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They are solicitations for an investment newsletter that covers drips. I'm not a subscriber, so I can't vouch for the efficacy of the information contained therein. However, I have posted previously about DRIP investing. You can, indeed make impressive long term gains with them. It all points to the effectiveness of choosing equities that pay high, consistent dividends (which I've also posted about, it's a great investment strategy, even over targeting stock price appreciation) and reinvesting them. In addition, there is a pretty good post over at Stock Gumshoe dealing with the whole 801(k) email thing. There are also some good follow up comments regarding the 801(k) solicitations that go into greater detail.

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Posted by debtblog at 01:43 PM | Permalink | Comments (0) | TrackBacks (0)

Well, when Huffington's Hypocrites move out of their Mega mansions and into a 1,400 sq foot homes with CFL bulbs like the rest of us live in, then they can pop off. Until then, Arianna, hop into your Prius and stop meddling into our lives. Carbon credits? Walk the walk for a change, instead of just talking the talk. I personally could give a rat's buttocks if she ever takes a private jet or not. When you have engagements all over the country, it's doubtlessly a much more efficient use of your time than any kind of commercial common carrier. It's when she gets up in the saddle of her high horse saying what a wonderful thing carbon credit are, and because she can afford them, she can do as she chooses, while us Plebs should do as she says, that makes my blood boil. It must be fantastic to be so much more able and enlightened than the rest of the population.

Sorry about the Monday morning rant.

Now, about those airlines Arianna may be avoiding by traveling on more exclusive modes of transportation -
Recently I was on a flight where, mysteriously, it took the luggage 1-1/2 hours to find its way the 100 yards from the gate to baggage claim. Several travelers were unfortunate enough to have theirs not appear even then. Thankfully, about 4 hours later, mine was located. One group so affected included a woman traveling to give a training seminar. Many of the materials she was to be using for the seminar were in her luggage. She indicated that many of them were more or less irreplaceable.

This points to the necessity of not carrying mission critical materials in your checked baggage. Send them Fed Ex or UPS Next Day Air, and insure them, to mitigate the risk of them being lost or stolen. They'll arrive at your hotel intact and the $50 you'll spend is a tax deductible business expense anyway. What price piece of mind and business continuity? If those materials are truly essential to this woman's training business, it could cost her not only revenue, but also referral business when she is unable to give her best presentation. The $50 or $100 would have been a small price to pay.

I began using this little strategy not through the desire for risk mitigation, but because, after a long week at a trade show some years ago, carrying on and checking 100's of pounds of materials seemed like too much work (In addition, these days you'll be charged additional money for those extra pounds). An easier method beckoned, and it worked very well. From that point forward, it's been one of my standard strategies.

Is air travel really getting worse? Anecdotal evidence from friends and associates screams yes, but what about real data? According to the U.S. DOT's records, the airlines' on time performance in each of the months February (67.27% on time) – May (77.91%) actually showed improvement over the previous month, however they also showed declines from the same months last year. So, things are getting better and getting worse. Astoundingly, the DOT indicates that some 518,549 flights were more than 30 minutes late in the month of May alone! On some levels, it's surprising that we have an airline industry at all, since another U.S. DOT report on 21 airlines indicates that Q1 of this year was the first profitable Q1 for the airline industry since Q1 of 2000.

What can you do do to keep from being caught in an air travel nightmare? Aside form the typical advice about arriving 2 hours early, one might suggest that you drive. As this may not be practical for a day trip from LA to Cincinnati, here are some ideas. First of all, if you're traveling west for a little R&R or business to Hawaii, know that both Aloha and Hawaiian Airlines had the best on time performance in the month of May, and by a significant margin. Both the island airlines were over 90% on time, while the next best was Southwest at 81.74%. According to the U.S. DOT, the worst of the airlines surveyed for May was U.S. Air, at a dismal 63.7%. Wow! More than 1/3 of their flights are late. If you're one of those stuck in an airport, it probably seems like more. So, Southwest seems like a good bet.

The worst day of the week for on-time performance? No surprise, it's Friday, barely eclipsing Thursday for that dubious distinction. Where can you go and be sure you can actually arrive on time? Greenville, MS, home of Greenville Municipal airport and Palmdale, Palmdale Af Plant Nr 42 in CA showed every other airport in the nation how it's done. They reported a 100% on time arrival performance in May. As for the rest of the field (in the continental US), Bellingham International in WA, Minot International in ND, Simmons Nott airport in NC, Elko Municipal in NV, E.E.Faust Regional in WY, Nantucket Memorial (remember Wings?) in MA, Melbourne Regional in FL, Twin Falls City/Co Joslin in ID, St George Municipal in UT all scored over 85% in on time arrival percentages. Sadly, the odds are few of you ever travel to those places on a regular basis.

What about places you can travel to if you haven't an aversion to small regional jets and turboprops? Try Spokane International in WA (84%), Metropolitan Oakland International in CA (81+%), Jackson - Evers International in MS (81%), and Fresno Air Terminal in CA (83%).

What about the on time percentages for the big boys in May? La Guardia NY (63.86%), Los Angeles International (77.12%), Mc Carran International - Las Vegas (74.39%), Dulles International in DC (69.20%), Hartsfield-Jackson in Atlanta (74.99%), Miami International (72.36%), Minneapolis St Paul International (70.78%), Kansas City International (77.66%), Dallas Love Field (76.86%), Detroit Metro Wayne County (65.71%), Logan International – Boston (69.07%), Denver International (70.96%), Salt Lake International (79.45%), Sky Harbor International – Phoenix (74.70), O Hare – Chicago (62.62%) It's really is true, when it seems like something always goes wrong there. Unless of course, you happen to be traveling to Kennedy International (60.25%), where you stand to do even worse.

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You can do as Warren Buffett suggests, invest in companies as if the market doesn’t exist. Instead, look at the firm as if you were buying it strictly on the merits of it as a business entity. How are its products and / or services? What about its financials and management team. Check its labor relations and any legal issues it may be facing. What about the broader market in which it competes? Is there a strong future demand for its products? I posted some time ago about the affects of new product introductions on a company’s stock price.

For a great example of how a new product can boost a company’s stock price, take a look at Boeing (BA) after they announced the new, highly fuel efficient, 787 Dreamliner. It’s been one of the great, sustained runups of any company in recent memory. I only wish I would have bought some stock as Boeing hovered around $30 a few years ago. As it sits now, the aerospace giant is at $103.70. This rise in Boeing stock price coincided with the announcement of it’s (at the time) 7E7 Dreamliner in early 2003. On March 24^th of that year, Boeing closed at $26.10. The 7E7 was submitted for FAA type certification, one of the earliest stages in a commercial aircraft’s new product lifecycle, in April.

What did Boeing do? They had sustained a fairly consistent drop in stock price for the few years leading up to their eventual climb. In early October of 2000, they closed in the mid $60 range. At the time, they were proposing a new high speed passenger aircraft they called the “Sonic Cruiser”. Obviously the market wasn’t impressed. From that mid $60 level, the stock consistently dropped until late March of 2003, at which point Boeing switched strategies. Instead of betting their future on speed, they chose fuel economy. History has proven that this was the correct strategic decision.

On a related note, Boeing is a great illustration of the potential success of the buy and hold strategy. In early April of 1970, they sat at split adjusted 41 cents a share. $1,000 invested at this point would be worth $251,219 today.

Other ways to invest in the face of such mixed economic news could take advantage of the uncertainty facing the mortgage and home building industries. As lenders drop mortgage products, retrench, or go out of business altogether, and builders look at bleak forecasts for the near term, opportunities lurk for the astute investor (I make no pretense to being one of them). What are your options in such a market?

One possible option would be selling mortgage industry stocks short. Typically, short selling is for the more advanced investors in our midst, so choose carefully. As this industry continues to experience difficulties, the stocks of many mortgage lenders will doubtlessly fall. Some examples include Washington Mutual (NYSE – WM), who at the beginning of this month was at $43/ share, is now at $38. Another candidate even more heavily engaged in mortgage lending would be American Home Mortgage (NYSE – AHM). American was at 18.06 at the beginning of this month, but now hovers around $10. Still another opportunity could be found in Countrywide Financial Corp (NYSE – CFC). This month, Countrywide has fallen from $36 to $29 a share. Homebuilder DR Horton has been dropping since mid-May ($23.75) to their current price of $17.08.  As noted, short selling can be a great opportunity in a declining market, but it can also be very dangerous. You can lose big time if the company, or the industry, should turn around.

There are also opportunities, as I’ve posted about previously, in the distressed real estate market. Don’t forget to look at companies that supply industries that are on the rise. An example would be the construction crane industry. A visit to Las Vegas NV, Bellevue WA, or Shanghai, China will confirm that there’s money to be made in the heavy construction crane business. The Manitowoc Co. Inc. (NYSE – MTW) is a leading producer of those huge construction cranes used in the construction of large, commercial buildings. In some cities there are 12 – 20 of them visible at any one time.

The rise of Manitowoc stock price corresponds to the huge demand for mammoth construction cranes throughout the world. In early April, 2003 they could be had at the bargain (split adjusted) price of $8.45. They are now in the mid-70 dollar range. This is a fantastic rise no matter how you look at it. That $74 is down from earlier in the month when they closed at $85.11. If you were clairvoyant, you could have made a ton coming and going!

The point is that, no matter how you do it, there are always investment opportunities to be found, weather the market and the economy are up, down or sideways. Have a great weekend.

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Posted by debtblog at 02:54 PM | Permalink | Comments (0) | TrackBacks (0)

Just as an exercise, I’ll use the 2007 Toyota Camry, America’s best selling car. It’s pretty representative of a nice, but not too nice, family sedan. The Toyota may fare better than many other vehicles due to its excellent resale value, which limits your losses to an extent.  I used the Camry SE, which is the middle of the 5 different trim levels offered by Toyota. I choose the 4 cylinder engine over the pricier 6 cylinder power plant, but did choose the automatic transmission, which is the way most Camry’s are sold. The price for the vehicle so equipped is $20,180, including destination and handling charges. Any applicable taxes aren’t included.

According to Toyota Financial Services, there is a special, 3.9%, 60 month financing offer in place right now, so I’ll use that for this example. That, of course, assumes you’d qualify for the special financing. If you traded in a paid off vehicle (you just lost even more money, but just try and sell a car these days) and received a $5,000 trade in allowance, you’d be financing $15,180 (plus taxes and licensing, of course). As an example, a 1999 Camry, in good condition, with a 4 cylinder engine and automatic transmission, a CD player and 85,000 miles has a Kelley Blue Book trade in value of $4,750.

Making all the above assumptions, your payments would be $278.88 per month. Amortized over 5 years, you’d pay $1,552.70 in interest. Your total of payments would be $16,672.70. In 10 years, if the 2007 Camry has depreciation similar to a 1997 Camry, it will be worth roughly $5,000. According to the Feds, the average operating cost for a car per mile for maintenance, gas and oil in 2006 was 16.1 cents per mile. If a 4-cylnder Camry is 25% better than that, you can expect to pay about 12 cents a mile. If you put 90,000 miles on the Camry over the next 10 years, your operating cost would be $1,080 per year. Figuring $1,400 per year for insurance and licensing, your total outlay for the next 10 years would be $41,472.

If, instead of trading it in on a new Camry, you sold the 1999 Camry and took the bus for the next 10 years, you could expect to receive about $6,380 in proceeds from the sale. If you spent $35 a month for a bus pass, you’d be out $35 every month, but it’s a far cry form the operating expenses incurred by a car.  If you put the $6,380 and the $1,080 annual operating costs, plus the $1,400 annually for insurance and licensing, into a mutual fund (minus the $35 a month for the bus) that returned 8%, you’d have $45,628 in your mutual fund. If not, you’d be the proud owner of an $87,100, 10 year old Toyota Camry! Not the best way to get debt free.

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Money Saving Car Tip 1
Plan a little – Just as in business, a plan can be a great thing. In many areas there are places where gas is less expensive that others. Sometimes you can save 5 – 10% on a gallon of fuel depending upon the location you're buying fuel. Many things create this; different real estate values, local tax rates, the station owner's business model, etc. The point is you could be paying $3.19 in one place, and 10 miles away, the same gas is selling for only $2.89. If you plan your fuel stops, especially if you regularly travel between different locations like this, you can get a nice break on fuel costs. When you get gas, follow money saving tip #2.

Money Saving Car Tip 2
Get gas early in the morning. Gas is a volatile liquid. It changes density with temperature. Since gasoline is sold based upon volume, not density, you can use this to your advantage. Get your gas early in the morning, after the gas in the storage tank has cooled off all night. The gas will be denser, thus you'll actually get more energy content per gallon.

Money Saving Car Tip 3
Clean up a bit. Unless you need them for work or your car is notoriously unreliable, don't carry heavy tools or other heavy objects around in your car all the time. It costs fuel to get them moving and puts extra wear on your brakes to stop. Clean out your trunk or pickup bed and you'll save 2% - 5% over having all that crap back there. The lighter and lower powered your car, the more you'll save per pound of junk you remove.

These are just a few quick tips to help you save some money and get debt free. If you think about it, your car is really a bad idea from a fiscal perspective. Any time you pay interest on a depreciating asset, it's a bad idea. If you have one that also costs you money in other ways, such as gas, parking, insurance, maintenance, etc, it adds up to one bad investment. If you have a job where you can take public transportation to work, you can save big money by making due with no car or one that's in the sweet spot. The auto owner's sweet spot is where the vehicle has taken most of the depreciation hit, yet is still reliable and as economical as possible to operate.

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Posted by debtblog at 01:12 AM | Permalink | Comments (0) | TrackBacks (0)

Lord knows many have tried. These days President Bush's popularity is at, to put it mildly, pretty low levels. There are many reasons for this, and I'm not going to analyze any of them. He has spent historic amounts of money (Yours!) and expanded many social programs to unprecedented levels. In any case, this hasn't done much to buoy his flagging support, either within the Republican party, or without. Just how much has he spent and what kind of popularity ROI has it garnered him? What about past U.S. Presidents popularity? Have they been able to spend enough, in the right areas, to ensure support of the people? Let's find out.

In FY 2000, the last year of the Clinton administration, the total outlays for the US government amounted to $1,789,216(million). By 2006, this figure had ballooned to $2,655,435(million). Any way you slice it, that's a bunch of money. Where did we manage to spend this cash? Some of it has been on the war on terror, Iraq, and national defense. The national defense portion accounted for about $123B of the increase. National defense spending rose from $294B to $417B in the 6 fiscal years from FY2000 to FY 2006. Where did the other $672B dollars go? Some of the increased government spending went to internal security. The Department of Homeland Security, and the agencies that now comprise it, spent .7% of the federal budget in FY2000. By FY2006, that had increased to 2.6%, a healthy jump, to be sure.

A large portion of the money has gone towards education. In the last year of the Clinton administration, FY2000, federal spending on education amounted to roughly 1.9% of the federal budget. In FY2006, this rose to 3.5%. That's right, as a percentage of the federal budget, federal education spending went up over 80%! In real terms it actually rose even further, because the total budget rose as well.

Another government agency that doles out money to individuals, the Department of Health and Human Services, experienced a similar budget increase. The DSHS (not to be confused with the DHS!) had their budget increase from 21.4% of the federal budget in FY2000, to 23.1% in FY2006. Again, the actual rise was even greater due to an increase in the total budget.

Although Bush increased funding for the Department for the Department of Labor almost 100% in his first term, he's subsequently reduced that back to levels about where they were under the Clinton administration. Under President Bush, spending on health care (except Medicare) has risen from $136B to $173B. Medicare spending jumped from $209B to $283B between FY2001 and FY2006.

Has Bush's spending on social programs amounted to squat in the mind of the public? Apparently not, if his approval ratings are any indication. As he's spent even more on social programs, his approval ratings have declined. It would be interesting to see how they'd be without our little Middle Eastern diversion. Would he be reaping any popularity dividends then? Have past presidents fared any better?

President Clinton had the highest job approval ratings in recent history. When he left office, his rating was 65%. Ronald Regan was just a tick behind, at 64%. Good ole' Ike sits in 3^rd position at 59%. Keep in mind these are their popularity ratings when they left office, not mid-term. How much did they spend on social programs as a percentage of the federal budget, and did that correlate to their popularity rating? LBJ, a known spender, had an approval rating of only 49% when he left office, but like President Bush, was facing an increasingly unpopular war overseas. How much did LBJ spend, really? As a percentage of the budget, his administration only allocated a maximum of 8.4% to the DHHS. Although this seems low in our “We’ve a program for everyone. Come and get it.” times, it is actually 2-1/2 times what it was only few years earlier, under the Kennedy administration. Where did Johnson spend the federal budget? On the military, of course, at a rate of just about twice what the Bush administration is spending now as a percentage of the federal budget.

Looking at the previously stated figures, it's apparent that President Clinton actually spent less on social programs, as percentage of the federal budget, than does President Bush. It sure didn't seem to hurt his job approval ratings. Regan, almost as popular as Clinton when he left office, actually spent far less on social programs than either Clinton or Bush 43, if the funding level of the DHHS is any indication. Under Regan, the DHHS was allocated between 12 and 13.5% of the federal budget, while under Clinton (17% - 21%) and Bush 43 (23% - 23.5%) it was far higher.

Jimmy Carter, the poster child for poor presidents, had an atrocious job approval rating (34%), and with good reason, if the economic indicators of the time and his foreign policy achievements(?) are any guide. Did he spend money on social programs? Not by today's standards he didn't. The Georgian spent an average amount for the times. In reality he only spent about what his predecessors, Nixon and Ford, spent on social programs. His rating was in the dumper because Joe and Joesphene average resented getting 18% mortgages and suffering through double digit inflation. He would have had to buy higher job approval ratings, but economically, he couldn’t deliver, so he delivered the office of the President to Ronald Regan.

It looks like social spending by an administration has little bearing on the President’s job approval rating. Some have spent comparatively large amounts, but the people still felt like they couldn’t get no satisfaction. On the other hand, some spent  a fairly small amount and the folks loved them. Make of it what you will. All figures provided by the OMB.

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The 3 ethanol plants are yet to be on-line, but by the time all three are producing at full capacity, projected to be early in Q1, 2008, VeraSun's total ethanol production should be about 1 billion gallons per year. The news of the acquisition comes soon after VeraSun's (VSE) 52 week low, reached on Friday, July 20^th . The news rallied the stock from the low of $13.01 at Friday's close, to the upper $13's at the time of this post. Time will tell if the rally continues. After peaking at almost $27 in November, VeraSun has been on a downward slide. Will this deal arrest the plunge?

In other interesting alternative energy related investing news, Quantum Fuel Systems Technologies Worldwide Inc. (NASDAQ:QTWW) indicated this morning they would be supplying GM with 3 liquid hydrogen refueling stations to facilitate the auto giant in the demonstration of new hydrogen fuel cell vehicles. Quantum also produces the fuel cells used by GM in the technology demo vehicles.

In a press release this morning from Quantum's Irvine, CA offices, Alan P. Niedzwiecki, President and CEO said the following: "Our transportable hydrogen refueling stations are designed to support our customers as they advance their hydrogen fuel cell vehicle initiatives and are helping to establish the foundation of a hydrogen refueling network. The high pressure storage systems developed by Quantum, which these new refueling stations support, translate directly into a greater vehicle driving range for hydrogen fueled vehicles, a critical factor for the commercialization of fuel cell vehicles." Since a close of $3.29 a year ago, Quantum has been slowly regaining ground, with a nice 40% spike last month that's mostly been given back. At the market's close on Friday, it's stock sat at $1.42, up from a $1.06 close in late April.

GM has also recently demonstrated a hydrogen fuel cell vehicle that has a 300 mile range. With the clamoring to free the U.S. and other countries from foreign oil dependence, this technology is just another promising development. For years, hydrogen fuel cell technology has held promise, but only recently has it shown the capability to offer both the range and power demanded by consumers in an actual vehicle. We'll see if the new developments in this field continue. GM plans on introducing production fuel cell vehicles in the future. Earlier this month at the Berlin Auto Show, the General showed its new HydroGen4 concept vehicle. In 2008 they will test 10 of the cars in Europe.

Last month at an event in Canada, Nick Zielinski, Chief Engineer of Advanced Vehicle Development for General Motors, showed several advanced fuel vehicles, including a version of GM's Volt electric hybrid concept that uses GMs 5^th generation fuel cell instead of a conventional, internal combustion power plant. In a heads up, GM has also announced the award of battery development contracts for it's next generation of hybrid vehicles. The two competing teams are from Compact Power Inc. and LG Chem, and a team from tire manufacturer Continental and A123. In addition, GM moved 500 engineers from advanced vehicle R&D to advanced vehicle production and engineering. Design targets include an advanced power train with a life cycle of greater than 150,000 miles in real world use.

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Posted by debtblog at 01:20 PM | Permalink | Comments (0) | TrackBacks (0)

I've got a few articles in carnivals this week. My post on Alternative Investing is over at the Carnival of Long Term Investing at Forex Reader. Check out the carnival for some great investing posts. That post also appeared in the Festival of Stocks That's definitely worth a read as well. Head on over.

Also, see the Carnival of Money Stories over at Sushi Money, where my post on How to Avoid Credit Card Fraud was included.

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Your house - Unless you’ve got a really sweet Ferrari, your house is probably your largest investment and expense. How can you save money when buying your next house? Here are a few strategies you can use to either get more home on your budget or lower your house budget and still get the same size and quality home.

Home Money Saving Strategy #1
Buy a home in foreclosure or pre-foreclosure. When the bank owns a property they want to unload it ASAP. Real estate isn’t their business and holding the property costs them money. You can find a realtor that works with foreclosures or search for pre-foreclosures on your own.

Another great place to find foreclosures is through HUD. The Department of Housing and Urban Development sells foreclosed FHA homes at auction. Don’t get all excited about buying your dream 5 bedroom home on the lake for $150,000.

It doesn’t work that way. Homes are auctioned at market value. There are times however, where you can save money by purchasing your home that way. HUD home auctions are sealed bid affairs. Your real estate agent can submit a bid for you if you find a property that fits your needs. You can also check RealtyTrac. They're the nation's largest foreclosure service. They are the providers for the foreclosure data you see on the Wall Stree Journal Online, Yahoo Finance and MSN Money. They have a free trial, so you can sign up and check for foreclosures in your area.

Home Money Saving Strategy #2
Build it yourself. You can save money this way, but be aware that building a house isn’t like building those Revel model cars you built when you were 12. Even if you use one of the services that walk you through the process, there are never ending decisions that must be made. On a larger home design and project meetings are almost a full time job you need to be prepared for.

In addition, you may not save as much money as you think. Established contractors, especially the very good ones, will use their expertise and relationships to save you money. You will pay a premium for their services, but that may be offset in a large part by the money savings they can get you from their preferred vendors and the great speed with which they complete your project. Watch out for how they do their billing, however. Some builders bill you a fairly small fee for their services, but nail you with high markups for any upgrades or additions. Be aware of any of this going in.

Home Money Saving Strategy #3
Negotiate! – Don’t forget to ask. In many cases you can get the lender or broker to waive or reduce some of your closing costs. You should also try to find out as much as you can about why the home is being sold. In most cases this won’t be easy, but it can pay big dividends. In any negotiation information is vital. The more you have, the better position you’ll be in to make yourself a great deal. You may be able to make (and get accepted) a better offer than you could have hoped.

Home Money Saving Strategy #4
Buy as is.  This means that you’ll get stuck with any fixes or repairs the property may need. In some cases you can get a greater discount than just the value of the repairs. This is the case when the seller can’t or won’t take care of the repairs themselves. You’ll also benefit due to the increased risk you’re undertaking.

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One way would be to take on partners. They could supply any cash needed for the down payment or closing costs. For many people, that’s just not an available option. Those rich uncles with cash dripping out of their pockets seem awfully hard to find these days. Even if it’s an attractive investment for both parties, you may not know where to turn for this sort for real estate transaction.

Another option that was used extensively in the past for this type of transaction is the assumable mortgage. An assumable mortgage is one that’s transferable between different parties. You can’t use this with just any mortgage. They’re not all assumable. Generally you can choose from FHA mortgages or some ARMs when it comes to selecting an assumable mortgage.

Look carefully before you assume a mortgage. Once you do so you’re by and liable for all the terms contained therein. Look at the interest rate, and all the clauses. Make sure, for example, that you’ll not get dinged by prepayment penalties in the event you want to refinance or pay off your loan early. You’ll need a down payment if there’s a difference between what the house is worth and how much is outstanding on the mortgage. If your main purpose is to get into a property with no money down, that’s not the property you’re looking for.

The bottom line is that you can get a spectacular home, and actually pay no money down if you can find one with an assumable mortgage, your credit is acceptable and it doesn’t have so much equity that you have to chip in any cash. Be prepared to do quite a bit of searching before you find one of these gems, however. You can’t just run down to your local assumable mortgage store and select the daily special.

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What it does mean is that our society is so litigious someone should sue us just for being stupid. Many of these lawsuits should probably be thrown out before they are ever allowed to proceed. That’s not to say that there are many legitimate needs for lawyers. We do live in a very complex society after all. Not all lawyers are the stereotypical shyster either. Many are great people. Mine’s a fantastic person, in addition to being voted one of the best attorneys in the state by his peers. He’s seen a great many things in his life and has given me fantastic advice on many things outside of the law.

Why the hell am I even bringing up the whole thing? It all points to the need for asset protection. This is especially true if you are a physician or own a business. If you’re a landlord, you really need a solid asset protection plan. Make sure you find an attorney that specializes in such matters. The last thing you need is to work your fingers to the bone for years, building your business or real estate portfolio, only to have it taken away in the blink of an eye. In many cases your business structure will preclude you from losing your business, although your personal assets will still be at risk. Even if you manage to retain most of them, a substantial portion could be eaten up by large legal defense costs. You should protect yourself. The larger your asset base, the greater your need to protect it.

One of the most common asset protection strategies is the use of a trust. Placing your assets in a trust will basically take the ownership away from you and give them to another legal entity. Once they are no longer yours it’s much more difficult for them to be taken away. One caveat here; if you wait until you’re think you are about to be sued, it’s probably too late. You’ll probably run afoul of fraudulent conveyance laws.

Something else to be aware of are scam artists that exist here, as it seems they do everywhere. Some things to take under advisement –

* In most cases you must lose a judgment in order to lose your assets. Of course the IRS knows no such restrictions.

* Most U.S. judgments are not recognized overseas.

* If someone tells you you’ll get huge tax benefits from asset protection plans, look out. While possible, in most cases this substantial tax benefits are unlikely.

* There are some asset protection consultants that aren’t licensed attorneys. Be aware that in many cases they don’t have the expertise required for this type of work. In addition, because they aren’t lawyers, there’s no attorney / client privilege, and thus no confidentiality under the law.

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If you are just graduating from college, chances are you have many things on your plate. Obviously everybody's situation is a bit different, financial and otherwise. If you're just Joe/sephene average however, I'll assume you make an average salary for a recent college graduate. For 2005 a business graduate with a bachelor's degree the approximate average was $42,964, if you majored in computer science - $49,585, nursing $61,276, communications $31,517, engineering $51,053, and education $29,332. All salary figures drawn from the 2006 Job Outlook report. It sure pays to be a nurse.

The average of these figures is $45,337, so I'll use that figure for analysis purposes. If you were making the average graduate salary of $45,337, should you start an emergency fund equal to 6 months worth of living expenses? I say no, and here's why. In the first place, you are betting a fairly large sum of money that you'll have an emergency. By doing so you are probably failing to fund your 401K or other retirement vehicle to the fullest extent you could. That means, in the case of a 401K, there's a good chance you're leaving your employer's matching funds on the table. Bad idea. That's free money, and you know how hard it is to come up with that.

By funding your retirements and other investments early, you are taking maximum advantage of compounding, the financial principle that will make your retirement fun and enjoyable, much less possible before you're 80. Many of you have probably seen the figures that if you save money for 10 years and then stop saving, you'll be forever ahead of someone else that begins saving when you stop, then contributes money for 20 years. That's the power of compounding. Here's a review, which ignores the benefits provided by an employer match.

If you assume 8% interest compounded daily, and a $500 monthly contribution, after the initial 10 year period, you'll have $91,921. After 20 more years of no contribution, that grows to $455,208. If you had a really good time and spent your $500 a month for the first 10 years instead of making your investment contribution, here's how you'd end up.

After 10 years, you'd obviously have nothing but memories. After 20 years of saving, you'd have only $296,477. If you went 10 more years, but upped your monthly contribution to $1,000, you'd end up with $843,606 in your retirement account, 40 years after you left college. If you were trying to catch your friend that started putting away the $500 per month right after college by doubling your monthly contribution, it would be in vain, however. If you just did the 10 year contribution plan at $500 per month, you'd have $1,012,994.97 at the end of the 40 year period.

That's one reason that I'd say that if building up your emergency fund means cannibalizing your retirement account, you're just ensuring an emergency in retirement by preparing for an imminent emergency now. If your emergency fund was earning the current money market account average interest of 3.66%, you'd take over 3 years to establish an emergency fund with $20,000 for 6 months of living expenses. If you kept that in a money market account for liquidity, but made no more contributions, you'd end up with about $79,000 at the end of 40 years, assuming the same 3.66% interest rate. How much does that cost you? Sit down.

You now have only 36-3/4 years to save before your 40 year retirement begins. If you still saved for the 10 years at 8%, then sat on it for 26-3/4, you'll be left with $781,093, plus the $79,000 in your emergency fund, for a total of $880,093. That's a $132,000 loss from where you'd have been without the emergency fund diversion. There's your emergency, Bucko. My personal feeling, and you may or may not agree, is to ditch the emergency fund, or at least have a much smaller one, say $2,500 - $3,000, and fully fund your retirement accounts. That would keep you from having to dip into credit cards for things such as car repairs, If you truly have an emergency, you can find an alternative source of funding. If it means you end up with some high interest debt, that would be regrettable, but chances are that won't be the case.

That doesn't even touch on the possibility that the establishment of an emergency fund could keep you from buying a house until some years down the road. In most cases, owning a home will add to your retirement assets, instead of enriching a landlord somewhere (you should become one of those, eh?). This is all just my personal opinion, and I'm not a financial adviser, but I definitely have at least $.02.

Have a great week end.

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Posted by debtblog at 02:16 PM | Permalink | Comments (0) | TrackBacks (0)

In a move that could surely affect your finances if you're either in college, or have a dependent for whom you'll be footing the college bill, Congress passed revisions to federal student aid programs by a margin of 273 to 149. What's changed?

They have eliminated over $19 billion in federal subsidies to loan providers. Despite 11^th hour appeals to congress by lobbyists, the deal passed by a fairly wide margin. Under the new plan, lenders will exist in a competitive environment, having to actually bid for loans in government auctions. Lenders who accept the lowest subsidy amounts will win the loan contract. It's kind of like Lending Tree for student loans. The loan auctions are separated by geographic regions and educational institution. Lenders have been under fire in recent years for several practices, including the offering of cash and other incentives to educators and institutions in exchange for business. It seems they have a system similar to that of the lobbying industry and congress. Perks for props or therabouts.

The $19 billion will instead be used to cut student loan interest rates and subsidize the college education of low income students. Bush has threatened a veto, but earlier this year, the Bush administration proposed $16 billion in subsidy eliminations, with the savings to be used for similar purposes. His reasons for the veto threat? The president would like to see more direct funding for student grants. In addition, he feels the new program will set up more expensive government programs. Amazingly, Congress doesn't seem worried about more expensive, government programs. In Feburary, President Bush approved an approximate 5% increase in the Pell grant maximum award, the first such increase in 4 years. Doesn't seem like the Pell Grant program has a COLA provision, does it?

Sallie Mae (SLM) is the country's biggest student loan provider, and has been in negotiations for a buyout deal worth about $25B. The news of the new subsidy slashing could endanger the purchase. Sallie Mae shares (hope you don't have any) dropped almost 10% on the news of the Congressional action.

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Posted by debtblog at 01:55 PM | Permalink | Comments (0) | TrackBacks (0)

The other day my wife got a call from one of her credit card companies, inquiring why she was getting $300 worth of products from the Disney store and a new cell phone. Apparently their fraud algorithm indicated those purchases, in that time frame, was outside her normal spending patterns. Their algorithm works very well. Someone was using her credit card without her permission. The problem was that her card was securely in the confines of her purse, right where she left it.

Thankfully, in this instance, the attempted credit card fraud was discovered before it went from attempted to actual. Since the fraud attempt occurred in the mall, you'd think it would be easy enough to use security cameras to try and catch the perpetrators. They know exactly what time the attempt was made, and where. Just look at the video, and there you go.

Security experts point out that even though the digital video servers used for the CCTV systems in most major malls would easily allow the perp to be captured, sadly it would be only on video. It seems law enforcement is just too damned busy in most metro areas to worry about most of your garden variety credit card and identity theft. That means you have to protect your own credit card. Your card doesn't have to get stolen, even though a friend of mine had his stolen at the gym a few years ago. The thieves get some nice outdoor stuff from REI before he found out.

How do you protect yourself from credit card theft? After all getting debt free is hard enough with your own debts, you don't want them added to by someone else. Luckily you're usually only liable for $50 of fraudulent activity in most cases. Thank the Feds for that one. Even with the $50 liability limit, credit card fraud is a problem you want to avoid. Here are some tips to help you avoid credit card fraud:

1 - Don't let your card out of your sight. It's common now for thieves to use small scanners to capture the information from the magnetic strip on your card. Presto! They now have all your account information and PIN, which they are free to use, or more likely, sell to organized crime. This is especially dangerous at restaurants when you give your card to your server to pay for your meal. They take it away to do who knows what with it. Don't let them.

2 – Make sure you destroy all copies of anything with your credit card number and name on it, such as receipts.

3 – Write “Please Check ID” on the back of your card next to the signature. With any luck the store clerk will actually do just that. It's amazing when they apologize for checking your ID when you make a credit card purchase. Aren't they supposed to do that? If every retail employee did check your ID, instances of credit card fraud would take a hit.

4 – Get your credit cards replaced with picture cards. It's allot harder to get away with using someone else's credit card if their picture is on the front , and they look nothing like you. If they want to go so far as to get cosmetic surgery to resemble you, let them have the money. They earned it.

5 – Keep your credit cards in a mini wallet separate from your main wallet. That way if you lose your wallet a thief is less likely to get both your credit cards and your ID. You may lose one or the other, but not both. As an added bonus, it'll be easier to leave your credit cards at home when you head out shopping. That'll help you on the road to getting debt free.

6- Unless you called a business, don't ever give your credit card information out over the phone. Who's really on the other end of the line anyway? Probably some boiler room credit card theft operation in Uzbekistan, that's who. That applies even if they seem legit and have most of your information already. The scam there is that they're most likely after the 3 digit security code on the back of your card.

Hopefully you'll never be the victim of credit card fraud, but in this day and age the numbers aren't on your side, unless you have no credit cards.

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The IEA reported this morning that in spite of the rising prices, the pace of oil production has not kept up with the quantity demanded in the marketplace. They are predicting that this trend will only accelerate in the coming years. Are they crying wolf? Who can tell, but this comes on the heels of a report issued last month that indicates per capita gasoline use in the 3 northwestern states of Washington, Oregon and Idaho down by an average 10% since 1999. The report theorizes the increased gasoline prices are responsible for much of the decline. You think? Since this came at a time when more NW residents opted to drive SUVs and high performance cars than ever before, it’s probably not because their vehicles are more fuel efficient. Yet.

The IEA report also indicates that the standard culprits; economic growth in the 3^rd world, especially India, China and the Middle East, a growing population and, a failure to increase refinery capacity in the U.S combined with a stagnation in oil production, is the main cause of the shortfall. The report does not see the trends that created the shortfall easing any time soon. Oil production numbers will have to be increased through more expensive means, such as deep water, artic and oil sand extraction.

While this may mean pain for you, and the economy as a whole, it has a silver lining, as do most dark clouds. Just as the problems in the sub-prime mortgage market have generated opportunities for the foreclosure and distressed property investor, this economic situation will create investment opportunities in the alternative energy sector.

Weather you’re in individual equities, traditional sector funds or ETFs, those that are heavily invested in alternative energy stand to do well in the foreseeable future. As an example, Phoenix, AZ based First Solar is on a tear, posting revenue numbers that beat Wall Street’s expectations last quarter by 220%. They have experienced as much as a 392% year over year quarterly sales growth recently, despite just signing new deals that have yet to cone to fruition.  See a story in the investors business daily here.

The Wall Street Journal reported yesterday that U.S. wind power producers are hamstrung by a lack of windmills. U.S. windmill makers just can’t keep up with the demand, leading to a search for wind turbine producers elsewhere. Last year 2,454 megawatts of wind turbine generated energy capacity was installed in the U.S. It’s the same in other countries throughout the world, record numbers of turbine installations have outstripped supply.

One wind turbine producer that’s bet heavily on the trend to continue is the Spanish firm of Iberdrola SA. The Madrid based utility concern has snapped up alternative energy production companies recently, but also owns Gamesa SA, the world’s second largest wind turbine producer, acquired last year for just over $4B. Denmark’s Vestas Wind Systems A/S is the largest wind turbine producer, with 13,000 world wide employees. Last year they installed over 15,000 megawatts of wind generated capacity and had a 28.2% share of the market. Modern wind turbines require around 8,000 component parts, so producers of such parts are not to be overlooked when searching for investment opportunities.

McCord Air Force Base in Washington State is set to begin expanded trials on a new, synthetic jet fuel that’s 50-50 mix of JP-8 and a coal shale derivative. The fuel was produced by Tulsa based Syntroleum and costs, are you sitting down? $10 a gallon! If the Air Force, which uses over 6 million gallons of jet fuel a day, would switch to the fuel, it could provide the economic impetus needed to jumpstart mass production.

As it stands now the high cost is largely due to the lack of large scale production facilities. A plant to produce the fuel in large number will cost an estimated $1 billion (with the inevitable cost overruns, figure $1.4B). It’s kind of the chicken / egg corundum. There’s insufficient quantity of the synthetic fuel demanded due to the high cost, but investors are hesitant to invest in the production plant because there’s not much demand for the fuel. This says nothing of opportunities in the biodiesel arena, a fuel also now being used in small quantities by the Air Force. The fuel is also slowly finding favor with consumers, and the trend is sure to accelerate.

Although there is opportunity in the alternative energy sector that’s recognized by investors, it seems few of us have actually put our money where our mouths are. A recent report by the Calvert Group determined that although 85% of investors feel they can make money in alternative energy, only 20% have actually entered the sector. This in itself is indicative of a future profit opportunity. As more investors enter the sector, demand for shares in alternative energy firms will rise and with it, prices.

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Posted by debtblog at 02:12 PM | Permalink | Comments (0) | TrackBacks (0)

What can you do if you need help paying medical bills? Well, there are some places you can find help and some ways you may be able to reduce your medical bills. First of all, there are some things you should not do in this situation. If you have mounting medical bills, do not try and avoid them. They are like any other outstanding debt, and will not go away on their own, like so many puffs of smoke. They will negatively impact your credit rating and will be reported as an outstanding debt on your credit report. Some people are under the mistake assumption that medical expenses aren't going to hurt their credit, but this is just not the case. In fact, about 80% of bankruptcies in the U.S. are due to medical expenses.

If at all possible, you don't want to file bankruptcy die to medical expenses, however. On top of the social stigma, it will stay on your credit report, just like any other bankruptcy. Future employers and potential creditors will see it just as if you'd gone on a spending binge you couldn't afford. In most cases you should not get a standard debt consolidation loan to pay off medical debt, either. You could lose your home by doing so. In addition, you'll start paying interest on your medical bills, something your weren't doing in most cases.

If you need help paying medical bills, you should contact your creditors. Almost all hospitals and doctor's organizations will allow you to set up a payment plan. Many will allow you to pay minimal monthly payments with little or no interest. You should definitely avail yourself of such a plan if one is offered by your medical creditor. You won't know about one however if you don't ask. Hospitals have an office of patient relations or patient finances. Go meet with the representative and discuss your debt.

In addition to a payment plan, many hospitals will forgive a substantial portion of your debt if you contact them before things get out of hand. You can easily get 25% - 75% of your medical bills waived. This is usually income dependent, but you can make a hardship case that will get you a further reduction. Almost all medical facilities will offer this. (If you got male enhancement surgery or a hair transplant, you're probably out of luck.) They will usually let you list any financial hardship you have recently suffered and will take them into account when figuring your forgiveness. They will be much less likely to do this if you wait until your bills go to collection. In fact, by then it's most likely too late, so act sooner, rather than later. Usually, doctor's associations aren't as likely to offer such programs. Medical school loans have to be paid, you know. Sometimes the doctor's school loan payment is bigger than your mortgage. It doesn't hurt to ask, however.

Before you take the trip down there for your meeting, look over every bill you received for accuracy. It is all too common for medical bills to be chock full of errors. You may be overcharged for procedures and medications you received, or charged for those you did not. Both situations are unfortunately all too common when dealing with medical bills. Be prepared for some long nights. Medical bills are notoriously difficult to understand, and there may be hundreds of line items to go over. This step is essential to prevent being overcharged, however. You'll probably want to contact the medical facility or doctors office and find out what exactly some of the items are.

The next step is talk to your insurance company if there are any portions of the bill you think should have been covered. In some cases you'll be able to get them to pick up the tab for things they originally didn't. Even if they didn't pay for certain items, you should be sure you should have to pay them. In some cases there are procedures and medications that you cannot be billed for, or the bill was submitted too late. You insurance company will be able to determine such things. So, even if you were denied by the insurance company, check with them to determine if you should be the one writing the check. If the doctor's office submitted their bill to the insurance company late, and it was denied, you should not pay for their mistake.

There are companies that will negotiate for you and also offer consolidation loan services that don't require you to use your house as collateral. This is obviously a far better option than risking your home or, in most cases, declaring bankruptcy. Look for such companies in your state, but check them out carefully before you do business with them.

Hopefully your never find yourself with overwhelming debt due to medical expenses, but if you do, make sure you go through the steps to make sure the debt is valid, then reduce it as much as possible. Once you've taken those steps, it could be a good idea to consolidate it, but only if you are not risking your home, and if the fees you are charged are not excessive. Here's to getting debt free.

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Posted by debtblog at 01:55 PM | Permalink | Comments (0) | TrackBacks (0)

Money Saving Tip 1
Use some caulk – This stuff's cheap, so you shouldn't be. Go to your local hardware store, and don't forget to bring those coupons you got on Tuesday. Get two kinds of caulk, the expanding foam kind and the white latex kind. Plug every crack or hole in your house you can find where hot or cold air can make you miserable and your HVAC system work harder. When it works harder, you work longer (to pay your utility bill).

Money Saving Tip 2
Change your filters – Just like in your car, a clogged or partially clogged air filter will cut your system efficiency and cost you money. It's amazing so many people will spend extra money buying the most efficient heating and A/C system they can find, then neglect the basic maintenance required to keep those extra efficiency points they paid extra for.

Money Saving Tip 3
Ask around – Check with your utility companies to see if they offer different prices depending on the time of day. Many do, especially in the summer when they are trying to reduce peak demand on their systems due to air conditioning usage. If they offer reduced rates, choose those times to do any activities that consume extra power, like showers and clothes washing.

Money Saving Tip 4
Look at your bill – If you have both gas and electricity, a look at you bills will supply some insight as to where your energy goes. Look at the yearly history. If, for example, your gas bill is far higher in the summer than in the winter, you can be assured that's for keeping your toes warm on those cold, winter nights. Look at the amount of gas you're using in the summer. If you've got gas hot water, that will be the potential for savings that exists by improving the efficiency of your hot water system.

For example, if your gas bill in the winter is $210/ month and $33/ month in the summer (as mine were recently), even if you got a really efficient water heater, there aren't huge money savings to be had. If you got a pretty large, 25% improvement in efficiency from it, you'd only save $8.25 a month. While $8.00 monthly savings add up, you'd be better served by improving the efficiency of your heating system 10%. Bottom line, maybe that $1,800 tankless water heater isn't going to pay for itself in your lifetime, although the endless showers may be a better reason for getting one (there go