We may think that we need a lot of things.  We may think we need cable TV, our morning coffee and bagel, a couple of pints at the pub each Friday, or a really big house with a mortgage that the lender had to “make work for our income.”

These aren’t really needs when we get down to it, of course.  They’re wants.

The stuff we really need — after breathing — are (a) food (and clean water) in our stomachs, (b) clothes on our backs, and (c) cover over our heads.  To this you might add basic medical care, education, and a few other very important things.

Most people (especially if you’re reading this now, and especially me) can stand to cut out a lot of non-essential items if it’s needed.  This is extreme downsizing and simplification.  It isn’t fun, but it can be done.  Moreover, what’s spent on the essentials can be trimmed way down to boot as well, by doing the little money-saving things again.  Even the essentials can be simplified and scaled back!

Here are a few ways to get by on spending less for food:

• Consider generic brands over name brands.  Generic or store brands are usually (but not always) cheaper than the name brand, and for some products they’re comparable or even better than the name brands.  I prefer store brand diet soda in some cases because I like the taste of one sweetener over another.
• Use coupons for items you buy anyway.  You can get them a number of places, like your weekend newspaper, from magazines, online at the websites for the products, or online at places like CoolSavings or MyPoints.
• Substitute less expensive foods.  How about oatmeal instead of cereal?  How about eggs instead of meat?  How about rice and beans?
• Buy food that requires more preparation or reconstitution.  As in dried beans over canned beans, dehydrated milk over milk in a carton, raw oatmeal over instant oatmeal, or big bags of rice over instant rice.  The other advantage of reconstituting food is that it may keep longer than the “fresh” food.
• Buy food with less packaging.  Packaging means extra cost, and the food tastes the same if it can be resealed and consumed in time.  Binder clips work fine to keep “family-size” snack bags shut.  Reusable storage containers are great for all kinds of food storage.
• Buy in bulk if the price is right and if you know you’ll use what you buy.  We buy rice 50 pounds at a time, and use it.  I buy the big Costco-size box of oatmeal, and eat it.  It usually saves money to buy in quantity.
• Spend more at the grocery store and less at the restaurant.  The cost savings is clear here.  Eat in with friends as opposed to eating out with friends.
• Learn a few easy, cheap recipes.  I know how to cook rice well enough so that I can prepare a cheap, filling lunch (and dinner sometimes) merely by putting a few ounces of beans over the top with some Worcestershire sauce.  Heck, adding rice to a can of soup works, too.
• Be diligent about consuming leftovers.  Odds are you’ll only be eating the same stuff a few days in a row at most.  (Except at Thanksgiving: It’s turkey leftovers for at least a week!)

Cut your clothing bills, too:

• Make your clothes last.  Making things last can be a money-saver.  My wife is an excellent sewer and has given some of my clothes an extra life.  Simple Debt Free Living has a decent introduction and link collection for clothing repair.  But even before that, be kind to your clothes in the washer and don’t overdry them. 
• Check out yard sales.  We’ve found great deals on baby clothes at yard sales, as in maybe a dime apiece for a bagful.  My wife and I have found clothes for us, too.
• Check out thrift shops.  Sometimes the donated clothing has hardly been worn.  The bigger ones usually have a good selection of sizes.  Sometimes they run sales to make room for things.
• Check out consignment shops.  These are perceived as a little higher-brow than thrift stores but the premise is the same:  buy used and save.
• Check out the clearance racks in department stores.  Some department stores perpetually mark things up just to mark them down, but there are still good deals to be had at places like Macy’s or Kohl’s.  Since my wife has a Macy’s store charge card she gets special coupons that get her some really good deals.  Wal-Mart’s hard to beat, too.
• Check out eBay.  There’s always eBay!  They’ve been getting much more buyer-friendly these days.  Buyers cannot receive negative feedback anymore, and eBay is also waging war against inflated shipping charges (which is in their interest, but that’s another story).

Cutting costs on shelter can be a touchy subject but please remember, it boils down to a roof over your head:

• If you’re renting, think very carefully before buying a house.  Owning a house is a worthwhile goal but it can be very expensive.  During the real estate bubble times of the past few years it was more expensive to own a house than it was to rent.  Or, if it was affordable to own a house, in some areas, it would become too expensive later (adjustable rate mortgages).  The start-up costs can be a bit of a shock.  Plus, you’re a lot less mobile in a home than in a rented apartment.
• Reduce operating costs of your living space.  Keep the temperature warmer in the summer and cooler in the winter.  Use compact fluorescent lightbulbs where you can.  Seal cracks where heat (or cool air) can escape.  Don’t use the clothes dryer for one pair of socks.  And so forth.
• Reduce financing costs of your living space.  Pay the mortgage (or rent) on time.  Consider paying the mortgage down a little faster.  Consider refinancing an adjustable-rate mortgage to a fixed-rate mortgage to remove interest rate risk and take advantage of a depreciating currency.  Work to get rid of private mortgage insurance as soon as possible.
• Test the waters for signs of trouble.  Is the checkbook balance going down month by month?  Why?  Is it due to increasing costs associated with your living space?  Is is possible to move into a cheaper living space if the costs of your current living space are getting out of control?  (A good friend realized this.  His family had built a larger house and had been renting their original, smaller house.  The costs of the larger house were too much, so they are working to sell off that one and move back in to their original house.  Hey, it happens, but they recognized what the problem was and are fixing it.)
• Can someone share your living space?  Can you take on a boarder or a roommate?  An unmarried woman at work has a house and has taken on a roommate to subsidize her housing cost.  Alan Corey did this to great benefit; he took the smallest room in the house so that he could rent out the larger ones for more money.
• No affordable options in your area?  Since moving is costly, it’s usually easier to cut other expenses before contemplating a move, especially one out of town to a less expensive area.  But if nothing else seems to work, this is an option.  It may mean leaving friends and family, and finding another job, but the housing cost issue can go away if the price difference is large enough.
• What if the worst happens and you lose your living space?  There are some options.  They’re not great options, obviously, but better than nothing.  Living after foreclosure or eviction might mean moving in with someone who will take you (and your family if they’re involved).  It can mean finding a church or other group that will take you as a “shut-in.”  It could mean taking whatever job you can and renting by the week (Barbara Ehrenreich, author of Nickel and Dimed found this to be a tough life ).  Even more simply, it could mean pitching a tent or sleeping in your car.  This kind of living isn’t something I’d wish on anyone, but unfortunately more people will be thrust into this kind of situation.  And in any case, it doesn’t have to be forever.

Own rental property? Are you aware of all the tax implications (and opportunities) available to you?

Check out CompleteLandlord.com.

This site is a great resource for landlords offering tips and advice to make sure you’re making the most of your rental property.

For example, while many landlords know they can deduct all the interest on a mortgage used to acquire or improve a rental property, some don?t realize that if they pay off the mortgage early and are charged a penalty by the lender, the IRS allows them to deduct that penalty as interest.

Share This

By all accounts it seems the banking lobby will get everything they’ve been ask for from Congress over the past decade and in do so may legislate mortgage brokers out of existence.

A little history lesson is in order to understand all the political and media spin designed to sway their and public opinion away from mortgage brokers the banking industry orchestrated for the last 10 plus years.

During the 70’s and early 80’s, banks dominated originations carving out a whopping 80% of the retail loan applications. Brokers quickly picked up the slack and by the early 90’s the numbers reversed. The market, especially real estate investors, liked the idea of a personal mortgage broker who understood their goals scouring the landscape for the best products and rates.

Banks have never been know for the best customer service or pricing and the public punished them by fleeing to the broker community. During this time brokers enjoyed about 75% of all originations leaving the crumbs for the banks.

They didn’t take that lying down. The quickly got their lobbyists working on legislation that passed in 1999 to poison the market against broker by demanding brokers show their “yield spread premium” income while the banks were allowed to hide their own. The thought was the public upon seeing this often times enormous “profit” that was heretofore hidden would put brokers in a bad light with consumers and they would come running back to the banks.

It didn’t happen.

As it turns out consumer either didn’t know or didn’t care. Some critics ( myself included) would say the brokers decided one “dirty trick” deserved another and devised ways of obfuscating the YSP. After all banks were getting away with setting up an un-level playing field in the first place so they could claim they were just “evening the score”.

Undaunted in their pursuit of the killing off their competition, many believe the banks decided upon a “scorched earth” plan to rid themselves of retail mortgage competition once and for all.

The Plan was one they pulled from the S&L playbook a decade earlier. Give the mortgage brokers just enough rope to hang themselves just like the Savings and Loans did.

Remember the Savings and Loan crisis of the late 80’s?

Banks wanted the S&L’s out of the way back then too. When a few greedy large S&L’s decided they wanted “deregulation” so they could make commercial loans it was the banking lobby who helped them get it.

At the time it seemed like “strange bedfellows”, but it only took a few years to see the banking industry genius behind their “assistance. They knew the S&L’s were unprepared to thwart their own greed and would create a “banking and real estate crash” lawmakers and the public would rightfully lay at their doorstep.

All the banks had to do this time around was find an equally stupid idea, attach a lot of money to it, and let the brokers commit a little “banker-assisted” suicide.

Enter the subprime loan.

Bankers priced them, marketed them, and feed them to a stupid, greedy bunch who cobbled them down with out the knowledge they’d just been had.

It worked.

Lawmakers and the public are clearly laying the current real estate and banking debacle at the doorstep of mortgage brokers. Legislation will pass making mortgage brokers all but extinct.

It worked so well that the banks may have succeeded in taking down not only the brokers but the mechanism that put them in business in the first place…the GSEs…Fannie Mae and Freddie Mac.

On Friday there were cries to bailout the GSEs since they too got caught in the bankers web of greed. The infection of subprime losses it seems put both GSEs on tilt. With them out of the way, the broker have no hope of staging a comeback since it’s Fannie and Freddie’s pathway to the money markets that give brokers something to sell.

The banker planted subprime virus not only killed brokers and the GSEs, but will likely kill the real estate industry and economy for the next few years too.

But when the dust settles a few years from now, every one will go to a bank to get a mortgage because that is all that is left.

Mission Accomplished!

If investors thought getting a loan was hard before, just wait. You ain’t seen nothin’ yet.

Advertisement: Payday Loans Online from the leader in online cash advances since 2003.

This Post is from the BiggerPockets Real Estate Blog. Copyright © 2008 BiggerPockets, Inc. All Rights Reserved.

Are Mortgage Brokers An Endangered Species?

There is so much bad news floating around, so much to be worried or angry or upset about in the world. However there is a lot to be grateful for as well, so I thought I would take a moment and count a few blessings. This may be a bit late, considering Thanksgiving was a week ago, but I suppose it is never a bad time to be grateful.

A few quotes on the subject I have read recently:

“Life isn’t fair, but it’s still good.” - Unknown (to me)

“To be grateful is to recognize the love of God in everything He has given us-and He has given us everything.”-Thomas Merton

Now you may not be religious, but that last quote really struck me when I read it. It reminds me to take the bad with the good, and to appreciate it. It might seem wrong or even stupid to try to appreciate what seems unfair, bad, or even evil, but it is possible - and important. We can learn and grow and change for the better as a result of every experience - be it sickness, recession, job loss, or even death.

I once overheard my mother say that having cancer was a huge blessing. I recoiled, but she explained that it brought our family closer together and made her realize her inner strength. Remembering that comment has always kept me in check when I find myself whining or self-pitying.

Things for which I am grateful:

• Having a job and a regular paycheck; not everyone does right now.
• Not having to worry about where I’ll get my next meal or bath.
• Having the means and time to give to others who need support.
• A large family which supports and uplifts me.
• The freedom and ability to learn and pursue whatever I choose.

Many in our country are struggling, some for the first time, as our economy sags and companies lay people off and wages stagnate. Of course we are all still much better off than many in the world, but is still natural and easy to worry, to complain, to be angry and even scared.

But struggles can bring us together, and they can encourage us remember what’s really important - what matters a lot more than the 401k balance or the big bonus check. I hope as this volatile year comes to an end that we can all find some things to be truly grateful for.

More from Meg at The World of Wealth

ShareThis

I no longer have a job to worry about (today, I’m self-employed and have other problems…), but allow me to share my own job layoff story with you from way back when.

Scary things are beginning to happen around here as the harsh realities of recession begin to hit closer to home.

At this time, I’m personally encountering more and more people who are hurting because of the effects of the shrinking economy. Here in Silicon Valley, there’s practically nobody I know now who isn’t either laid off, worried about being laid off in the near term, or is in the middle of an active job hunt. Just last week, a dear friend was involuntarily released from his job, while others are debating whether they should take some work time off because “business is slowing down” and they’d rather prepare for what they think is the inevitable.

My Own Job Layoff Story

What I’m seeing here is a much more broad-based recession than the one I remember in 2000. Seven years ago, I was laid off from my position at a Silicon Valley startup because of the dot com bust. The company I worked for imploded painfully after 4 waves of lay offs. I stuck with the company till the bitter end, being one of the core managers and early employees of the company, so I had to participate in the layoff process from both sides of the desk. I had to lay off people in the first 3 waves, and finally, as was expected, I was let go on the last wave as the company itself shut down altogether. It was definitely a sad and stunning process to live through, especially since it was one place I truly enjoyed working 14 hours a day at . But those are the risks and vagaries of startups. Startups and recessions prove to be a lethal combination, unfortunately: they just don’t mix well.

So as the recession hits, we’ve gone from foreclosures, tighter credit, plummeting housing prices, failing banks, crashing stock markets to the dreaded layoffs. The last thing that stands between us and the food line is our cash flow, and once that’s at risk, it’ll be like landing in the final circle of doom in Dante’s Inferno (for some). Speaking of lethal…. More and more are resorting to extreme behavior when their livelihood is threatened. Yet one more tragic indicator of how far this economy has fallen?

Job Loss Tracker and Where To Get Your Next Job

More signs and symptoms of our weakening economy include this Job Layoff Tracker from Techcrunch that I stumbled upon recently. But don’t panic just yet, as there are many options available to those on the lookout for new jobs, which I promise to cover in detail sometime this week. In the meantime, if you’re needing a job or wanting to be proactive about your employment situation, you can check out a few online resources such as Job.com, Resume Rabbit and Snag A Job. It never hurts to be one step ahead of the game.

This is a post from The Digerati Life.

Bookmark It

You may or may not have heard the term ?ethical will?. But, for those who care about making their values and ethics part of their legacy, it is a tool to consider when planning your estate.

Unlike a ?last will and testament?, which provides for the distribution of a person?s material assets, or a ?living will?, which contains instructions for how you want to be treated medically at the end of your days, an ?ethical will? is designed to let someone preserve and share their values, principles and beliefs for heirs and future generations, though it?s not legally binding.

According to Personal Legacy Advisors? Web site, an ethical will is a letter that transmits the non-material assets that are also of great importance: your values, your story, the lessons life has taught you and the other information that is too valuable to risk being lost. Your ethical will is the tool that enables you to address the question, ?What do I want my loved ones to know??

As a concept, ethical wills are not new. The first written reference to ethical wills occurs in both the Hebrew and Christian Bibles. Examples are Genesis, chapter 49, and The Book of John, chapters 15-18. Over time, they evolved into written documents. While ethical wills were traditionally shared after death, along with the reading of an individual?s last will and testament, today they are often shared during the author?s life.

While exact figures aren?t available for how many people are writing ethical wills, they are on the rise, based on increased Web activity and sales of ethical will resources. They have gained impetus particularly in the wake of tragedies like the September 11 terrorist attacks.

Why create one? People are inclined to write an ethical will when facing a challenging event, or at a turning point in life. Some examples are facing the loss of a loved one, birth of a grandchild, expectant parents, becoming an empty-nester or approaching the end of life. Other reasons to create an ethical will include:

• Your reflections will confirm what?s important and renew appreciation of your life to date
• You will create a personal message to those you love, of priceless value in the event of your absence
• If you do not tell your personal (and family) stories, they may be lost forever
• Your material assets can be given within a personal context
• You will mitigate confusion and hurt feelings with a personal explanation of potentially controversial elements of your legal will
• Your spirit will be expressed on paper, living beyond you in a timeless way
• Your words will link the past, present and future generations of your family
• You will enjoy peace of mind knowing the most important things will have been said.

Pros and cons. The pros of an ethical include having an opportunity to influence future generations. Through the process of writing an ethical will, the writer can gain self-knowledge and come to an understanding of what?s most important to him or her. This is valuable information not only for their families but their professional advisers as well. Another pro is that ethical wills are private documents. Unlike a will, which if admitted to probate will become a matter of public record, an ethical will is a private communication and will not be made public unless the author (or recipient) so desires. The con is that an ethical will is not enforceable in a court of law. Those who want to provide specific instructions, such as who is to receive which asset or how assets are to be distributed and under what conditions, would need to put the instruction in a will or trust.

Setting up an ethical will. Ethical wills come in a variety of forms, from a short letter to a lengthy autobiographical statement, from an audio-recorded message to a bound album. There are three basic ways to create an ethical will.

1. Begin with an outline and list of suggestions. Once you?ve created a rough draft, you can review and personalize it as much as you wish.
2. Begin with guided writing exercises. For example, start with phrases such as ?From my grandparents, I learned?? or ?I am most grateful for??
3. Begin with a blank sheet of paper and write down whatever is relevant about your thoughts, experiences and feelings. This is an open-ended approach. Eventually you should be able to create a comfortable structure for your ethical will. For one-on-one help, an organization like the Association of Personal Historians may be of assistance.

Other tips from Personal Legacy Advisors include the following:

• Start today: If you were not here tomorrow, what is the most important thing you would not want left unsaid? Write it down - now you’ve begun
• Relax: You are not trying to write for the Pulitzer Prize. The letter is a gift of yourself, written for those you love
• Ask yourself: What do I want to make sure my loved ones know and have in writing
• Take it topic by topic: Don’t try to write it all at once
• Be yourself: You cannot bequeath what you never owned to begin with
• Be careful, be loving. The reach of this letter is unknowable.

Sharing your will. It?s a good idea to share your ethical will not only with family and friends, but also with your financial adviser and attorney. Knowing what you value and what?s important to you will help them to develop a personalized plan that can help you to leverage your values in the future.

An ethical will speaks to one?s posterity or descendants long after the legal will has been probated and forgotten. Of note, an ethical will is a dynamic document. Just as a will or living trust document needs to be revisited so does an ethical will, because events occur in ones’ life that have an impact on ones’ value systems.

Share This

Below is an email interview with Brent Kessel, author of It’s Not About the Money: Unlock Your Money Type to Achieve Spiritual and Financial Abundance*, a book that I reviewed earlier this week.

Why did you decide to write a book?

Without wanting to sound cliché, I never really feel like a made the decision. I had observed so many people suffering around financial issues, and barking up the wrong tree, as it were, that I felt compelled to write it. It was one of the easiest things I?ve ever done professionally.

What do you think is the number one reason people fail financially?

They don?t understand what payoff their financial habits are giving them. If they?re chronic overspenders, there?s a need that their purchases are filling, an emotional need, and buying purses or cars or new furniture allows them to feel good about themselves for some time. In order to change the financial habit, they have to replace the payoff with some other payoff that fills the same need. But most people never question what?s motivating their financial habits.

You say in your book that the ideal person would be balanced among the eight financial archetypes. How do you recommend a person obtain that balance?

It?s very difficult work, but very rewarding. It?s very hard to answer this question in a generalized way, which is why there are about 60 highly customized exercises in the book, so that each archetype can create the balance that they need. One way to say it, is that we often need to cultivate the positive attributes of the archetype which is most dormant in us. So for me, that?s mostly been the Innocent. Being willing to have faith and trust that things will work out, without putting quite so much focus on the numbers, given that I?m a Guardian/Saver/Empire Builder predominantly.

Which of the eight archetypes do you think is most prevalent in today?s society?

Pleasure Seeker and Innocent were prevalent until Summer 2008, which is why we?re in this mess. Today, it?s much more Guardian and Saver. People seem to be returning to the values of the ?30?s ? 50?s, but we?ll see how long that lasts.

How do you explain the archetypes to your clients?

I usually don?t. This is part of why I wrote the book, so that they could read the complete story about each archetype in there. As an example, I?ll more intuitively give a client ?homework? to spend more money on things which bring sensory pleasure, in the case of an overly frugal Saver, or have an Innocent hire a bookkeeper or sign up for an internet-based service like mint.com which shows them where the money?s all going.

What is the typical response from your clients once they learn about the different archetypes?

?Wow, I had no idea you had me so pegged.?

Do you ever have clients who deny the findings?

?Not really. The most I?ve had is someone who felt they couldn?t find themselves in any of them, which is usually a sign of the Innocent. Some people feel that they?re a balance of many, or that it?s constantly changing. Both of these are good signs.?

Once you know a client?s financial archetype, how do you cater your financial advice to fit the archetype?

Again, this is very customized. The Appendix of the book has specific financial planning recommendations tailored to each archetype, and it?s many pages, so it?s hard to summarize. But one example might be to have a Pleasure Seeker sell their vacation home and art collection and deploy that money in more income-producing assets (which don?t produce sensory pleasure), like stocks, bonds, or income properties.

Since writing the book, do you find yourself trying to figure out the archetypes of the people you meet?

Sometimes. It?s mostly intuitive though. If you go to my first MSN story, there?s a video of me walking around Central Park interviewing people and guessing their archetypes. Kind of humorous. The other stories there may give you some good blogging ideas too.

Finally, is it natural for a person?s archetype to change over the years or do people tend to stay the same throughout their lifetimes?

The healthiest people I?ve met with money are able to express different ones at different times. But there?s a whole class of people who, especially when the going gets tough, go back to their tried and true archetypes. Financial habits are hard to break, because unless we very intentionally try to cultivate those which have been dormant, they?ll stay dormant.

Thanks, Brent!

Also, I want to go ahead and announce the winner of the “It’s Not About the Money” book giveaway. There were forty-nine entries and the randomly-selected winner was commenter #31, Walter. Congrats, Walter. I hope you enjoy your book!

I have another giveaway coming up soon. Stay tuned…

ShareThis

We’ve got the recession in full swing in Silicon Valley and our region, along with many others, is experiencing job losses left and right. So how are we coping with things right now?

Over at the US News Alpha Consumer blog, Kim Palmer has begun a new series called “Recession 2.0, Do You Feel It?”, where she’s asked a few bloggers to share their latest thoughts on this financial slowdown. Well, I just turned in my article yesterday on how we’re dealing with the recession here in Silicon Valley, and it’s now been published.

Coping With The Recession: Income Check

In that article, I wrote with some detail about the adventures (and travails) of two self-employed people who have 2 dependents. My spouse launched his start-up around 2 years ago called BestInClass.com, and only recently did I go off to do my own projects (mostly to do with writing and internet related stuff). We’re doing fine, given the economic setting we have right now, but is what we’re doing enough to keep us afloat in Silicon Valley, where the cost of living is ridiculously stratospheric? That’s the million dollar question.

Well, we continue to trudge on, with just a wee bit of concern about our current income levels. If we continue to bleed green for an extended period of time, we’re going to make a few adjustments (like focus on snaring more service-oriented contracts), but it looks like we’re going to hold on to status quo for now.

Cutting Costs….Hard: There Go The School Funds

Some major change in attitude though, in our household. If you’re a parent (or maybe even if you’re not), you can empathize with this story: there’s a little kid, one of our sweet neighbors, who regularly comes by to sell stuff to raise funds for his school. I’m normally pretty generous and buy items from him every time he drops by. I do the same and order a load of items from my own kids’ schools to support our school district. Unfortunately these days, we’re now watching our money like hawks and account for everything that leaves our pockets. This means that $25 scented gift candles and various overpriced assorted bric-a-bracs, chocolates and what not are no longer part of our discretionary budget. So for the first time ever, I had to leave our little neighbor boy empty-handed. The sad part of the story is, the rest of the neighborhood had the same idea (I took a peek at his order list, and it was pretty much empty).

When times get tough, priorities rule even harder.

Carnival Roundup

Now for the latest from the carnivals! MoneyNing gives us the Smile Edition of the Carnival of Personal Finance. David Ning just quit his job to be a full-time problogger too, did you know? Congrats to him for making the huge step! Anyway from his list of financial articles, I picked a few neat ones to showcase here:

• Free From Broke: Never Mind A New Economic Stimulus Package - Save Yourself! Here are more thoughts on the second stimulus check.
• Cash Money Life: Year End Retirement Plan Moves
• The Wisdom Journal: Money Is 100 Percent Emotional

Next up, The Festival of Frugality was put together by The Financial Wellness Project. You’ll find these posts among other money saving articles in their awesome list:

• Passive Family Income: Turn Frugal Behaviors Into A Game
• Shark Investor: How YOUR Saving Advice Caused The Financial Crisis
  
• Money Beagle: Saving Money By Mulching The Leaves

Recent Carnivals

• Carnival of Money Stories
• Investing Carnival
• Carnival of Money Hawks
• Road To Financial Independence
• Carnival of Debt Reduction
• Total Mind and Body Fitness Blog Carnival
• Best of Me Symphony
• Kids and Money

This is a post from The Digerati Life.

Bookmark It

Al Gores whole basic theory is based on the LIE that CO2 causes global tempertures to rise.

Are record cold temperatures an indication of global cooling or a new ice age? NO

Are record cold temperatures an indication of global cooling or a new ice age? NO.

Fact: Carbon Dioxide levels in the atmosphere are at a record high, not just in human history, but in the geological record for the last 600,000 years Is this increased carbon dioxide the result of human activity? Almost certainly. We are digging up coal and pumping up oil that was buried over hundreds of millions of years. We are dumping the spent products of combustion into the atmosphere pretty quickly. Before we have exhausted the world's supply of coal and oil, we will raise carbon dioxide even higher.

Fact: Carbon Dioxide levels and global ice volume are inversely proportional in the geological record for the last 400,000 years.

Does Carbon Dioxide itself cause temperature to rise?

That is the popular theory. There is no appearent correlation between carbon dioxide and global temperature in longer term studies for the last 500,000,000 years (Nir J. Shaviv, Ján Veizer, "Celestial driver of Phanerozoic climate?" Geological Society of America Today 13:7 July 2003 p4-10). Actual temperature increase, measured by methods that may be tainted by the Urban Heat Island Effect, still show an increase less than 0.5C since 1880. While carbon dioxide content in the atmosphere has gone up continuously for more than 100 years, average global temperatures have risen as well as fallen during that period.

The drop in carbon dioxide levels observed during the ice ages may have caused the ice age, may be caused by the ice age or both may have a common cause, but are otherwise unrelated. Scientific analysis of the correlation between temperature and carbon dioxide indicate that rising temperatures PRECEDE carbon dioxide increases by about 800 years, suggesting that temperature causes carbon dioxide to rise, which is not the position of global warming theorists. (Caillon et al, "Timing of Atmospheric CO and Antarctic Temperature Changes Across Termination III", Science v299, March 2003, p1728-1731).

Global Temperature changes correspond more accurately to changes in solar activity than they do to the continuous rise in carbon dioxide during the last hundred years. (Friis-Christensen et al, "Length of the solar cycle: An indicator of solar activity closely associated with climate", Science, v254, 1991, p698-700) There is some evidence these data sets have begun to diverge in recent years, but the data is only published on the internet, not in scientific review journals. Current scientific data cannot be easily interpreted to portend global warming. Mathematical models can be constructed to project future temperature changes many different ways, but those mathematical models projecting large increases are considered "realistic" while straight line projections (which aren't very scary) are not popular, possibly because they are not exciting.

Is increased carbon dioxide bad for the environment if it has no effect on global temperature? No.

Carbon dioxide is a necessary nutrient that plants depend upon. Carbon Dioxide levels many times higher than current levels on earth improve plant growth and vitality. A significant portion of the increased farming productivity observed during the last 50 years may not be due to pestisides or improved techniques, but to the increasing levels of carbon dioxide in the atmosphere. (Sherwood B. Idso, Bruce A. Kimball, "Tree Growth in Carbon Dioxide Enriched Air and Its Implications for Global Carbon Cycling and Maximum Levels of Atmospheric CO2," Global Biogeochemical Cycles, 7(1993):3:537-555, p. 537-5380)

Is increased temperature bad for the earth?

In and of itself, temperature increase would not be bad. Longer growing seasons and increases in arable land would improve crop yields even more and increase the earths sustainable population. In the 1970s, when a broad consensus of scientific opinion and projections suggested the earth was rapidly cooling, mass-starvation was a cause for worry, but global warming would not have that particular effect.

For the non-human population of the earth, over hundreds or thousands of years global warming would change the viablility of species. Plants and animals would migrate, adapt or become extinct. Would it be worse, i.e. more deadly, than the ice ages that have fallen over the whole earth 4 times in the last 400,000 years? That would depend on the quickness with which the climate changes.

Global sealevels have been rising continuously for several centuries at a rate of 1-2mm per year. An acceleration of the rise in global sealevels would have a more significant effect than slower rates, but coastal cities will be forced to change with the times either way. Sea levels 18,000 years ago were 100 meters lower than they are today. Sea level has risen an average of 5.6mm per year for the last 18,000 years, so we are actually in a rather slow period geologically as far as sea level changes. During the "Little Ice Age" of 1650 to 1850, the rate of sea level rise was virtually halted, but we have now moved back into a relatively warmer period and sea levels are rising once again, but not yet at thier historical clip. About 3.5 million years ago, sea levels were around 30 meters higher than today.

The earth will change and we will change with it. Some of the changes we may cause, but other changes will be out of our hands. Change is not necessarily good or bad. Slow change is inevitable. The earth can adapt and so can we.

About the Author

Steve Johnson is writes on a large variety of subjects and topics. Currently Steve is involved in The Truth About Iraq

When you get engaged, you’re not just promising to marry a person; you’re also marrying their money habits, their debt, and credit history.  If you’re not careful, unknown money issues can not only ruin a marriage but sink you deep into debt.

Hiding Credit Card Debt
Here’s a sad story of a former co-worker whose life was turned upside down by his spouse’s debt.  I met up with him for lunch yesterday to catch up and couldn’t believe the story he had to tell.

His wife had 50K of credit card debt coming into their marriage that she didn’t tell him about until several years after they were married.  She was only making minimum payments so over the years the interest mounted and the debt continued to grow.

He had owned a home prior to the marriage and they finally they decided to tap into it’s equity and take out a loan to pay off most of her debt. A few days later he comes home to find her packing her bags and on her way out the door.  Of course he didn’t share this story with anyone for quite a while since it was so painful and embarrassing but now happily he’s met someone new and is moving on. 

What’s the morale of the story?  Find out about your future spouse’s finances before you get married.  To help you do that, here are some questions to ask, courtesy of Real Simple:

Ten Romantic Debt Questions for Your Fiancé

• Do you use credit cards for everyday expenses?
• Do you pay your credit-card balance in full each month?
• Have you ever maxed out your credit cards?
• How many credit cards do you have?
• What are your debts?
• Have you looked at your credit reports in the last year?
• Did you ever require a cosigner for a loan?
• Have you ever been put into collection by a creditor?
• Are you a cosigner on anyone else’s loan?
• Do you have any tax or other liens pending?

These questions are obviously not very romantic but they’re definitely necessary things to ask.  Depending on your fiancé’s personality you might handle them in different ways.  It might be easiest to just sit down and go through them all straight up or you might have to slip in a carefully worded question here and there during the course of conversation. 

Here are some other finance questions the article suggests asking:

• Do you have a savings or checking account?
• Do you balance your checking account each month?
• Do you do research before making major purchases?
• Do you have a budget or a spending plan?
• Do you track your finances? How often?
• Are you aware of all your benefits at work?
• Do you have life insurance?
• Do you have health insurance?

Of course some of these things you might find out over the course of time as you get to know someone. However you do it, make sure you get these questions answered, I know my friend sure wishes he had.

Checking Their Credit History
If you’re worried that your fiancé is holding back information you could dig a little deeper. Not telling you everything is probably a bad sign for future marital communications but if you’re determined they might be the one you could always do some more research.

If you know their full name, social security number, date of birth, current address, and previous address you can probably pull your future spouse’s credit report to do some double checking.  Be aware checking their credit report without their permission can potentially get you into some trouble:

“Anyone who obtains a copy of someone else’s credit report under false pretenses can be fined substantially and jailed for up to a year.

Only businesses or individuals with a “permissible purpose” can access your credit report. “Permissible purpose” is defined in Section 604 of the Fair Credit Reporting Act (FCRA).“

Then again, if your fiancé is willing to throw you into jail for checking their credit history, probably a sign you don’t want to marry them.

How to Build Credit History
What if your future husband or wife doesn’t have any debt but they don’t have any credit history at all?  This happened to us, when we went to get a loan for our home my wife’s lack of credit history affected the interest rates we were eligible for. 

We ended up putting both our names on the title but only mine on the loan so that we could get a better interest rate but we wanted a way to help build her credit profile.

Our financial planner showed us a pretty slick way that worked wonders for my wife’s credit.  She put $1000 into a 12 month certificate of deposit at our local bank and then used the CD to get a secured loan from the same bank.

We setup our checking account to make automatic payments on the loan so she had a year’s worth of on time loan payments on her credit report. Then after 12 months we took the money out of the CD and paid off the loan.  The interest we had earned on the CD helped pay for most of the interest we had paid on the money we borrowed.

Marriage Money Summary
Get to know your fiancé’s money baggage and habits or they may come back to make you miserable, divorced, and in debt in the future.

I’ve been reading more and more about the threat of deflation. What’s deflation? I can’t find a better definition for it than what’s in the Barron’s Finance and Investment Handbook*:

DEFLATION decline in the prices of goods and services. Deflation is the reverse of inflation; it should not be confused with disinflation, which is a slowing down in the rate of price increases. Generally, the economic effects of deflation are the opposite of those produced by inflation, with two notable exceptions: (1) prices that increase with inflation do not necessarily decrease with deflation—union wage rates, for example; (2) while inflation may or may not stimulate output and employment, marked deflation has always affected both negatively.

In other words, deflation is not a good thing even though price declines sound wonderful to the shopper!

Here’s a great little deflation tutorial if you’re interested: What is Deflation and Why is it Worrisome?

Are we headed for deflation? I have no idea. I think we’ve already seen it in housing and oil prices. Will we see it in other areas? I don’t know. I think it depends on how high unemployment goes.

Nouriel Roubini is expecting stag-deflation (stagnation/recession + deflation)…that doesn’t sound so good.

ShareThis