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Bob's Boomer Blog Now that I've turned 60 I get to write whatever I want and you have to read it. ;)

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Old 11-09-2007, 02:16 AM
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Bob D'Amico Bob D'Amico is offline
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Exclamation Can you hear that sucking sound?

Are you keeping up on the economic news? Oil is skyrocketing, the dollar is nearly in freefall, the Chinese have us by the throat since they hold, get ready for this, 1.4 TRILLION US Dollars in reserves. The housing market is in a recession, savings, CD rates, money market rates, everything is dropping and even the poor NJ Democratic Party is upset because they didn't get approval to spend $450 million of money we don't have so ALL 21 counties, yes ALL 21 counties would each get a share of the 10 year, Stem Cell Research program. They even brought in Michael Fox to help but it was amazing, the NJ voters said no.

Here are two shocking quotes from Tom Moran's column in Thursday's Star Ledger (page 15):
"I didn't run for public office to be a number cruncher or to play Scrooge,"
The Honorable, Jon Corzine, Governor

"We haven't done a good job over the last couple of decades. It's like a household that puts too much on its credit cards."
The Honorable, Richard Codey, Senate Majority Leader
I don't know about you but I nearly choked when I read those quotes. By the way I didn't know that the Governor of New Jersey is supposed to be Santa Claus.

I will never claim to be a financial wizard, I've lost more money than I care to think about but I do keep a close eye on key factors. I had a premonition several months ago that I needed to move money from a high, yet variable rate savings account at HSBC to Certificates of Deposit. There was enough to build a 5 year CD ladder for my wife at decent rates with a well known online bank (if you don't know about CD ladders you better do some homework).

That was a smart move, in the past couple of months and especially the last few weeks the savings and CD rates have nose dived. Check Bankrate.com regularly and you will be able to see first hand the impending free fall in the investment market. Now is not the time to be a spendthrift, its time to hunker down and protect yourself and your family.



There is a funny section on Bankrate.com right now:

6+1 ways to sabotage savings (and your future)

1: Don't have a budget

Walk on the wild side and squander every penny that finds its way into your grubby mitts. After all, you might be squashed by a falling piano tomorrow as you walk down the street and then all of this hypothetical hoarding and penny pinching would have been wasted. So why start? Of course, you could accidentally live to a ripe old age or maybe even decide to start a family, buy a car, break a leg or catch a cold. But why plan for the unexpected? There's a lot to be said for spontaneity.

2: Indulge in your whims
You need that $700 Van Staal reel and $300 rod, NOW. Shopping sprees don't have to involve a pair of astronomically expensive, anatomically implausible shoes or a really spectacular watch that you promise you'll wear every single day for the rest of your life. The more insidious savings-sucking culprits masquerade as purveyors of common items, such as Costco and Sam's Club. Strolling through a warehouse-sized storeroom full of practical items at low, low prices all but guarantees a spending bonanza. In an informal poll of visitors to their Web site, Consumer Reports found that about half of warehouse club shoppers spent more than they intended. (Don't forget it's up to you to keep Starbucks and Dunkin Donuts in business!)

3: Splurge on gifts
What better way to celebrate than by going into debt? Forget gifts from the heart and deep, meaningful sentiments. Presents should reveal how much extra dough the giver has to throw around. If holiday bills aren't still rolling in come July, you didn't do it right. According to Unity Marketing's Gift Tracker survey of more than 600 consumers conducted in January 2006, holiday gift givers spent nearly 20 percent more than they planned, buying Christmas and Hanukkah gifts.

4: Buy a gas-guzzling SUV
When some cars on the road can travel over 35 miles on one gallon of gas, it seems almost like a waste of money to roll around in a vehicle that sports a fuel economy in the low teens. An equally effective method of getting rid of cash would be to set fire to it straight away rather than going through the hassle of getting out of the car to pump gas. According to the EPA, the car with the lowest fuel economy for 2007 is the Lamborghini Murcielago at 9 mpg in town. The Jeep Grand Cherokee fares a little better at 12 mpg.

5: Rely on credit for emergencies
Instead of paying yourself back after a crisis drains your emergency fund, pay a credit card company instead. Not only will you get to pay for the privilege in interest charges, there's also the fun of risking a good credit rating, should anything happen to delay a payment or, even better, prevent it from being made at all.

6: Skip routine maintenance
Remember that old saw about an ounce of prevention being worth a pound of cure? Forget it. Don't waste time and money eating apples, exercising and having your car's oil changed regularly. Wait for something to go catastrophically awry and then figure out the problem from there. This advice goes for everything that requires a slavish devotion to routine care and upkeep -- children, pets, pools, computers -- you get the idea.

This last one is an addition by me.

7: Made in America Sucks
If its made in the USA it's no good. Only stuff made in Europe or Japan is good. We can't make shit any more and you shouldn't give a damn that some red neck in Buzzards Breath, Michigan or Bumbletown, Massachusetts is going to lose his job because his company is going to import its products from China and export customer service and tech support to India. It will be good for the board of directors and the shareholders. American business executives are scared shitless of their shareholders, they are far more important than their employees, their community or their country. Anyway screw the workers, it's a free market economy, damn right. Everywhere its free market, except of course in the UK, France, Italy, Germany, Spain, Portugal, Holland, Belgium, Denmark. Sweden, Poland, ........ Japan, China, Korea.
----------------------------------------------------------------------
There used to be a great strategy by the Democrats, "Butter and Guns." It worked during WWII but that was the last time. LBJ tried it during the 60's when we were fighting in Vietnam but it didn't work. The economy went in the crapper and worse during the Nixon years, the peanut farmer president, Jimmy C, was like a rabbit caught in headlights. Reagan understood, went for the Guns and let the the economy gradually come back. Bush the first got caught on the downside and lost to Bill who rode on the coat tails of the tax and spending cuts set by Republicans when they took over the Congress, plus the dot.com and stock market fantasies right up to the end, One lucky SOB! Now Bush II doesn't have a clue, he 's just "lettin it ride" and proving once again that "Butter and Guns" is not an economic strategy, it's an economic fantasy.
Don't expect the Bush Administration, the federal government agencies or the Democratic majority in Congress to actually do anything. Their only job is to spend money, especially money we don't have.

----------------------------------------------------------------------
Keep a close eye on your 401K, study it carefully and be prepared to move your FUTURE from a higher yield (aka RISKY) portfolio to one much more conservative (aka SAFE).

You have been warned!
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Last edited by Bob D'Amico : 11-09-2007 at 03:34 AM.
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  #2  
Old 11-09-2007, 10:55 AM
spence
 
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Default Re: Can you hear that sucking sound?

What ever happened to that Conservative confidence in the free market system to fix all our problems in the name of profit and incentive?

-spence
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Old 11-10-2007, 05:53 AM
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Default Re: Can you hear that sucking sound?

Quote:
Originally Posted by spence View Post
What ever happened to that Conservative confidence in the free market system to fix all our problems in the name of profit and incentive?

-spence

Still there...my idea of conservative investing is Large Cap funds....but I'm not 60 and looking at a pile of money saying "Ok this is what I got". I'm 40 and saying I should make X by 60 and God willing pull the plug, gas up the camper and follow the stripes....

We are headed for some very interesting times, but it has been worse, just not for the majority alive today, I suggest talking to children of the Depression, relativity is key, optimism is clutch. We're probably looking at a late 70's early's 80's scenario, inflation, stagflation, housing collapse...it will correct, it's all cyclical.

As for the quote from Corzine...why am I not surprised?
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Old 11-10-2007, 07:57 AM
spence
 
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Default Re: Can you hear that sucking sound?

Quote:
Originally Posted by Frank N View Post
Still there...my idea of conservative investing is Large Cap funds....but I'm not 60 and looking at a pile of money saying "Ok this is what I got". I'm 40 and saying I should make X by 60 and God willing pull the plug, gas up the camper and follow the stripes....
I'm an Index person myself. Easy with a great long-term return...I like the ladder idea for someone in a different position, although I could also see doing that to improve on what I keep in a money market.

I generally agree although this time could be different. I don't see a short-term fix to potential energy issues we've been ignoring for the past 30 years.

-spence
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Old 11-10-2007, 08:03 AM
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Default Re: Can you hear that sucking sound?

Great Inaugural post boss. I agree whole-heartedly with Frank. Its one thing to have various political beliefs and opinions, its another thing to ignore reality because of them.
I think its gonna get bumpy for awhile. We have been hunkering down for about 2 years now. I think we are ready.

The one thing that nags at me is the SUV. Is it cost effective to get a third used car that gets kick butt milage? If I get rid of the SUV and get a high milage car it will seriously curtail my North Jetty trips, but not much else (fishing wise).

My father Laddered about 60% of his liquid assests starting about 7 years ago. When he passed away, we looked at what he lost by not being in the market during that HUGE blowup. We were a bit dismayed to say the least. And here I am ready to do the same thing.
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Old 11-10-2007, 08:08 AM
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Default Re: Can you hear that sucking sound?

The first step in resolving the energy situation is when the market finally stops buying vehicles that get crappy mileage...people who beotch about $5/gal fuel when they get crap mileage or drive 50 miles each way to work...hey whose fault is that?

PS...how many hear actually shut down their computers when not in use....
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Old 11-10-2007, 09:13 AM
spence
 
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Default Re: Can you hear that sucking sound?

Quote:
Originally Posted by Frank N View Post
The first step in resolving the energy situation is when the market finally stops buying vehicles that get crappy mileage...people who beotch about $5/gal fuel when they get crap mileage or drive 50 miles each way to work...hey whose fault is that?

PS...how many hear actually shut down their computers when not in use....
I've often argued that some simple lifestyle changes could have a dramatic impact on energy use without any real hit to our lifestyle. Unfortunately it takes a team effort and there's just no real motivator yet.

A lot of the efforts from the Left have simply been feel good, and the pundits on the Right program their sheep to believe it's an affront to the American Dream to think you aren't blessed by God to drive a Hummer to the grocery store

Stuck in the middle are people who either try to do what they can or simply don't care because all things considered, life is pretty good.

-spence
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Old 11-10-2007, 03:04 PM
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Bob D'Amico Bob D'Amico is offline
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Cool Re: Can you hear that sucking sound?

Quote:
Originally Posted by spence View Post
What ever happened to that Conservative confidence in the free market system to fix all our problems in the name of profit and incentive?

-spence
You've attached a label that doesn't apply - I think I'm a bit more complicated than that. I am a rabid capitalist but capitalism has some ugly history, Standard Oil and Enron are 2 good examples. Companies sponsoring golf tournaments is a big turn off for me.

My purpose here was not to discuss my personal investing, or imply that CD ladders are all we do. My point was that it's very simple nowadays with online banking and financials to manage your money. A savings account is not doing you much good but you can use it as a secure base to move money around or stick money that falls from the sky until you decide where it should be invested. All without leaving home!

I always shut down the PC's and all 3 monitors each night. Then I just push the off button on the UPS which cuts the power to all the AC/DC converters which run things like the cable modem, router, external disk, hub, speakers etc. When we go away for weekend trip or on vacation I pull the cable and plugs from all the TV's and other electronics. It's not so much for energy savings but who wants to come home and discover their stuff was fried by a power surge or bolt of lightening. I know a few people who have had everything in their house fried, all the electrics and all the motors (fridge/furnace/sump pump/AC). You don't really trust surge protectors, do you?

We use CFL bulbs in 50% of our lighting. I think they are a joke. They cost a lot more, deliver less light and, at least for me, burn out MORE often than regular incandescent lightbulbs. My long time Christmas tradition is never to put up outdoor lights, a wreath is about as far as I'll go. As long as its inexpensive.

Frank brought up children of the Depression era. There are many times when we've told Genevieve Sophia the Depression is over and "we don't want your money when you make your last trip" but you know what, she's got more smarts than most financial professionals I've met. She hasn't parlayed her life's earnings into multimillionaire status, she raised 6 kids, but she's done ok and will be secure, even if she doesn't (hopefully) take that last trip until she's 110. Here I am 60 years old and I still, go over major financial investments with her because I trust her judgment and know her excellent track record.


Yes - I really do try to Buy American. Learned that from my father, another Depression era kid and a lifelong, active UNION man.
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Old 11-10-2007, 08:38 PM
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Default Re: Can you hear that sucking sound?

There is one and only one thing that will make America alter it's energy habits. Price. We won't do it for man made global warming, we won't do it to stick it to Oil or to screw the Middle east.

Painful yes, but high prices now are the best thing that can happen for our kids.

I am up to 50 CFL bulbs in my house, and except for a few, i am generally very pleased with them. A few burnt out before their time, but all of them were returned for replacements. The manufacturers all offer a minimum of 2 year warrenty.

The current downturn should be no surprise to anyone. If you had a pulse, you were approved for a mortgage. It will get worse before it gets better.

Right now we are developing a business plan to offer energy efficiency consulting and implementation. As always, Capitalism is about turning lemons into lemonaide. Thank God, but this year will be our best ever, and there is already work on the books for next year.
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Old 11-13-2007, 04:18 PM
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Default Re: Can you hear that sucking sound?

Britney Spears' retirement plan
The star is reportedly making more than $700,000 a month without saving a cent.Though the 25-year old pop star is hauling in some $737,000 a month (yes, per month), the Associated Press reported last Thursday that according to court documents, she's not saving or investing a penny of it.

More than $100,000 each month is going to entertainment, gifts and vacations alone.

What a hillbilly!
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Old 01-16-2008, 07:50 PM
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Default Re: Can you hear that sucking sound?

I though this was a thread about bong hits MY BAD
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Old 03-31-2008, 09:09 AM
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Default Re: Can you hear that sucking sound?

I only have one fact I would like to point out at this time.

Low interest rates lower the value of the dollar.
If we raise interest rates the value of the dollar goes up.
Why are we lowering interest rates?
What is more important - Morgage defaults or the eveyones dollar?
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Old 03-31-2008, 11:21 PM
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Default Re: Can you hear that sucking sound?

The Feds management of interest rates is not aimed at mortgages.

Lowering the rates is a two edged sword, it permits increased exports by US companies but makes the capital markets less interesting for foreign investors. Historically, lower rates spurred companies to make capital investments in buildings, factories, machinery and equipment. Today we're outsourcing so much from Asia I don't believe the lower rates are going to help.

The biggest impact a lower valued dollar has is in the oil business, a devalued dollar means the cost of fuel goes up and that effects everything.

All the financial advice I have read recently is the same. Cut back on high risk investments, switch to cash investments, stay fluid and don't take on any long term debt. That would include buying a car, house, boat etc.

Make sure you do not make any credit card payments late. That's a self inflicted gun shot to the head. All of a sudden (post Bear Stearns), all the financial institutions including credit card providers have "gotten religion" and are cutting back on lending. Expect the CC companies to become even more ruthless.

Ask yourself what would be more beneficial, a Plasma TV or Zero Balance on your credit cards.
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Old 04-05-2008, 07:46 AM
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Default Re: Can you hear that sucking sound?

Rule #1. Don't use the credit card unless you have the money to pay it off (Don't spend what you don't have).

This lower dollar and hit to the stock market has been great for me in a way. I brought over $300,000 Euros worth $468,630 if I were exchanging it today at the rate of 1.5621.
56% GAIN


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Old 09-15-2008, 08:22 PM
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Thumbs down Re: Can you hear that sucking sound?

And today you lost $42,144 if you haven't adjusted your holdings earlier.
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