crazy when it's $50 bucks a pop for a new game.  I think a lot of folks sure are going to be regretful in their older age when they look back to see how much of that money could have been invested wisely for a nice return.

Present Coach At Texas A&M

This video clip depicts my current feelings regarding the present coaching regime at my alma mater.

Frantastic

Economically Conservative

I do not like labels, but over the years I've continued to clarify my outlook on life such that I've somewhat quantified myself as Economically Conservative, yet Socially Liberal.

I don't believe the government should be completely removed from fiscal policy, but their role should be minimal and mostly revolve around keeping society honest when it comes to money.

On the social side, I've swayed very far to the left as a result of years of entrenchment in the religious right.  I thank God everyday for removing from the culture that thrives on religion.  Don't take that to mean that I'm not spiritual or truely believe that I was created by a divine entity.  There is too much evidence in life to deny the existence of God.  I am, however, completely opposed to organized religion.

Religion has helped to bring order to society, but it has also brought great pain as a result of human beings requiring a cause to destroy other human beings who don't subscribe to one particular view of the world.  The desire to wield power over other people is the fundamental premise of all western religions.  I look back on my years in the Bible Church realm and find myself disgusted at what I stood for during those times.

I can truely tell you my days now are so much more clear then they ever were in the past.  What is the meaning of our life here on earth?  I now know.  It's all about children!!!  I never knew what true, pure and complete love was until I had the privilege of looking into my children's eyes and experiencing something I've never felt before.  Children are God's way of softening our hearts such that we never become bitter about everything else that life throws at us.

Reducing Weight

In December 1999, I ruptured two disks in my lower back.  Fortunately, I was able to avoid surgery and have led a normal life since then.  However, as a result of the injury, I have to be very careful about carrying too much excess weight.  Since I have some permanent nerve damage in my lower back and left leg, any additional pressure in that area can cause some issues.

When I first moved to Tulsa in July 2001, I weighed 175.  I was probably in the best shape of my adult life at that time.  Since being here in Tulsa, I've been diligent about working out and staying reasonably fit, but over the last six years my weight has crept up to just short of 190.  The top end of my ideal Body Mass Index ( BMI ) is 183.

Because of the bit of extra weight, my bladder has become overstimulated due to pressure on my nerves in that area.  After undergoing several tests at the urologist, it was determined that my bladder was fine and that the nerve damage from my back injury was causing the increase in my bladder activity.

Since that visit to the doctor five weeks ago, I have committed to reducing my weight in order to reach my goal of 175.  I'm happy to report that I've had great success.  I've lost 5 pounds and I'm currently around 185.  Here is how I've done it so far...

Increased intake of water

Eliminated sweets

Eliminated dairy

Eliminated alcohol

Minimized red meat intake

I would have to say the elimination of sugar from my diet has had the biggest impact.

Mercedes-Benz

You know, when I was in High School it used to mean something to drive a Mercedes-Benz.  The Germans made an elegant car that was really only driven by folks with some real money in the bank.  Today, thanks to Chrysler taking over several of the Mercedes-Benz models, the name Mercedes has just been cheapened.

I look around at some of the idiots driving these "cookie cutter dodge" Benz's and it just makes me laugh to see the smug look on their face because they have the Mercedes-Benz name plate on the car.  These morons are driving around in a $35,000-$40,000 vehicles with a $40,000/yr salary and no money in the bank and act like everyone else should be in awe of them because they are driving a Mercedes-Benz.

Plus, the cheaper models just look like shit in my opinion.  These vehicles made in the US are basically a Dodge Neon with the Mercedes-Benz name on it.  Now, granted, the high-end models are still made in Germany and look fantastic.  I do realize Mercedes-Benz probably has expanded their market considerably, but I think they've done their overall creditability a disservice by allowing Chrysler to take ownership of the lower-end market.

"God Bless the Whole World"

I saw a bumper sticker this week that read "God Bless the Whole World".  How often do we see "God Bless America"?  A lot!!!  There are 5 billion people on the planet.  Only 300 million of its inhabitants reside in the United States, yet, as Americans, we think the world revolves around us.  We are, perhaps, the most narcissistic society on the globe.

The world is full of incredible diversity and people with rich, deep heritage.  In our country, we minimize the significance of other cultures because we have been "blessed economically".  I'm very thankful that we are fortunate to have "things" here in America, but prosperity is not the single most important factor to one's existence.

The influence of the Christian religion over the centuries has fostered the idea that we in America are the only people in the world that know the "truth".  How often do you hear Christian leaders point to our economic success as evidence that God has uniquely blessed us and us alone.

Granted, the structure of our society has brought order and success, but to say that we are unique in the world because God has blessed us and us alone is false.  Frankly, there are so many good things in other cultures that we lack in America that I wish we had.

Love

I Love My Wife Dayna and Two Children, Morgan and Parker !!!

Kat Von D

Kat Von D is an amazing portrait tattoo artist.  We've really been enjoying her new LAInk reality show on TLC.  Hannah Aitchison is a fantastic pinup girl artist as well.  The most fascinating part of the show is to watch the artist free-hand a tattoo right on their clients.  There are so many tattoo artists that can only trace existing art.  The real pros can develop their own designs and also free-hand with ease.

Alternative Minimum Tax

The Alternative Minimum Tax ( ATM ) was created in 1969 to ensure all Americans, particularly those wit higher incomes who benefit from tax shelters, will pay at least some federal income tax.  Unfortunately, the income level of a wealthy person in 1969 is now the income of an average household.  According to Vanguard, there is a good chance that a household that makes $75,000 a year could be subject to the AMT.  Congress really needs to act to correct this policy of a past era.

Alternative Minimum Tax
Wikipedia

Exotic Mortgages

As you've seen from the news, the Financial Markets are in turmoil at the moment as a result of the mortgage lending crisis.  Personally, however, I'm not taking any action with my investments.  I'm diversified adequately, yet, I will take some losses over the near term.  I'm in this, however, for the long haul and I'm not going to make the mistake of trying to move money around and incurring transactions costs when the best thing to do is to continue to dollar-cost-average and remain diversified.

Over the course of my lifetime, I will ( and have already ) experience many market down turns.  This is the nature of a capitalist economy.  A couple examples of poor economic times I've managed through...

1990 - I graduated from college during a very poor job market.  I interviewed with 26 companies during my last semester at Texas A&M and received 2 job offers.  Most of the companies that interviewed on campus simply made their obligatory visit to campus without any intention of hiring anyone during those years.

2000 - I saw the dot com company I was working for run out of money and close their doors during the tech bust of 2000.  Within two weeks, I was fortunate to land a solid job in the Healthcare industry here in Tulsa.

2007 - I'm now observing the economy teeter on the edge of another economic slowdown as a result of the mortgage crisis and housing speculation.  Fortunately, I'm not the type of person who thrives on impressing others with how much I have, therefore, I have not put myself in a situation with my current mortgage that would jeapordize my financial life.

Below are a couple sobering articles...

Money and Markets
Soaring Foreclosure Rates
American Dream ?!?!? ( not for everyone )

I also read a small blip in Kiplingers today that stated "homes lose about 1% of their value for each foreclosed property within an eighth of a mile".

In my view, the following list of ridiculous mortgage types are to blame for the current mortgage crisis.  How is it that the US Government could not regulate the mortgage industry a bit closer so as to prevent such ludicrous instruments from entering our economy?

I really like the "Good For" section of the article.  Notice how many of the "Good For" options state something like..."for sophisticated borrowers" or "young lawyers or doctors" or "have large cash reserves" or "young professionals", etc.

I don't see any notes in the "Good For" section that read...

For people that want their mortgage to consume over 50% or more of their gross income

For illegal aliens who feel entitled to the American Dream that should be living in a $500,000 home in Southern California

For young people mowing lawns who think the world owes them the right to live in a home

For people who cannot prove they have an income

Exotic Mortgages

Morgan Update

Today was the last day of Morgan's Little Gym Summer Session.  She and I had a great time and we're investigating activity options for the fall.  She is 16 months old today and is just shy of the next class level at the Little Gym which begins at 19 months.  I would like to get her in the older class so she can learn from the the older kids, but it looks like that will not work.  I will have to enroll her in the same class if we're going to continue there in the fall.

Morgan is really growing in her language skills.  We were in the car this week and she recited her ABCs without any prompting from mom and dad.  I think that is very impressive considering she is only 16 months.  I also read that a 2 year old typically has a vocabulary of 200 words.  Morgan is 8 months away from being two and probably has a 50+ word vocabulary.  Things are very exciting with her right now.  It's very important to me that we continue to keep her challenged so she does not get bored.  We purchased some flash cards last week to continue to help build her vocabulary, letters and numbers.  She routinely spreads out her flashcards, picks one up at a time and says the word.  She knows the following words...

Dog, Zebra, Turtle, Cat, Kite, Apple, Bee, Car, Watch, Ball, Mouse, Monkey

Oh, and one more piece of big news, Morgan pee'd in her potty chair for the first time this week !!!  We've been trying to give her time on the chair when she wakes from naps.

Unethical Corporate Behavior

The extent of unethical Corporate behavior really has no limits.  I've seen a lot of dishonesty and wasteful actions in the Corporate world.  Last week I had the privilege of witnessing another occurrence.

One of my fellow managers who reports to someone other than my manager had their boss and their boss's boss decide to randomly show up in Tulsa.  Not sure where these two guys live ( probably Atlanta ), but they popped in on my co-worker without any legitimate business reason.  They showed up in the office for less than 1 hour on Thursday and were never heard from again nor a reason identified why they decided to show up.

Well, it turns out the PGA Championship was in town and these two corporate executives decided to use company funds to pay for their airfare, hotel, vehicle and meals so they could see Tiger Woods play at Southern Hills ( along with the nights at the local stripclub as well ).

I seriously considered dropping an anonymous voice mail to our Corporate Code of Conduct hotline, but I simply don't know what the point would be in doing that and it would probably jeopardize my job of which I prefer to have at the moment with two small kids.

Oh well, I guess I've always been a bit of a literalist when it comes to following rules and adhering to a professional code of conduct.  If I got upset everytime I heard about activities like this, then I would probably drive myself insane.

Mission Money

I heard about this website on NPR's Sound Money program.  Missing Money is a reputable source managed by the National Association of Unclaimed Property Administrators.  I actually found a few dollars under my name that I'll be collecting on.  It wasn't much, but was nice to stumble across this.

PGA Championship In Tulsa

The big news this week here in Tulsa is the PGA Championship at Southern Hills Country Club.  The word for the week is "excessive heat warning".  The temperatures will hover around 100 degrees for the entire week.  Tiger Woods has his game face on and is ready to hit the course.  When asked which hole he was most ready to tackle, he responded with "all 18".  He is such a great competitor and was the first to hit the course on the Monday and Tuesday practice days.  He was spotted on the course at 6:20am on Monday.

Corn! Corn! Corn!

Ah, the joys of parenthood.  Dayna and I had an interesting adventure with Morgan today.  Upon returning home from running errands, I put Morgan down for a nap.  While doing this, I realized she had spilled some water on her shorts while in the car.  I went ahead and removed her shorts and put her down for her nap in a t-shirt and a diaper only.  After some time went by, we heard her rustling around in her crib.  Dayna peeked in on her and saw that Morgan had removed her diaper and had a nice surprise wrapped up in her blankets.  Morgan was covered with poop along with all the blankets!!!  Dayna quickly ordered me to get Morgan in a bath while she cleaned the crib and blankets.  As I was bathing Morgan, she kept laughing and yelling out "corn, corn, corn !!!".  Suddenly, Dayna and I realized Morgan was recycling the corn found in her dirty crib !!!  Gross !!!  We freaked out and made sure we brushed her teeth thoroughly.

Self-proclaimed Experts

I find it comical how so many people in Software Development think they are the first one to ever have a unique idea.  Fact is, arrogant boneheads everywhere in this business just keep recycling the same old shit.  It appears that some folks seem to think the Agile Software Development Methodology is NEW and is now all the rage!!!  LOL !!!  What a f*$cking joke.  You know how many times now I've heard the same ol crap repackaged ?  The worse part is not that these ideas keep getting recycled, but the fact that these idiots doing the recycling truly think they are the first ones to come up with these concepts.

Since the dawn of time, the same old bs keeps coming to the forefront because someone along the way wants to resurrect an idea and attempt to claim it as their own.  There are an incredible number of people who try to pull this off within all aspects of our society - professional, religious, cultural, etc.

There are so few ( if any ) truly unique ideas by a very select few thinkers.  99.9% of the rest of the population are like sheep that just follow and try to capitalize on other's creative thoughts.  It can all be so frustrating for someone like myself who constantly sees morons in this business who have the gift of BS and simply talk their way through anything and make it sound good.  Worst part is, they proclaim themselves experts and make everyone else out to be idiots.

Weekend

Tulsa Gatesway Balloon Festival and Oklahoma Aquarium Photos

Pre-Season NIT

Because of the success of the A&M basketball program last year, the team was a awarded a slot in the prestigious pre-season NIT tournament.  Not only are we in the tournament, but the school will be hosting the first and second rounds of the South Region in College Station.  We'll get the opportunity to play a team from Tulsa - Oral Roberts.  Good luck to coach Turgeon and the Aggies.

Subprime Lending Crisis

Man, the IRS does not miss anything.  Check this out, with foreclosures on a record pace due to the crazy subprime lending crisis, the IRS can get their grubby hands on these folks who participate in a short-sell.  A 1099-C is triggered whenever a homeowner does a short-sell.  The difference between the mortgage amount and the selling price of the house gets reported as taxable income.

Here's a scenario, say you still owe $300,000 on your mortgage but the house value has dropped to $275,000. If the bank agrees to a short sale, you'd sell the place, pay the commission and other selling costs -- let's assume $15,000 -- and turn the remaining $260,000 over to the bank. The $40,000 gap between the payment and the amount due would show up on a 1099-C form as taxable income to you.  Even the $15,000 of selling expenses gets tossed in with the amount of forgiven debt on which you owe tax.

The tax bill, however, will be forgiven if the homeowner is completely bankrupt.  But, if the homeowner has other assets, then the tax bill will take affect.

Financial Priorities

Yes, my Financial Priorities are in order !!!

Triple digit drop for the Dow...

"Another triple-digit drop for the Dow" exclaimed CNN.com today.  Opportunity, opportunity, opportunity is what I say.  In spite of my investment's market value dropping by $10,000 in the last two days, I consider days like this to be good news for my overall portfolio over the long-term.  As I do every year, I look for a place to invest my cash I've stored up over the course of this year.  I've had such great success with Vanguard funds ( particularly, the Vanguard PrimeCap Core Fund ), that I will be pumping in another $10,000 into this fund in the next several months.  The lower the price, the better for me.  Bring on the low prices !!!

Optimistic About Texas A&M Football

College Football is about 30 days away.  I'm very optimistic about my Texas A&M team this year in spite of the brutal road schedule.  If we can repeat our road success we had last year, then we'll have a real chance to win the Big 12 South Title.

Rumor has it that Stephen McGee ( our starting quarterback ) has put on about 20 additional pounds of muscle.  A proven quarterback, a potent backfield ( in Lane and Goodson ) and the best offensive line in the Big 12 will be fun to watch.  If our defense continues at its current pace of improvement, then our team will have to be considered contenders in the South division.



Gig Em Aggies!!!

Parker Logan Karas

Parker Logan was born today!!!  He weighed exactly 8 lbs and was 19.5 inches long.

Parker Logan

My Blackberry

Friday at work was my last day for a while.  I'm taking off 2 - 3 weeks for the delivery of Parker which is slated for Monday.  It typically takes me about 2 days to get work off my mind, but since I acquired my Blackberry I'm almost constantly tied to work.  The Blackberry was, by far, the absolute worst purchase I've ever made.  Because of it, I can never get away from work.  However, for the next two weeks I've committed myself to turning it off.  This time is going to be my time with my family without any work thoughts whatsoever.  I work with a great bunch of folks and fully trust they will handle all open issues without any problems.  As a result of me disabling my Blackberry, today was a glorious day with Morgan and Dayna.  I've actually had the Blackberry OFF for a full 24 hours now.  I've also been able to begin catching up on my reading.  Like I mentioned in my previous blog entries, I've been really enjoying Bart Ehrman's work.

Jenks Made Money Magazine's Best Places To Live List

Money magazine has rated Jenks, Oklahoma the 43rd best city to live in America.  Dayna an I enjoy our town very much and think it's one of the better kept secrets.

Jenks #43
Jenks Data

The Theory of the Leisure Class

In 1899, an economist by the name of Thorstein Veblen wrote a paper entitled The Theory of the Leisure Class.  Within this publication, he coined the term "conspicuous consumption".  Conspicuous consumption is the idea of buying things as a symbol of one's earning power, a signal to others that you've attained a certain level of wealth.  Not only do Americans practice this theory, but, according to MP Dunleavey, we've escalated this into an even more aggressive form - "competitive consumption".  This is the desire to have things that not only display your purchasing power, but your ability to outstrip whatever your neighbor acquired - we know it commonly as "keeping up with the Jones'".

The Theory of the Leisure Class
Conspicuous Consumption

A couple additional great quotes from MP Dunleavey's book Money CAN Buy Happiness...

"...the number of storage units nationwide increased from about 22,000 in the early nineties to nearly double that ten years later"

"The average size of an American home has grown from 1,500 square feet in the 1970's to over 2,400 square feet today"

Indications are everywhere in American society that people spend more on "stuff" just to fill homes and storage units so as to attempt to represent the wealth they have achieved.  Yet, at the end of each year, folks are always asking themselves the question "where did all the money go".  Meanwhile, they are surrounded by discarded and broken items all around them that may have brought joy to them very briefly when they first bought it, but now is simply taking up space while their savings accounts are a bit smaller because of the unsound purchases they have made over the year.

Stock Market Soared

The stock market soared these last couple days.  It's always nice to see the ol portfolio riding high, but I personally prefer things to be down for a while so as to take advantage of low prices.  I'd prefer the market to reach its peak just as I reach retirement, but of course that's not going to happen.  Dollar Cost Averaging through these years will hopefully keep things reasonable for my accounts.

There is talk that rising interest rates will keep stock prices in check.  You know, the classic Hank William's song that tells us..."interest is up and the stock markets down and you only get mugged when you go downtown...a country boy can survive".

I finally got around to creating a joint kids page.  Very soon, we'll have some pics of Parker Logan's birth which will be anytime now up until the 23rd of this month.

Morgan Avery
Parker Logan

Origins Of Christianity

I typically adhere to the philosophy of "don't talk religion or politics", but today I'm going to deviate from that rule and discuss religion within the context of a couple books I've been reading.

    
For those of you who show interest in these books, you may be asking yourself the question "wow, has Scott become an agnostic?".  The answer to that question is "no, Scott has not become an agnostic nor an atheist".  There is too much evidence within creation ( i.e. the birth of a child, the changing seasons, the extravagant detail within every living creature ) for me to deny that there is a God that created everything in our world.

If you're interested in understanding the origins of Christianity a bit deeper, then you will find these books fascinating.

Morgan Update

Work has really been crazy lately.  Unfortunately, I've neglected updating Morgan's pages until now.  Here are June and July's pictures.  Hope you enjoy them as much we have.

June 2007
July 2007

I've also brought the Morgan's Page up to date.

Defined-benefit Plan (Pensions) vs Defined-contribution Plan (401K)

In my 17 years in the corporate world, I have never heard any of my peers my age speak of having a pension plan at work.  When I first started work at Pennzoil in 1990, the company had just recently offered early retirement to most of the older workers.  Many of those more mature workers at the time probably had some form of pension plan.  However, pretty much every new employee hired with me and afterwards did not have the option to participate in a pension plan.  Back then, pensions were becoming obselete.  Today, they are pretty much non-existent for new workers.

A pension plan is commonly known as a defined-benefit plan.  This is when the company pretty much takes care of funding your retirement.  You really don't have any say in how the money is invested.  The cash is automatically deducted from your paycheck and invested by the company as they see fit.  In a way, it's kind of like how Social Security works.

Today, however, workers are pretty much on their own to ensure they fund their retirement adequately.  The defined-contribution ( i.e. 401K ) is now the primary means by which workers handle their retirement.  For someone like myself who enjoys investing and keeps up with the latest information, a defined-contribution plan is superior to the old defined-benefit plan.  I prefer to have full control over my investment choices.  I don't want my money going into a black hole and to have someone else responsible for my financial destiny.

When to purchase another vehicle...

Dayna and I have two vehicles - a 1999 Acura TL3.2 with 79,000 miles and a 2000 Nissan Xterra SUV with 93,000.  The two cars are 8 and 7 years old, respectively.  At this point, my plan is to not purchase another vehicle until Morgan's fifth birthday.  That would make our cars 12 and 11 years old at that time.  Yes, I know, many folks have told me I'm a miser and have unrealistic expectations when it comes to the life of a vehicle.

Here are some stats for you from the National Highway Traffic Safety Administration...

In 1977, half the cars on the road survived until they were ten years old with an expected useful life of 107,000 miles

In 1990, half the cars on the road survived until they were twelve years old with an expected useful life of 127,000 miles

In 2001, half the cars on the road survived until they were thirteen years old with an expected useful life of 152,000 miles

When I do finally buy another car, it will not be new.  I will be looking at vehicles that are one year old at the time I make a purchase.  I have no need to have the latest and greatest popular vehicle to impress friends.  This all goes back to one of my core financial values... "Don't envy what others have".

Two packs of cigarettes

I was standing in line at a convenience store the other day and overheard the gentlemen in front of me ask for two packs of cigarettes from the cashier.  I was not paying too much attention until I heard the lady behind the counter say "that will be $9 sir".  NINE dollars!!!  As in niner!!!  Holy freakin cow I thought to myself.  Nine Dollars?!?!?

So, being the nerd that I am, I pulled out my Blackberry and fired up the calculator.  OK, so, if I smoked 2 packs of cigarettes a day at a cost of $9 a day for 365 days that would come out to $3,285.  To be perfectly honest with you, that is about the amount of money we paid for all diapers and baby food for Morgan's first year of life!!!

$3,285 is about equivalent to...

The amount McKesson matches my 401K for one year

Three times the amount I paid to fuel both our cars last year

Three times the out of pocket expense for the birth of Morgan

Slightly less than what I paid for a 10 day honeymoon in Paris in 2004

One-third of our annual housing cost

Same amount I will spend over 10 years on a $500,000 life insurance policy

8 times the amount I pay on our annual healthzone membership

Wow !!!  Nine Dollars.  That is something else.

Boom and bust economy

I've always been puzzled by the mentality of folks who believe their income will do nothing more than increase throughout the years.  So many people stretch themselves so far with mortgages because they truly believe they will be making more money each and every year that goes by.  Therefore, they justify to themselves that their income with catch up or exceed the necessary level to meet the demands of an out of bounds mortgage.

We live in a boom and bust type of economy.  There are no guarantees that one's income will always be reliable.  Of course, there is a small percentage of people in this country that seem fortunate enough to avoid the highs and lows of a fluctuating income stream.  These folks are among the lucky few who have wisely managed their careers in order to avoid such instability.

To illustrate my point about income fluctuations, let's consider a real life current event - the news that Toyota has now surpassed GM and Ford as the number one seller of vehicles in America.  What exactly does this mean for workers in this industry currently at GM or Ford ?  Well, the possibility of them being layed off is very real.  Where might they go work instead ?  I bet Toyota is hiring.  Why do you think Toyota is now number one in the industry?  I can almost guarantee you that their costs are less.  What does this mean exactly?  Well, for one, they are probably paying their employees less.  Hence, professionals in this industry can expect to be performing their work for less money if they wish to have a job.

Unfortunately, we in America make way more money than folks in other countries.  There is an entire planet out there prepared to do our work for a lot less money then we are.  We'll continue to see our jobs go offshore.  For those jobs that do stay here in America, the pay levels will continue to remain flat or decrease.

Required Minimum Distribution

For those near or in retirement, dates become increasingly important.  Not complying with certain IRS rules can lead to hefty penalties.  The Required Minimum Distribution (RMD) is the amount of money that one is required to begin withdrawing from their retirement accounts beginning in the year following the year they turn 70 1/2.  The 70 1/2 thing is what confuses most people.  If one does not withdraw the RMD from their retirement accounts each year, then a hefty penalty of 50% is applied to that money.

You must begin taking your RMD by what is called your Required Beginning Date ( RBD ), which is generally April 1 of the year following the year you turn age 70 1/2.  So, in my case, I will turn 70 on October 2, 2036.  This means I will turn 70 1/2 on April 2, 2037.  Which means, my "first distribution year" is considered to be 2037, but I would not be required to withdraw money until April 1, 2038 which is actually my Required Beginning Date ( RBD ).  My situation is a bit unique since my 70 1/2 birthday falls on almost the precise April 1 date.  I will need to gather more information regarding exactly how that 70 1/2 birthday is determined so I will know if it's just prior to April 1 or just after that date.

So, what types of accounts must you begin withdrawing money from ?  Basically, any account that has been exempt from annual taxes each year - this would include money in 401K plans, Tradional IRA, Roth IRA, Simple IRA and SEP IRAs.  Consult with a tax expert to get a full list of accounts that money will need to be withdrawn from.

The NewRMD.com RMD Calculator is a handy tool for determining your RMD.  The logic behind the calculator is based on the 2002 RMD Tax Law.

One other important retirement date is the year when you turn 59 1/2.  This is when you can begin withdrawing money from your retirement accounts.  You are not required to withdraw money at this time.  It is simply the age at which you can withdraw money from these accounts without incurring a penalty.

Track the Residential Construction Market

Below are more good links for tracking the Residential Contruction market.  I believe company stock will fall even further as the housing market continues to suffer.  There is a large oversupply right now of homes.

Yahoo! Industry Center

Construction Companies By Market Capitalization

Housing Starts

Home Builder Stocks

All the doom and gloom I've whined about the last several days regarding the subprime lending crisis will create real opportunity for many.  The current crisis in the real estate market will provide a super opportunity for folks to begin acquiring stock at some very reasonable prices.  You might want to consider Home Builder Stocks sometime in the near future.  The article highlights the following stocks...

DR Horton (DHI)

Lennar (LEN)

MDC Holdings (MDC)

Pulte (PHM)

Ryland (RYL)

Toll Brothers (TOL)

Predatory Lending

As I dig deeper into the subprime lending crisis, I have found it increasingly important for me to participate in disseminating information about predatory lending such that folks can avoid falling prey to this unfortunate practice.

Predatory mortgage lending practices strip borrowers of home equity and threaten families with foreclosure, destabilizing the very communities that are beginning to enjoy the fruits of our nation’s economic success.  Full Story

Predatory lending practices can leave victims homeless and defeated, stripped of self-respect and hope, their credit ruined.  Full Story

Seven signs of predatory lending.  Full Story

Subprime lenders made too many loans to borrowers who didn’t make enough money to make the monthly payments. In some cases, lenders didn’t even bother to verify borrowers’ incomes.  Full Story

Corrupt Mortgage Broker + Uninformed Low Income Home Buyer = Subprime Crisis

"If there is a fault line in the global financial system, it runs through the U.S. mortgage market" -- Mark Zandi, chief economist with Moody's Economy.com

Last year, 13.5 percent of mortgages originated in the U.S. were subprime, according to the Mortgage Bankers Association, compared to 2.6 percent in 2000. Overall, the subprime market was $600 billion in 2006, 20 percent of the $3 trillion mortgage market, according to Inside Mortgage Finance. In 2001, subprime loans made ups just 5.6 percent of mortgage dollars. -- CNNMoney.com

The scariest part of that statistic (the current foreclosure rate) is the fact that 2006 borrowers are still in their fixed-rate period. "What will they do when their payment starts to rise?" -- Glenn Costello of Fitch Ratings

In January, more than 14% of subprime mortgages were at least 60 days delinquent. -- MarketWatch.com

The subprime mess has reached crisis proportions as the widely cited Center for Responsible Lending reports that 4 percent of U.S. homeowners--or about 2.2 million--face the prospect of losing their homes. -- BuilderOnline.com

Predatory lending means that making a loan that the lender knows will have little chance of getting paid off without a host of penalties, and a high likelihood that the asset backing the loan will get confiscated at a nice profit for the lender. -- FoxNews.com

AND FINALLY, THE pièce de résistance...

California Mortgage Broker promises strawberry picker and mushroom farmer that they can afford a $720,000 home !!!

Final Equation...

Corrupt Mortgage Broker + Uninformed Low Income Home Buyer = Subprime Crisis

Foreclosures

A very big (and bad) housing crisis is looming.  Our lovely friends in the subprime lending industry have created a freakin mess that will reach deep into the overall national economy.

US Foreclosure Rate Surges to 47%
A Foreclosure Story

I found it very interesting in the second story how the subprime lender convinced the home buyer that with an interest-only loan that her tax return each year could be used to pay her mortgage principle.  These lenders had no business "approving" this woman for a loan on a $400,000 home.

Money begets money

Money begets money, right?  We've all heard the expression "you must have money to make money".  Very true.  But, many people simply say they can't "make" enough money for this statement to be valid for them.  So many are caught up in the thought that only rich people who have inherited money can apply this principle.  However, we can ALL make this happen with some discipline.  I really like the following quote from Richard Templar...

"You have to set aside money for breeding purposes.  If you ran a rabbit farm and killed and ate all your rabbits, you wouldn't have any left to keep going.  Instead of a rabbit farm, start a money farm and breed your money.  You can then reinvest some and spend some, but you can't spend it all, or you'll have no more rabbits."

The Rules of Money

There are so many bad books out there that I rarely recommend them.  I did, however, pick up The Rules of Money at the library today and have found some useful information in it.  It's a nice concise little book with 100 simple financial rules to live by.  A couple rules that the author mentions that are always helpful are...

Don't envy what others have

Spend less than you earn

Don't borrow money, unless you really must

Property, in the long run, will not outpace shares

Only buy shares (or anything) you can understand

Think long-term

Control spending impulses

Perform regularly scheduled finance health checkups

Don't try to get rich quickly

Make your money work for you

Don't spend it before you've got it

Never borrow from friends or family

College Station Regional

This year has been a good sports year for Texas A&M.  The trend continues with our baseball team.  We're currently just two games behind Texas.  Rivals currently has us hosting the College Station Regional.  Let's hope the momentum continues.

Morgan's First Birthday

Today was a big day for Morgan.  Not only was it her birthday, but she also had her 12 month appointment with her pediatrician, Dr. Mayberry.  I'll be updating the growth tracker shortly, but Morgan is now 30 inches long and weighs 19 lbs 9 ounces.  Unfortunately, Morgan had to endure 3 shots during this visit to the Dr's office.  Dr. Mayberry is well liked by Morgan.  According to the doctor, Morgan is doing just perfect.  We also had the privilege of sharing Morgan's big day with my parents who drove up from Austin.  We could all see the joy in mom and dad's eyes as they had the opportunity to interact with Morgan.  It's always special to have family around to be a part of Morgan's life.

Morgan's First Birthday

Kentucky Derby 2007 Contenders

Kentucky Derby 2007 Contenders

We're ALL fat!!!

Dayna harassed me about my last blog entry.  She said, "uh, are you going to write anything along with that picture?".  I retorted that the graph was self-explanatory.  Evidently, she didn't think it was funny, nor self-explanatory.  So, here goes...basically, we're ALL fat !!!  I'm all for having goals, but the BMI scale simply does not work in many cases due to the amazing variety of body types.  Don't believe me?  Check out this list of celebrities/athletes who exceed 25 on the BMI scale...

Mel Gibson 5'9": 214 pounds: 32

Matt LeBlanc: 5'11": 218 lbs: 30

Steve McNair: 6'2": 235 lbs: 30

The Rock (Dwayne Johnson): 6'5": 275 lbs: 33

Arnold Schwarzenegger: 6'2": 257 lbs: 33

Sylvester Stallone: 5'9": 228 lbs: 34

Barry Bonds: 6'2": 228 lbs: 29

Tom Brady: 6'4": 225 lbs: 27

President Bush: 5'11": 191 lbs: 26

Nic Cage: 6'1": 210 lbs: 28

George Clooney: 5'11": 211 lbs: 29

Tom Cruise: 5'7": 170 lbs: 26

Matt Damon: 5'11": 187 lbs: 26

Johnny Depp: 5'7": 190 lbs: 27

David Duchovny: 6'0": 212 lbs: 29

Vin Diesel: 6'2": 200 lbs: 26

Harrison Ford: 6'1": 218 lbs: 29

Richard Gere: 5'11": 187 lbs: 26

Ethan Hawke: 5'9": 172 lbs: 25

Hugh Jackman: 6'2": 210 lbs: 27

Lebron James: 6'8": 240 lbs: 26

Dale Jarrett: 6'2": 200 lbs: 26

Bobby Labonte: 5'9": 170 lbs: 25

Nick Lachey: 5'10": 180 lbs: 26

Karl Malone: 6'9": 259 lbs: 28

Dr. Phil McGraw: 6'4": 240 lbs: 29

Mark McGuire (playing weight): 6'5": 250 lbs: 30

Donovan McNabb: 6'3": 240 lbs: 30

Yao Ming: 7'6": 310 lbs: 27

Brad Pitt: 6'0": 203 lbs: 28

Keanu Reeves: 6'1": 223 lbs: 29

Cal Ripken: 6'4": 210 lbs: 27

Andy Roddick: 6'2": 197 lbs: 25

Will Smith: 6'2": 210 lbs: 27

Sammy Sosa: 6'0": 220 lbs: 30

Denzel Washington: 6'0": 199 lbs: 27

Bruce Willis: 6'0": 200 lbs: 29

Billy Zane: 6'2": 210 lbs: 27

BMI

Morgan's Gallery

April is here.  I've added the April 2007 web page to Morgan's Gallery.  Morgan's hair is really starting to fill in, but it's at an awkward stage.  Dayna and I are trying to figure out how to deal with it.  Is it too early for a haircut at a salon?  Probably, but we'll have to do something soon to get it under control.

California Home Prices

Unless you were one of the few fortunate souls to buy a home in California many years ago when prices were affordable, it's just not realistic for a new home buyer to afford a house on the west coast.

Home Price Disparity

"On the coasts, average incomes are higher. But just a bit. In Los Angeles, an average family makes about 15 percent more than in Oklahoma City. But an average home in Los Angeles costs 600 percent more than in Oklahoma City."

Simply put, this is ridiculous that home prices are so out of whack with incomes in California.  These soaring home prices are the result of greed and it puts the possibility of owning a home by an average income ( or even middle-to-high income ) family way out of reach.  As a result, lenders have become more "creative" in their approaches to allow people to hang themselves with their mortgages.  Interest only loans are one of the many foolish attempts by lenders to get people into homes.

I heard another story on the news the other night about a single black woman who is a nurse in New York.  Apparantly, she was able to get into a home with a nice fat mortgage of $4,000/month !!!  Yes, a nurse with a $4,000/month mortgage.  Even if she was one of the world's most successful nurses making six figures, a mortgage of this amount would be almost impossible for her to afford.  Yet, the mortgage lender thought she could handle it.  So, keeping in mind that a mortgage should not exceed 28% of your gross monthly income, this woman would have to be making $171,428/year (or $14,000/month) in order to afford this home.  It's highly unlikely she is making that much money (even in New York City).  You know, I keep slamming mortgage companies, but at some point people need to wake up and stop insisting that they are entitled to a home and to discontinue this foolishness of getting themselves into mortgages that are just not realistic.

Another Foreclosure Story

As I was listening to Market Place Money on the radio yesterday, I heard a caller with a story that typifies the mentality of so many people with financial troubles and the blinders they wear.  A woman called into the show explaining that she, her husband and two kids need a larger home.  As a result, they put their existing home on the market.  Problem is that their home has been on the market for 15 months without any serious buyer prospects.  Now, the caller states the family is considering foreclosing on the home just to get out of it.  Has the credit implications not sunk in with this seller?  Is a larger home really necessary?  Can the family not be content where they are?  A foreclosure is an option on the current home, yet they are looking for a larger home???  Either I completely missed the point of the call or this woman is high.

Hebeler Article

I like some of the thoughts Mr. Hebeler has in this writeup...

Hebeler Article

Very problematic issues in our society...

Large Homes

Multiple Automobiles

Unbridled Consumerism

Record Debts

Low Savings

Escalating Health Care Costs

"There are those that say the savings rate doesn’t matter. This argument was voiced when investments grew so much during the late nineties. In an effort to keep consumerism going, some economists said that people didn’t have to add to savings because investments had grown so much on their own. Then the market fell, and we didn’t hear from these economists again until the recent escalation of home prices. Now they have again come out of their scholarly cubicles with the same story based on the theory that home prices will continue to grow, and equity growth will be recovered sometime in the future as the population downsizes their homes or takes out additional debt using homes as collateral. Never mind that homes as investments are equivalent to illiquid highly leveraged long term securities which would be shunned by the average person if they had a name other than home." -- Henry Hebeler

Best practices for building/retaining your wealth...

Some good tips here from money.com regarding best practices for building/retaining your wealth.

1. The best home renovation is to upgrade an old bathroom. Kitchens come in second.
2. Refinance your mortgage when you can cut your interest rate by at least one point.
3. Spend no more than 2 1/2 times your income on a home.
4. For a down payment, it's best to come up with at least 20%.
5. Your total housing payments should not exceed 28% of your gross income.
6. Total debt payments should come in under 36%.
7. The best place to invest is a 401(k).
8. Max out a Roth IRA.
9. Subtract your age from 120 to determine how much of portfolio should be in stock.
10. Invest no more than 10% of your portfolio in your company stock.
11. Don't pay more than 1% in fees for a mutual fund.
12. If you don't understand how an investment works, don't buy it.
13. If you're not saving 10% of your salary, you aren't saving enough.
14. Keep three months living expenses a savings account for emergencies.
15. If you have kids or rely on one income, make it six months emergency fund.
16. Aim to accumulate enough money to pay for a third of your kids' college costs.
17. You need enough life insurance to replace at least five years of your salary.
18. With children, you need life insurance to replace 10 years salary.
19. When you buy insurance, choose the highest deductible you can afford.
20. The best credit card is a no-fee rewards card that you pay in full every month.
21. The best way to improve your credit score is to pay bills on time.
22. Do not borrow more than 30% of your available credit.
23. Buy late-model used cars and drive them until it's junk.
24. Resist the urge to buy the latest computer or other gadget.
25. Buy airline tickets early. Most seats go on sale 11 months in advance.
26. When you shop for electronics, don't pay for an extended warranty.

Appliance Life Expectancy

It's not cool to occassionally have the need to shell out some bucks for stuff that breaks around the house.  Here's a handy web page with the average life expectancy of household appliances.  This might help some of us stash a little cash away in anticipation of the inevitable with these fallible electronics.

Appliance Life Expectancy

The average cost of some of these big ticket items...

Refrigerator - $400 - $2,000

Microwave - $40 - $1,000

Dryer - $200 - $1,900

Washer - $300 - $1,900

Dishwasher - $200 - $1,300

Subprime Loans

Subprime loans have been in the news quite a bit lately, but not for the same reasons they were in the media a couple years ago.

Defaults and Foreclosures are climbing rapidly across the country.  Unfortunately, a good number of the population who "qualified" for these loans should not have been given the opportunity to hang themselves.  I firmly place the blame for this looming crisis on the mortgage industry and their creative efforts to create several new loan types that are simply ridiculous.  I like the Implode-a-meter. It represents how out of control the mortgage lending institution has become.  Fortunately, we live in a country where capitalism has a way of correcting itself by weeding out these idiots that suck people into something that only, ultimately, sets others up for failure.

A few quotes from regulators and critics of subprime lenders...

"subprime borrowers may not fully understand the risks" -- originator times

"Borrowers with bad credit are going to find it harder to get a home loan or refinance" -- credit.com

"Some have viewed the burgeoning subprime mortgage market as just such a ticking timebomb" -- costar group

"We're looking at subprime" -- SEC enforcement director Linda Thomsen

Brokers

Let's talk about Personal Finance again now that my obsession with College Basketball is coming to a halt until next year.  I know I'm once again stating the obvious, but YOU are the alone one who truely has your best financial interest in mind.  Your financial future should NOT be put into the hands of a BROKER.  A Broker is NOT a Financial Planner/Advisor.  A Broker's job is to SELL you something in order to serve his/her best interest.  As a matter of fact, the law states that a Broker MUST convey to his/her clients that his advice is not comprehensive and that his interests do not dovetail with his client's interest.  A Broker takes your money and will attempt to perform as many trades as he reasonably thinks he can get away with while charging you a fee for each transaction.  Churning is a common term used to describe this activity.  As much as the Brokerage firms try to communicate they have your best interest in mind, the truth is that they are working hard to line their own pockets.

Would a Broker lie to you?

Churning = An unethical practice employed by some brokers to increase their commissions by excessively trading in a client's account. This practice violates the NASD Fair Practice Rules. It is also referred to as "churn and burn", "twisting" and "overtrading". --- www.dictionary.com

Check out the Devil's Derivative Dictionary definition of churning.

Texas A&M Basketball

Texas A&M had a terrific year in basketball.  In spite of our loss yesterday, I'm so proud of what our team accomplished.  This team will go down in history as one of the greatest teams in school history.  But, I think this is only the beginning.  I feel strongly that Billy Gillespie will be back coaching our team next year.  He is a Texas boy through and through and I truely believe his heart is in the A&M program and has a real desire to win a National Championship.  With the current administration in place, I feel like we have all the right facilities and staff to make this happen in the near future.

Honestly, I think we have the capability of being better next year.  To this point, we have been overachieving with a bunch of hard working guys.  The talent level we have in place in this year's Freshmen and Sophomore classes, along with the very strong incoming recruiting class, our athleticism is going to step up to the next level.

Let's take a brief glance at our potential starters and bench that will provide the key to our success next year...

Donald Sloan ( Guard )
Joseph Jones ( Forward )
Josh Carter ( Forward )
Dominique Kirk ( Guard )
DeAndre Jordan ( Center )

Bryan Davis ( Forward )
Bryan Beasley ( Guard )
Elonu Chinemelu ( Center )
Victor Dubovitskiy ( Forward )

Gig em !!

House Flippers

House flippers have now surpassed lawyers as the most unscrupulous and detrimental element of our society.  Here's an article that illustrates the greed of these people and how they prey on the more vulnerable of our society.  Through this process, they continue to push up the cost of living for everyone and make it more difficult to afford a home these days.

This house flipper found an unfortunate widow living in a nursing home to take advantage of.  According to the article, Spickes herself states the elderly lady could sell her home herself for $130,000.  Spickes, however, exagerates the closing costs and fees to the poor woman and tells the home owner she would be better off selling it to her at a grand price of $95,000.  According to my math, if the widow sold the home for $130,000, I would estimate closing cost in the range of $10,000 ( 6% for buyer's and seller' agents and maybe another $2,200 in other fees ).  This would allow the woman to walk away with $120,000.  Instead, the house flipper goes to work on the lady in her weakened state and convinces the poor victim that $95,000 is a great deal for both parties.  That leaves a total of $25,000 out of the elderly woman's purse that represents a very significant portion of her overall portfolio that should be available to her for her critical needs as a widow.

Fortunately, our economy has a way of correcting itself and karma has a real nice way of repaying people who take advantage of the poor and elderly.  And believe me, I know how much bad karma this house flipper has brought into the world - she is my ex-wife.  I'll just leave it at that.

2007 Sweet Sixteen

The 2007 Sweet Sixteen and how I ranked them prior to the beginning of the tournament...



2006 transpired this way...

Texas A&M vs. Louisville

On Saturday, Louisville lost to A&M by 3 points.  However, they had a chance for the win when they were down by only 1 with the ball and 16 seconds remaining.  Pitino drew up a couple plays as options, but the freshman point guard, Edgar Sosa, decided to take an ill-advised 3 point shot.  A couple weeks ago, I discussed the value of having upperclassman in a team's lineup.  This is a perfect example of how a young team can let close games slip away.  The odds were in Sosa's favor if he would have just simply driven the lane.  He, most likely, would have been fouled and given two free throws to potentially win the game for Louisville.  Fortunately for the Aggies, Sosa's youth got the best of him.

"Coach [Rick Pitino] told me to look for Jerry [Smith] coming off a stagger screen and [Terrence Williams] off a screen," Sosa said. "If both were denied, he told me to go the basket at 6 seconds." - Hartford Courant

"Pitino said there were three options coming out of a timeout with 16.4 seconds remaining and trailing by one point, and Sosa taking a 3-point attempt was not one of those." - New York Post

Morgan is 11 months old...

Morgan is 11 months old today.  We had a wonderful time at the park yesterday and got several really good pictures of Morgan.  The next few months will be very busy (especially for Dayna and Morgan).  They are headed to Orlando to see Dayna's mom and step-father, then back to Tulsa to catch my parents passing through to Nebraska.  Then, in May, Dayna and Morgan will be off again.  This time to Vegas to see Doug and Linda and Dayna's brothers.

Oh yeah, I forgot to mention that Texas A&M won a pretty big game today.

Big game today!

Today is the day the Aggies have worked so hard for all year.  The game against Louisville in Lexington will determine how I feel about this season.  A win will give me complete satisfaction that we made it to the Sweet 16 with an opportunity to play Memphis and Ohio State in San Antonio next weekend.  A loss will cause me to doubt how good we really are and whether or not we can truely contend with the big boys in the NCAA Tournament.  I do know one thing though.  Regardless of the outcome tomorrow, I know the game will be closely contested.  With the quality of our defense, there is no team in the country that will blow out A&M.  Louisville will not get the satisfaction of beating us by 20 like they did Stanford two days ago.

Gig em !!!

March Madness 2008

Here are my rankings now that Selection Sunday is behind us.

A few observations so far...

Arizona - They are a 10 seed, but have the skills to make the Sweet 16.

Washington State is seeded too high at 4.

Kansas State is seeded to low.

Michigan State lacks discipline and are too high at 5.

Watch out for Pittsburg. They are good.

Butler will make the Sweet 16.

BYU should not be an 8.

Temple is 12 seed that is likely to beat a 5 seed.

New Baby Boy!

I created a new page for our NEW BABY BOY.

Madness May Now Ensue !!!

All possible permutations have been analyzed to the n-th degree.  Let's all stop the smack talking and put our brackets (and butts!!) on the line.  Let's get it on !!!

The Final Bracket

I'll just close with this quote from a notable sportswriter...

The South Region Pick: Texas A&M.  The most talented team in the region is top-seed Ohio State and the hardest to gauge is second-seed Memphis. The most seasoned, however, is Texas A&M. Led by All-America senior point guard Acie Law IV, the Aggies knocked off Syracuse in last year's tourney and won at Kansas earlier this year. The Aggies composure and craftiness will be too much for the young Buckeyes in the Elite Eight.--- Stewart Mandel, SI.com

Gig Em !!!

My Yahoo! Bracket Characteristics

100% of #14, #15 and #16 seeds lose in Round 1

50% of the #12 seeds over #5 seeds

50% of the #10 seeds over #7 seeds

50% of the #9 seeds over #8 seeds

84% of higher seeds win over lower seeds when 4 spots separate them

50% of the number #1 seeds advance to Final Four

50% of the number #2 seeds advance to Final Four

More Bracket Thoughts

I plagerized this, but I thought it contained a few good ideas...

1st Round:

#16 seeds are 0 for 88. #15 seeds are 4 for 88. #13 and #14 seeds are less than 19% combined. Upsets are frequent when dealing with #12 through #9 seeds. #12 seeds have won 11 of 24 matchups vs. #5 seeds the last six years. #9 seeds have a winning record vs. #8 seeds.

2nd Round:

#1 seeds win their first two games 86% of the time. Consider keeping the #12 and #10 seeds dancing through round 2. They win almost half the time in Round Two (14 of 29 for #12 seeds; 17 of 35 for #10 seeds). Rarely pick a #13 seed or lower to win in Round Two. Only 9% of teams advancing past Round Two are seeded that low.

Sweet 16:

Advance three #1 seeds into the Elite 8. 70% of #1 seeds advance into the 4th round (that's a higher percentage than #5 seeds who win a single game). Advance no team lower than a #12 seed into the Elite 8. NOT ONE has ever advanced.

Elite Eight:

Advance ONE or TWO #1 seeds to the Final Four. Exactly one or two #1 seeds have made the Final Four 18 of the last 22 years. Advance no team lower than a #8 seed to the Final Four. Only 2 of 88 Final Four teams have been seeded lower than #8.

Final Four:

Advance NO team below a 6th seed to the Championship game. Not a single one has made it in the last 21 years.

Championship Game:

Pick a #4 seed or higher to win it all. For 18 straight years the champion has been a 4 seed or higher.

My Brackets

As of today, here's what they look like...

Yahoo! Tournament Pick em - NdcPerKesson Work

ESPN Tournament Challege - texags.com

Unfortunately, due to the fact that the ESPN web people suck, I'm unable to create a PDF bracket.  I'll use snag-it to capture the brackets and put them out here on my website at some point.

By the way, for those interested, the NIT Tournament lineup has been set as well.  Two Big XII teams (Kansas State and Oklahoma State) are among the contenders.

Selection Sunday

Today is the day !!!  Selection Sunday is here.  My Final Rankings.  Fourteen of these teams will not be dancing come Thursday.  Based on my rankings, these are the teams I do not feel are worthy of an NCAA bid.  The bursting may now commence !!!

Drexel

Akron

Old Dominion

Iowa

Nevada - will probably get in

Kansas State

Texas Tech - will probably get in

Alabama

West Virginia

Oklahoma State

BYU - will probably get in

Georgia

Michigan

Vanderbilt - will probably get in

Xavier

Stanford

Air Force

Syracuse

The Latest Morgan Pics

With March Madness in full swing I feel like I've been neglecting Morgan's web page.  Although I have not updated the page until now, we've had lots going on with her.  She continues to develop her little personality is on the verge of walking while completely unassisted.

The Latest Morgan Pics

Falling Into Place

North Carolina takes over the top spot. Georgetown is looking mighty fine these days.  Duke is still high on the list, but of their four quality wins, the Air Force and Boston College victories are not looking all that impressive at the moment.  A couple new potential dance members hit the board...

Arkansas

Oklahoma State

In my view, it's also worth mentioning again that the following are overrated and will fall early in the tournament...

Memphis

Nevada

Southern Illinois

Butler ( if they get in )

BYU

Air Force ( if they get in )

Selection Sunday is tomorrow at 5pm Central Time.  Here's another Tip Sheet for filling in your brackets.

Newcomers

In spite of their first round conference tournament loss, UCLA remains atop the Karas Criterion and a few newcomers have made the list as potential dance candidates...

Florida State

Michigan

Iowa

Akron

Playin' the Odds

Below are a few tips I've picked up along the way for filling in your brackets...

The 14, 15 and 16 seeds lose in the first round 95% of the time.  So, you have a 5% chance of looking like a genius if you pick one of these huge underdogs or a 95% chance of looking like a fool.

75% of the time the higher seed wins when the two teams are separated by 4 or more seed spots.

The 9 seeds quite often beat the 8 seeds in the first round.

Many cinderellas come out of the 12 seed to beat the 5 seed in the first round or the 11 seed to beat the 6 seed or in some cases the 13 seed beating the 4 seed.

All four number one seeds never reach the Final Four together.

On average, two of the four number one seeds reach the Final Four - see Tourney History.

Conference Tourney Time

Log5 Predictions for the power conferences.  Pomeroy's application of the Log5 formula to the Big 12 Tournament predicts there is a 53% chance that Kansas and Texas A&M will meet in the Championship Game.

The Log5 Principle basically states that in a short series (i.e. max of six games in the NCAA basketball tournament for each team) anything can happen in spite of statistics that lead us to believe a certain outcome is somewhat certain.  Here's an example of the Big 12 on February 27th.  The starting point for the calculation is the Pomeroy ranking (i.e. Kansas = 0.9872, Texas A&M = 0.9827, Texas = 0.9482, etc).

Last year, I factored in the Log5 into the Karas Criterion, but this year I did not.  I'll simply refer to it as one source of information when making my picks this year.

Have fun with it (particularly if you are a betting person) !!!

Conference vs Conference

Is the Southeastern Conference really that good?  Is the Atlantic Coast Conference worthy of having 7 teams in the NCAA tournament?  How about the Missouri Valley Conference with Southern Illinois, Creighton and Missouri State?  Well, according to Real Time RPI, these conferences are among the best in the country because of their team's average RPI and Strength-of-Schedule. However, as we saw last year, the ACC and Big East teams play a decidely different type of basketball then some of the other leagues. Some leagues are tinted more toward defense, while others are very offensive minded. It's very difficult to say how things will play out against teams from different leagues.

A few examples among the top teams...

UCLA - lost 3 of 4 games in conference; beat Big 10, Big 12 and SEC teams

North Carolina - lost to West Coast Conference (Gonzaga)

Ohio State - lost to ACC and SEC teams

Florida - lost to Big 12 (Kansas) early in season

Duke - did not play real high profile teams out of conference

Pittsburgh - lost to Big 10 and Big 12

Georgetown - lost to Pac 10 and ACC

Wisconsin - handled Big East and SEC teams well

Maryland - managed to beat Big 10 teams well

Kentucky - beat up by quality teams from Pac 10, CUSA and ACC

Overall, I think the Big 10 is weak.  The Big 12 is better then their average RPI due to level of competition in league play.  Personally, I think the Pac 10 may be the best conference in the country. I have a hard time taking the Missouri Valley Conference seriously.

Cinderella? Winthrop, perhaps?

So, based on last night's conference tournament outcomes, we now know that Davidson, Penn and Belmont have made it into the NCAA tournament.  Realistically though, can any of the soon-to-be 14, 15 or 16 seeds really pull off the unthinkable by making the Final Four?  It's highly doubtful considering that 95% of the time these seeds will lose in the first round.  So, with that in mind, where will this year's Cinderella come from?  My thought is that it will be a 12 seed that beats a 5 seed in the first round.  Last year A&M beat Syracuse as a 12 seed, but you really can't consider a school with 45,000 students and deep pockets to be considered a Cinderella.  If I recall correctly, George Mason was an 11 seed last year and that may have been a record for the lowest seed to make it to the Final Four.  At this point, I'm not sure where Winthrop will be seeded, but they appear to be the most obvious candidate for the Cinderella role.  Winthrop beat Missouri State and Mississippi State this year.  Both of these wins were against quality opponents.  I think we'll have to consider Davidson as well as a potential Cinderella.  How about Xavier? Currently, I have them ranked 43 with quality wins over Villanova and Illinois.

Senior Day At Texas A&M

Check out these really great photos from Senior Day at A&M.  The NCAA tournament is just around the corner now.  I'm anxious to see how the boys do.  I'm very optimistic this year.  I can't remember when I have seen a group of guys with this much character and drive to perform at the highest level.  Things are about to get really fun my friends.

Top Ten Adjusted Offense/Defense Efficiency

I've become a believer in Ken Pomeroy's Predictive Analysis for determining the outcome of college basketball games.  One of the most useful tools is his determination of the Adjusted Offensive and Defensive Efficiency of each team.  Man, don't you love all these statistics???  I know I sure do.  Anyway, basically, Pomeroy factors in the number of possessions to calculate the offensive and defensive efficiency for each team.  I'd encourage you to read the link I provided to help fully understand the calculation since I would probably muck up the details here.  So, taking these statistics into consideration, the teams that I believe that should be regarded very highly during the tournament due to their ranking in the top 10 in both Offensive and Defensive Efficiency are...

North Carolina

UCLA

Texas A&M

The teams next in line would be...

Kansas

Ohio State

Florida

Wisconsin

Freshmen Phenoms

With the new NBA rule preventing players from going directly to the NBA from High School, many schools have been the beneficiary of some great players.  As a result, this year has possessed many exciting moments for the college fan.  Listed below are some of my favorites to watch.  Try to catch these guys during the tournament.  They are fun to watch.

Kevin Durant (Texas)

Greg Oden (Ohio State)

DJ Augustin (Texas)

Brandon Wright (North Carolina)

Raymar Morgan (Michigan State)

Sherron Collins (Kansas)

Upperclassman

There is no doubt that Kansas and North Carolina are extremely talented and dangerous teams  They both, however, possess a very dubious characteristic.  Their starting lineups consist predominantly of freshmen and sophomores.  We have seen earlier this year that Kansas, in particular, can be very susceptible to losing close games.  Kansas wins big, but they have lost close games in the last minutes due to inconsistent play of their young players.  That's why I believe teams with juniors and seniors in their starting lineups are at an advantage when tournament time rolls around.  Here are a few teams that start at least four upperclassman that I believe will be a force in the tournament.

Pittsburgh

Maryland

Wisconsin

Texas A&M

Indiana