Okay, let’s end the week on another positive note….I’m going to start re-visiting some of my Best and Worst financial decisions as an open book to you….hopefully you can pick something up that you can incorporate positively into your life. My 100%, hand’s down, Best financial decision I’ve ever made, by myself and now with my Wife….is to month in and month out (not easily by the way)….Spend less than we make…because we created a very comprehensive Budget. Sounds so simple right? Well, unfortunately overspending is probably the most difficult thing Americans struggle with. I equate it to a disease…or an addiction that culturally makes it okay to spend more than you take home.
The name of this blog is “The Monthly Nut”…which is another expression for your Monthly Fixed expenses, your fixed nut so to speak….the money that no matter what…you have to spend to live. Rain or shine you have to cut these checks. It’s your Rent, mortgage, cable bill, grocery bill, PG&E bill, on and on and on. Do you know what your “Monthly Nut” is??? I reiterate I’m sick, but I know what mine is pretty close to the last buck. Knowing what my monthly nut is allows me to know what I can save in a given month (or how much slack or room I have in my budget)…which in-turn let’s me know how that extra round of golf or dinner out will affect my savings goals or how it will effect me breaking-even for the month. It allows me to prioritize on what is important to my life-style, to do the things my Wife and I want to do, but also take a pass on the things that we really don’t need and infringes on our “savings goal”.
So, going into the weekend I beg you to find out what your “Monthly Nut” is. Really, really dig into it….gals - find out how much that monthly back waxing is....and for the men, how much are those monthly facials?....yes it takes time, but I promise you it will be worth it. Everyone has different expenditures, so of course yours will look very different than mine. I’ve listed the majority of every monthly expense that I have below to get you started on where to look….No joke, after doing this exercise you will gain so much power over your personal finances that it you will be shocked. You will also find out by doing the exercise what is discretionary vs. fixed. Add up every single bill you have and find out where you stand…when I did this with my Wife, we found out real quick where we could cut some fat and I bet you will too….it’s truly enlightening!
Have a great Labor-day weekend and I’ll be back at it next week!
Rent / Mortgage
Cable Bill
Electricity Bill
Phone Bill (home & cell)
Car Payment
Car Insurance
Parking spot payment
Gas
Student Loan payment
Credit Card payment
Groceries (My wife and I spend $400 a month for example)
Dining out allotment
Basic Necessities (what we spend at CVS/Long’s every month)
Dry Cleaners
Housekeeper
Haircut
Gym Membership
Subscriptions (i.e. Netflix, Magazines, etc)
Golf rounds for my wife
Manicures and pedicures for me
Friday, September 3, 2010
Thursday, September 2, 2010
I love big Government and I can not lie!...you other brothers can't deny....
Sorry those aren't the right lyrics...insert proper word and you catch my drift...
Today, I want to dive into the FACTS that the Government has provided about its brilliant idea to meddle in the Loan Modification market for delinquent homeowner’s. After all, I’m pretty sure that these borrowers were delinquent for a good reason in the first place. Putting faith in these delinquents is kind of like taking King Henry the 8th’s word that he would be faithful the 2nd, 3rd, & 4th time around….minimum wage can’t support a half a million dollar mcmansion.…but who am I to try and tell the Gov't this, afterall, I also don't spend all day trying to fit a square peg in a round hole either....
Here is a quick rundown: (Through end of July...Data the Gov't has Provided)
- A total of over 1.2 million households have applied for this Government sponsored loan modification program.
- 630,000 households have been dropped by the program due to non-payments, not filling out paperwork, etc….50% drop-outs...looking good already!
- 438,000 households are currently in the Trial phase of the modification program….not real relevant…let’s move onto the success stories.
- 421,000 households have successfully completed the trial phase and become permanent loan modifications…that’s 35% of all who started…now here’s the good stuff….
- 15% of these PERMANENT loan modifications have made it 6 months after they became permanent....let me reiterate 15%! It gets better….
- And of the 15% that made it 6 months….1/5th of them have defaulted AGAIN over the course of the next 3 months….check please!
Simply put, I don’t think many of us would continue to get paid by our employer’s with a success rate of 12%….maybe hitting .120 as a pitcher is in the Big Leagues is acceptable, but as a Government, please don’t propagate the success your having with these Loan modifications when that simply isn’t true.
This process has just delayed the inevitable...prices are heading lower and the gov't can't do anything to stave it off this time...I can't promise you they won't continue trying to stick that square peg in that round hole though...
Hopefully I have some Seinfeld fans out there...Put in the famous words of Jerry Seinfeld looking at George Costanza while lying face-down on the floor with his pants down…”And you want to be my latex salesman???”
Today, I want to dive into the FACTS that the Government has provided about its brilliant idea to meddle in the Loan Modification market for delinquent homeowner’s. After all, I’m pretty sure that these borrowers were delinquent for a good reason in the first place. Putting faith in these delinquents is kind of like taking King Henry the 8th’s word that he would be faithful the 2nd, 3rd, & 4th time around….minimum wage can’t support a half a million dollar mcmansion.…but who am I to try and tell the Gov't this, afterall, I also don't spend all day trying to fit a square peg in a round hole either....
Here is a quick rundown: (Through end of July...Data the Gov't has Provided)
- A total of over 1.2 million households have applied for this Government sponsored loan modification program.
- 630,000 households have been dropped by the program due to non-payments, not filling out paperwork, etc….50% drop-outs...looking good already!
- 438,000 households are currently in the Trial phase of the modification program….not real relevant…let’s move onto the success stories.
- 421,000 households have successfully completed the trial phase and become permanent loan modifications…that’s 35% of all who started…now here’s the good stuff….
- 15% of these PERMANENT loan modifications have made it 6 months after they became permanent....let me reiterate 15%! It gets better….
- And of the 15% that made it 6 months….1/5th of them have defaulted AGAIN over the course of the next 3 months….check please!
Simply put, I don’t think many of us would continue to get paid by our employer’s with a success rate of 12%….maybe hitting .120 as a pitcher is in the Big Leagues is acceptable, but as a Government, please don’t propagate the success your having with these Loan modifications when that simply isn’t true.
This process has just delayed the inevitable...prices are heading lower and the gov't can't do anything to stave it off this time...I can't promise you they won't continue trying to stick that square peg in that round hole though...
Hopefully I have some Seinfeld fans out there...Put in the famous words of Jerry Seinfeld looking at George Costanza while lying face-down on the floor with his pants down…”And you want to be my latex salesman???”
Wednesday, September 1, 2010
Shout out to All my followers...
…the blog hit the 500 views mark this morning and I appreciate everyone for stopping by!!!
I’ve really enjoyed writing this stuff so I will try and keep it going the best I can....please email me with any recomendations, thoughts, ideas or topics you'd like to hear more about...and I'll try to address them in a timely matter.
I've also added a subscribe to link on the Top Right due to a email recomendation (thanks!)…so you can get an update when I post.
themonthlynut@gmail.com
thanks again!
I’ve really enjoyed writing this stuff so I will try and keep it going the best I can....please email me with any recomendations, thoughts, ideas or topics you'd like to hear more about...and I'll try to address them in a timely matter.
I've also added a subscribe to link on the Top Right due to a email recomendation (thanks!)…so you can get an update when I post.
themonthlynut@gmail.com
thanks again!
Tuesday, August 31, 2010
Dividends Schmividends...
If someone gives you the advice to purchase stocks because their dividend yield is high....please run far, far away. This rationale is a terrible reason to buy stocks. It has been proven that Stock yields do not have a positive correlation with stock returns. Yes, stock prices can go lower and dividend yields can go higher. Cheap is a relative term...anyone remember 2008??? It will forever be etched in my memory and taught me to question everything and everyone...because the smartest of smart money saw their portfolio's Halved!
Let's look at 2010 so far and if you would have taken this brilliant strategy for face value at the end of last year. Let's use the Dow Jones Industrial Average as a Broad index strategy. If you would have purchased the Dow at year end '09 for that irresistible yield of 2.45%....today the Dow is down 4% Year-to-date...but wait you've gotten paid 9 months of dividends or 1.83% (9 divided by 12 times 2.45%)....so now your only down 2.16%....great trade! And if the market continues to fall....that 2.45% dividend will surely keep my porftolio afloat....or will it?
Let's look at a few of the DOW companies for this year, just incase you would have gone the single-security route instead of the overall index. Here's a quick example from a few different industries. Pfizer, Exxon Mobil, United Technologies, and Johnson & Johnson, which are all great dividend paying stocks. After including the 9 months of dividends in their performance, these stocks are down respectively; -9.15%,
-11.05%, -4.25%, -8.55%. Makes me say hmmmmmm....
Let's look at 2010 so far and if you would have taken this brilliant strategy for face value at the end of last year. Let's use the Dow Jones Industrial Average as a Broad index strategy. If you would have purchased the Dow at year end '09 for that irresistible yield of 2.45%....today the Dow is down 4% Year-to-date...but wait you've gotten paid 9 months of dividends or 1.83% (9 divided by 12 times 2.45%)....so now your only down 2.16%....great trade! And if the market continues to fall....that 2.45% dividend will surely keep my porftolio afloat....or will it?
Let's look at a few of the DOW companies for this year, just incase you would have gone the single-security route instead of the overall index. Here's a quick example from a few different industries. Pfizer, Exxon Mobil, United Technologies, and Johnson & Johnson, which are all great dividend paying stocks. After including the 9 months of dividends in their performance, these stocks are down respectively; -9.15%,
-11.05%, -4.25%, -8.55%. Makes me say hmmmmmm....
Monday, August 30, 2010
Simple "World" Math...
I’ve heard the comments too many times to count and wish to dismiss such rubbish. “The BRIC (Brazil, Russia, India, China) countries will lead global growth and thus double-dip recession is off the table”. You’ve no doubt heard about the torrid growth coming out of the emerging markets. I can not dispute that and fully agree…Brazil is humming long at 5% clip…Russia was at a 5% clip till last year where it dropped 8%...India is moving at a 7% clip…....and last but certainly not least China is flying at a 8-10% pace. So no question these countries are Emerging.
Here is what I wish to question. The United States, Europe, Japan and the U.K. account for 65% of the World’s GDP. Arguably, this 65% is seeing no growth or very little if any. All of these 4 places have serious debt problems that continue to move above and beyond the 100% debt to GDP level.
Let’s take a closer look at the BRIC’s. Add these 4 countries up and you get 15% of the World’s GDP. All these countries are growing nicely, except Russia, and have very little Debt to hamper their growth.
So my simple math problem is how does the 15% carry the other 65% of the bums???
Let’s take a real-life example…I’ll even make it Politically Correct….Wife makes 65% of household income or let’s call it $65,000 a year for simplicity, and Husband makes 15% of their income or $15,000 per year….Now factor in that Wife has growing expenses at 10% of her income which would be $6,500 this year and she can’t cut any expenses because they are Fixed. Now husband has a nice bump in income at 8% of his salary this year which works out to $1,200 and he has no growing expenses.
So his $1,200 bump can help make a dent in Wife’s $6,500 increase, but it doesn’t carry her the whole way. So how the heck can the BRIC’s carry the rest of the INDUSTRIALIZED World on it’s back???
Even the math doesn’t add up. I strongly oppose this opinion that the emerging markets will carry the rest of the world into the Holy land. I Don’t think David takes down Goliath this time…oh and by the way I don’t have a unicorn ranch either…prepare accordingly.
Just in case you wanted to see the numbers:
(% of World’s GDP)
E.U – 28%
U.S. – 24.5%
Japan – 8.7%
U.K. – 3.6%
Total Industrialized = 64.8% of World’s GDP = Not growing with Significant Debt
Brazil – 2.7%
Russia – 2.1%
India – 2.1%
China – 8.4%
Total Emerging = 15.3% of World’s GDP = Growing quickly with barely any Debt
Here is what I wish to question. The United States, Europe, Japan and the U.K. account for 65% of the World’s GDP. Arguably, this 65% is seeing no growth or very little if any. All of these 4 places have serious debt problems that continue to move above and beyond the 100% debt to GDP level.
Let’s take a closer look at the BRIC’s. Add these 4 countries up and you get 15% of the World’s GDP. All these countries are growing nicely, except Russia, and have very little Debt to hamper their growth.
So my simple math problem is how does the 15% carry the other 65% of the bums???
Let’s take a real-life example…I’ll even make it Politically Correct….Wife makes 65% of household income or let’s call it $65,000 a year for simplicity, and Husband makes 15% of their income or $15,000 per year….Now factor in that Wife has growing expenses at 10% of her income which would be $6,500 this year and she can’t cut any expenses because they are Fixed. Now husband has a nice bump in income at 8% of his salary this year which works out to $1,200 and he has no growing expenses.
So his $1,200 bump can help make a dent in Wife’s $6,500 increase, but it doesn’t carry her the whole way. So how the heck can the BRIC’s carry the rest of the INDUSTRIALIZED World on it’s back???
Even the math doesn’t add up. I strongly oppose this opinion that the emerging markets will carry the rest of the world into the Holy land. I Don’t think David takes down Goliath this time…oh and by the way I don’t have a unicorn ranch either…prepare accordingly.
Just in case you wanted to see the numbers:
(% of World’s GDP)
E.U – 28%
U.S. – 24.5%
Japan – 8.7%
U.K. – 3.6%
Total Industrialized = 64.8% of World’s GDP = Not growing with Significant Debt
Brazil – 2.7%
Russia – 2.1%
India – 2.1%
China – 8.4%
Total Emerging = 15.3% of World’s GDP = Growing quickly with barely any Debt
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