Be sure to check out the development of my free eBook, "Stock Investing Basics."

Want to learn how to sell anything online? Here's how.

Stock Investing Basics: Chapter 6 -- Goals, Risk Tolerance, and Objectives

Posted by billspaced | 4:08 PM | , , | 0 comments »

I've posted Chapter 6 of Stock Investing Basics over at Your Money Is Your Life.

It's all about goals, managing risk, and setting objectives. All important stuff, especially right now!

A note of caution: The worst days to invest in stocks are on days that end in "y" -- but it's also the only time!

So, choose wisely.

May be a good time to sit on some cash and wait until some rock-solid companies are cheaper in a few days. This week will be the litmus test whether the "bailout" will work to calm the market down or have to work itself out in the absence of a plan.

Money isn't everything. Enjoy life. Spend time with your family.

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Professional Analysis of WHAT WENT WRONG

Posted by billspaced | 5:01 AM | , , , | 0 comments »

Hopefully by the time this is published, the "bailout" plan will have been approved by Congress and signed by the President. We can hope that Washington works, though we have our doubts.

Credit Crunch
Nevertheless, a step to take after the financial system stabilizes is to take a look back and see where things went wrong. I cannot even begin to start. It's too complex, lots of things went haywire, and greed surely factored into the equation. We can simplify, reduce mistakes and risk, but greed will never expire. So, we'll have to put up new, better rules that protect people from their own greed (all parties involved exhibited some greed).

The article below doesn't really address the genesis of all this. Rather, it paints the picture of why and how several large financial institutions failed in a matter of days (Fannie Mae and Freddie Mac, AIG, and Lehman. You can now add Washington Mutual to the list -- same problems).

It's interesting to see how things transpired. Suffice it to say that cash flow and loss of financing caused these big and established companies major issues. Issues that they couldn't solve on their own.

In the grander scheme, it might very well have been that the real estate euphoria finally wore off. The leverage that we all (homeowners, banks, mortgage houses, investment banks, hedge funds, and others) enjoyed led to our ultimate demise.

Diamond and Kashyap on the Recent Financial Upheavals - Freakonomics - Opinion - New York Times Blog

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Top WaMu Execs In Line for $38 Million in Severance

Posted by billspaced | 2:02 PM | 0 comments »

WaMu execs could get cash severance totaling $38 million - Portland Business Journal:
Alan Fishman, the CEO of Washington Mutual Inc. for only a few weeks before the Seattle-based thrift failed, would be entitled to $19.1 million in severance and bonus pay.

Two other top WaMu executives have clauses in their employment agreements that would also pay them a total of $19 million in cash severance if they are terminated by JPMorgan Chase & Co.
It's good to see that the little guys get paid, too!

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Lawrence Summers on the "Bail Out"

Posted by billspaced | 1:48 PM | 0 comments »

Here's an encouraging article by Larry Summers, former head of the US Treasury in the Clinton administration. He says spend more, not less. / Columnists / Lawrence Summers - The $700bn bail-out and the budget
A time when confidence is lagging in the household, financial and business sectors is not a time for government to step back. Well-designed policies are essential to support the economy and given the seriousness of healthcare, energy, education and inequality issues, can make a longer-term contribution as well.

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Financial Derivatives: Why Honor Them?

Posted by billspaced | 11:13 AM | , , , , | 0 comments »

This is more a rant than a logical argument against honoring financial derivatives. Let me explain.

According to everything I've read about this, derivatives, based on underlying assets, significantly added to the financial woes we're currently experiencing. In fact, in Everything You Wanted to Know About the Credit Crisis But Were Afraid to Ask, Ben Stein claims that the losses are unlimited. Furthermore, none of these instruments were on anyone's books (sellers or buyers).

Here's an idea: Since the government is so adept and eager to take over financial institutions nowadays (presumably to avoid a financial calamity second in severity only to the Great Depression), why don't they just declare these instruments null and void?


If they're not on the balance sheet, and they're not "hard" assets like dollars or gold, to me, at least, they don't exist. They're like me saying you owe me money and you saying you don't. If they're a "contract," can't the government rule that they are illegal?

Nobody loses here, do they? After all, if they don't exist, then nothing was lost, right?

I mean, obviously, the institutions and individuals who are owed money lose, but hey, haven't we all lost a bit in the last few months? Shouldn't we all share in this, especially since a lot of us just wanted to buy a house? I certainly didn't want to profit off my neighbor's loss.

In the derivatives business, it seems like it's truly a zero-sum game.

Here's another one: If these instruments aren't on the books, then how are profits taxed?

Our government has been asleep at the wheel on this stuff. Seems to me like they condoned, if not encouraged, a black market on financial instruments; instruments, by the way, that are purely imaginary right about now.

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Jim Cramer on the Market Meltdown

Posted by billspaced | 11:00 AM | , , , , | 0 comments »

Great (short) video from Jim Cramer on who is to blame for the collapse of the financial system.

Money isn't everything. Enjoy life. Spend time with your family.

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Bad Debts HERE!!!

Posted by billspaced | 8:41 AM | , , , | 0 comments »

Funny picture from Greg Mankiw's Blog. (MBS: Mortgage Backed Securities, a trigger of the current Mortgage Meltdown and subsequent Credit Crunch, and then the Financial Seizure.)

Next up: Burning trash cans OR My House Is On FIRE

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Save $4,000 On Utility Bill

Posted by billspaced | 5:01 AM | , , | 0 comments »

Here are some key things you can do to save quite a bit of money with a small investment (and we all know investing in the stock market right now requires an iron stomach and lots of Tums).

You can more than double your $1,500 investment by taking these steps. And this is in the first year. The savings pile up over the life of your house.

Plus, saving energy also saves our planet.

  1. Insulate your attic
  2. Seal ducts
  3. Use a programmable thermostat
  4. Seal cracks
  5. Wrap your water heater (this one used to be in vogue, then it went out of fashion. Now, it's back "in")
  6. Get your furnace serviced
Get green by saving green. -- Knock $4,000 Off Your Utility Bill

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Warren Buffett Chimes in on Financial Meltdown

Posted by billspaced | 9:25 PM | 0 comments »

Buffett to Congress: bailout economy or face "meltdown" - Sep. 28, 2008
Legendary investor Warren Buffett warned Congressional leaders Saturday night of "the biggest financial meltdown in American history" if they did not act to secure the financial system.

Earlier in the week, Buffett also warned that the financial crisis is "everybody's problem," not just Wall Street's. The potential collapse of financial institutions would cause industry to grind to a halt, he told CNBC Wednesday, and could have "gummed up the economy."

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Would You Take This Job?

Posted by billspaced | 12:58 PM | 0 comments »

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Greg Mankiw on the Financial Funk

Posted by billspaced | 9:35 AM | 0 comments »

Greg Mankiw's Blog: If I were a member of Congress...
What is my opinion about all this? I am of two minds about the complex situation we find ourselves in.

On the one hand, I share many of the concerns of the letter signers and other critics of the Treasury plan.

On the other hand, I know Ben Bernanke well. Ben is at least as smart as any of the economists who signed that letter or are complaining on their blogs or editorial pages about the proposed policy. Moreover, Ben is far better informed than the critics. The Fed staff includes some of the best policy economists around. In his capacity as Fed chair, Ben understands the situation, as well as the pros, cons, and feasibility of the alternative policy options, better than any professor sitting alone in his office possibly could.

If I were a member of Congress, I would sit down with Ben, privately, to get his candid view. If he thinks this is the right thing to do, I would put my qualms aside and follow his advice.

I don't know Ben Bernanke, though my initial "feeling" for him is that, while he may know A LOT, he has analysis paralysis. It seems to me that he's a little late to this party (as in, he got there after the cops closed it down and there are just a few folks left to clean it all up), but action taken now to avert a calamity of colossal proportions later (maybe today) is better than the alternative. Of course.

But I like Mankiw's views on a lot of things. His advice here is sound. Where's the leadership in Washington? Oh, yeah, forgot.

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25 Ways To Save

Posted by billspaced | 5:01 AM | | 0 comments »

Consumer Reports
posted 25 ways to save some cash, all relatively easy to implement. I've added my thoughts to some of them.
Clean the coils behind or underneath your refrigerator with a tapered appliance brush to keep it running efficiently. easy peasy

Skip prerinsing dishes. Our tests have found that it¹s unnecessary, and you'll save up to 6,500 gallons of water per year. I've found this doesn't work. But give it a try.

Opt for the cold-water wash cycle and save about $60 a year. It's better for your clothes too.

Put your PC to sleep. Save $25 to $75 each year by using the system standby or hibernating feature on your computer. This is an easy one.

Plug electronics into a power strip so that you can turn them all off at once.

Don't overload the dryer. Clothes will take longer to dry, and they'll come out wrinkled. When the weather is warm, line dry. You don't need to set the dryer on HOT, either. Dry clothes enough to hang them up and give them enough time to dry before you want to wear them.

Open blinds and shades on cold days. Solar heat gain can raise interior temperature significantly. But close them at night to minimize heat loss.

Dust off the slow cooker. You'll use a lot less energy than cooking a meal across several burners and in the oven. The food is usually quite yummy. And you can "cook" while you clean, wash, nap, or read. Whatever -- it's multi-tasking.

Keep car tires properly inflated. In our tests of a Toyota Camry, fuel efficiency dropped 1.3 mpg when the tires were deflated by 10 psi. Your tires last longer, too.

See whether your utility company offers rebates to customers who replace old appliances with energy-efficient models. Some states hold periodic "tax holidays" for purchases of energy-efficient appliances.

Lower the temperature a degree or two before guests arrive. A house full of people generates a lot of body heat. Or just invite yourself over to your rich, oilman friend's house.

Clean or replace furnace filters monthly during the heating season. Clogged filters force the blower to work longer, raising your electric bills. Same goes for the A/C.

String LED lights this holiday season. They last longer. Our tests have shown that they can save up to $11 per season.

Insulate and seal cracks and gaps in your ducts. That can help reduce energy costs by 30 percent.

Lower water-heater temperature to 120 degrees from 130 and insulate hot-water pipes to knock up to 5 percent off your energy bills.

Weather-strip old windows and doors. It's the surest way to close the gaps around openings, reducing heating and cooling costs by 15 to 30 percent.

Control outdoor lights with sensors or timers so that fixtures stay off during the day. Or try solar lights.

Install a high-efficiency showerhead. It will reduce hot water use by up to 50 percent.

Upgrade to a low-flow toilet and save 4,000 gallons per year.

Drain a bucket's worth of water from your water heater a few times a year to remove sediment, which can decrease efficiency.

Move the thermostat to an inside wall away from windows and doors so that drafts don't cause the heating system to cycle on unnecessarily.

Add insulation. An estimated 80 percent of older homes are underinsulated. Properly insulating and sealing your home can cut your heating and cooling bills by 10 percent.

Plant a deciduous shade tree on the west and southwest sides of a house to save energy.

Zone heat smartly. A portable heater in a room saves money only if you're willing to keep the rest of the house chilly. Wood-burning fireplaces can suck more heat from your home than they put back in.

Call a professional energy auditor. They use a blower door or infrared photography to pinpoint where your home is leaking energy. Some utilities provide free audits; you can also find certified professionals in your area through

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WaMu Fails, JP Morgan Chase Buys Assets in Fire Sale

Posted by billspaced | 9:15 PM | , , , | 0 comments »

Now that the cat is out of the bag, I'll tell you I work for WaMu. At least I did. I guess now my employer is JPM. At least for tomorrow. Time will tell how it all plays out.

Now, on to the important stuff. Your deposits are fine. In fact, they're safer now than they were yesterday. I implore you, though, to call your federal representatives about the so-called bailout and urge them to just get it done. Iron out the details later.

Read more about WaMu's demise here -- JPMorgan buys WaMu

Money isn't everything. Enjoy life. Spend time with your family.

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Minimum Payment Calculator

Posted by billspaced | 5:01 AM | , | 0 comments »

Bankrate has a nifty credit card calculator. With all the news about the financial markets, I hope this is a nice break from all that. 

This reinforces the idea that credit card debt should be either paid off in full each cycle (preferable since you'll never have to pay interest) or paid off in as little time as possible. Paying the minimums will take you virtually forever (since the balance declines a little each month, causing the minimum to decline just a touch each month, causing you to decelerate your principal pay down each month). credit card calculator -- How much will the minimum credit card payment cost me?

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I tend to agree with Pimco's Bill Gross, not just because he's smart, but because he's right on this one. I've been watching Cramer, too, and he seems to think the same.

We have to do this deal. The cost of not doing it is too high. And I do believe that the benefits will far outweigh the costs. Go find an 80 year old who lived here during the Great Depression. While they look upon those years (yes, years, as in a whole decade) with fondness, they would not choose to relive the pain wrought by an economy crippled with no liquidity, no credit, 25 percent unemployment, and picking peaches for 25 cents a box.

Our government froze then. Let's not freeze now. The time is to act. Let's not cut off our nose to spite our faces here. Sure, the officers of these companies do not deserve inflated compensation packages; some say they should be making furniture in a federal prison.

But we have time to deal with that later. Let's pass the darned bill and go to work!

Pimco's Gross says bailout to benefit Main Street: report: Financial News - Yahoo! Finance

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The New Dollar

Posted by billspaced | 5:12 AM | 0 comments »

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Kids and Money -- September 24, 2008

Posted by billspaced | 5:01 AM | | 0 comments »

Welcome to the September 24, 2008 edition of Kids and Money.

glblguy presents Christian teen budgeting posted at Gather Little By Little.

Sherin Devassy presents Money lessons to kid posted at Investment Internals, saying, "Teach your kid about money and how to deal with money at various ages. Let them achieve financial wisdom when they start earning."

Jim presents How To Include A Baby In Your Financial Plans posted at Blueprint for Financial Prosperity.

Livingalmostlarge presents $250k for sex? posted at LivingAlmostLarge, saying, "Better save for college if you don't want your kid to try this! Crazy."

Todd presents Financial Considerations Before Starting In Vitro Fertilization posted at HarvestingDollars.

Mac presents 10 Ways To Save A Dollar During Hard Times posted at Actorlicious.

Steward presents How to Make Your Child A Millionare! posted at My Family's Money, saying, "Save money for your kids - not so that they can have a comfortable future - but so that they can give lots of money away."

Raymond presents How To Apply For An American Express Black Centurion Card posted at Money Blue Book, saying, "Learn about the almost mystical card that you often hear about in pop culture, MTV, hip hop videos etc"

Silicon Valley Blogger presents Save For College Using These Tools and Strategies posted at The Digerati Life.

Jeremy Zongker presents How to Create a Household Budget posted at Destroy Debt.

Save Money presents Get FREE Gift Cards from Blue Cross Blue Shield posted at How I Save

KCLau presents 8 Money Principles To Stay Bad Debt Free posted at KCLau's Money Tips, saying, "At some points in your life, you will encounter debts. To understand how you got yourself into the mess and how to stay bad debt free, apply the 8 principles below for a complete financial makeover."

That concludes this edition. Submit your blog article to the next edition of Kids and Money
using our carnival submission form.

Past posts and future hosts can be found on our blog carnival index page.

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Money isn't everything. Enjoy life. Spend time with your family.

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Why Some Big Banks Have Hung On While Others Have Failed

Posted by billspaced | 5:01 AM | , , | 0 comments »

WaMu (WM) is the biggest thrift in the country with somewhere near $150 Billion in deposits. There's been a lot of talk lately about its imminent failure. Here's an article from CNNMoney that shows why WM has hung on longer than its investment banking brethren, namely Bear Stearns, Merrill Lynch, Lehman, and Morgan Stanley. I list two articles because, as I write this, the CNNMoney link is not working. However, Google's cached version gives the same story.
Investors now realize that an investment bank's financial health is tied directly to how many active customers and clients that bank has. But investment- banking customers' accounts aren't insured by the government - and when Lehman's, Bear's and even Merrill's trading partners started heading for the exits, more quickly followed to avoid losing their assets.
Customers at retail banks like WaMu, however, aren't so quick to head for the door, as the government's Federal Deposit Insurance Corp. insures all deposits up to $100,000. For most bank customers, therefore, a traditional bank failure is more inconvenience than catastrophe.
Here's a little-known fact: The average retail bank account balance at WaMu is $5200. They will have no problem funding that for the few folks who panic and want their money. Now that the government has helped to avert a financial calamity (at least for the time being), all of this might be moot. But it's worth knowing just in case (when) it happens again.

Why WaMu Has Hung On Longer Than Lehman Or Bear

Google's cached version

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Funny FAQs About Trader Joe's

Posted by billspaced | 3:00 PM | | 0 comments »

Bruce Jenner, 1976 Olympic ChampionI was looking for some organic bread mix from some local stores (I was searching online, of course) and ran across this.

Welcome to Trader Joe's - Your Neighborhood Grocery Store - Product FAQs
14. Will Trader Joe's products turn me into a superhero, a professional athlete or one of the great brainiacs of humankind? Sorry (seriously, we are because that would be neat). But they will hopefully make your taste buds tingle and leave you with a happy tummy - and wallet. Way better than being a superhero.
Too bad. I really want to be a super hero. Guess I'll have to start eating Wheaties (though I don't really believe their claims. Plus, have you seen Bruce Jenner lately? UGH.)...

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Letter from New WaMu CEO Alan Fishman

Posted by billspaced | 2:33 PM | 2 comments »

This is the sort of thing that the Fed and/or US Treasury should have done: Instill confidence in the financial markets and on "Main Street," as the media is so inclined to say.
As WaMu’s new chief executive officer,
I am writing to discuss the extraordinary economic environment for all
banks in the United States and why you can count on us to continue to
serve you safely and soundly.

But no, we have to rely on the CEO of the country's biggest bank to try to instill confidence in his customers.

While a good gesture, do you really think WaMu's customers are buying this? They should, but I'm not so sure they view this message as "pure."
I came to WaMu because I think it is a
great bank with a strong franchise and a solid financial position. We
take very seriously our role as the stewards of your hard-earned money.
I want to personally thank you for your loyalty and the opportunity to
serve your needs.

After all, Fishman has a vested interest in getting out from under the pressure that the Street has put on his new company.

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A Picture of the Money Flow to Fund the Government Bailout

Posted by billspaced | 5:01 AM | , , , , | 0 comments »

A good illustration and explanation on where the money will come from to do this government bailout. For the record, I'm for the bailout, even though we'll all by paying for this for years to come. But it's better than the alternative, which, in my humble opinion, was going to be another Depression (with a 'D' not an 'R').

In that scenario, we'd all be paying but it would be a whole lot more painful and protracted.

Here's the quick explanation for the flow:
Think about what’s been happening in the markets. The public basically wants out of the private financial system and into Treasuries. But the financial system has been unable to meet that demand, because it can’t sell off toxic paper. Now, under the Paulson plan, the Treasury will buy the toxic paper, which will give the financial sector the funds to pay off debtors, who will use the funds to buy the Treasuries the feds will have to issue to finance the toxic-paper purchases.

Follow the money - Paul Krugman - Op-Ed Columnist - New York Times Blog

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Government Bailout Hotline

Posted by billspaced | 8:44 AM | 0 comments »

Here's how to get a government bailout. (satire)
Hello! You've reached the United States Treasury's automated bailout hotline. Please listen carefully, because our options have recently changed. If you're too big to fail, press or say 'one.' If not, hang up and dial 1-800-FOR-FEMA.

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The current market mess we find ourselves in has a lot of blame to spread around. However, there are a few folks who might benefit from career changes. Some already have succumbed to early termination (Freddie and Fannie heads, for example).

I'm not one to get too much into politics on this site; I leave that to my alter-ego over at Rants for that (not for the faint of heart). This case, unsurprisingly, lends itself to a political perspective.

Way back in the '30s, the federal government put in measures to protect the market in cases of rapid sell-offs and manias. In essence, if the market rose or fell too fast, systems were in place to bridle the market's enthusiasm. The measures didn't necessarily stop the trend (though, in some cases, the market for a particular stock was shut down briefly), but it slowed them down. Over time, additional measures were instilled as market experts learned how to have a mostly "free market" with a lot less volatility than in the past.

AIG got into a big mess (a liquidity crisis) when its stock fell from about $20 to $1.43 in a matter of a few days. Word got around that the company was in dire straits and needed to raise money. Rather than a gradual fall in its stock price, AIG found its stock price falling precipitously, so much so, and so rapidly, that it couldn't possibly sell any of its $1 TRILLION in assets for anything near their worth. As an example, AIG closed at $12.14 on 9/12 and fell to $1.43 shortly after opening on 9/16. AIG lost 88 percent of its value in barely one full trading day, folks.

The stock, no doubt, was in trouble. So, too, was the company. The faltering stock market and economy didn't help, either. It was a perfect storm. But did the storm get out of hand? Could something have been done to stop it?


Perhaps not.

We've had market crashes and falls before. I got my feet wet as an observer of a market crash in 1987. I wasn't around for the '29 Crash. The 90s saw some pretty good falls, too. We had some more in the early part of this decade.

But I've never seen companies crash and burn so quickly as I've seen recently. I wasn't really paying attention to the S&L crisis when it happened. But I have yet to hear anybody compare that era with this one in terms of the rapidity of failure.
  • Lehman, bankrupt over the weekend
  • Bear Stearns, bought for a cheap song over a weekend
  • IndyMac, here today, gone tomorrow
  • AIG, down and almost out, and perhaps on its way down again
  • Freddie Mac and Fannie Mae, taken over by the federal government
I don't see the light at the end of the tunnel, but I know it's there, and I'm pretty sure it's not a freight train coming our way.

Times will get better. But I digress.

You want a scapegoat. So do I. It's you. And it's greed. And it's stupid guys put in office who are dumber than dirt.

Like Chris Cox.

Put in office as the head of the Securities and Exchange Commission by President Bush in 2005, Cox, who's resume looks not much better than Michael "Heckuva Job" Brown (former -- and disgraced -- head of FEMA during Hurricane Katrina, who's greatest claim to fame pre Katrina was as a horse judge, whatever that means):
From 1977 to 1986, Cox was first an associate and then partner with the international law firm of Latham & Watkins. At the time of his retirement in 1986 he was the Partner in Charge of the Corporate Department in the Orange County office, and served as a member of the firm's national management.
In 1984, Cox co-founded Context Corporation, which produced daily English reproductions of the leading state-controlled newspaper in the Soviet Union, Pravda. The publication was used chiefly by U.S. universities and U.S. government agencies, and was eventually distributed to customers in 26 countries around the world. The company had no connection to the Soviet government.
In 1982–83, Cox took a leave of absence from Latham & Watkins to teach federal income tax at Harvard Business School.
In short, Cox was a lawyer who didn't have any experience with the stock market, not even a small exchange.

Cox sought to make the stock market "freer."

So he stopped enforcing the rules and relaxed the systems put in place to protect the market from too much momentum.

It's the momentum that kills, not the downward pressure on prices. Let's go back to AIG. Had they enough time to sell off a few pieces of their business (remember, they had $1 trillion in assets), they could have met their short-term obligations and the government would not have had to come in to rescue them with a bridge loan.

You know who pays for government bailouts? You and me.

Specifically, the rules have been in place for a long time prohibiting naked short selling (according to Wiki):
Naked short selling, or naked shorting, is the practice of selling a stock short without first borrowing the shares or ensuring that the shares can be borrowed as is done in a conventional short sale. When the seller does not then obtain the requisite shares, the result is known as a "fail to deliver."

...Naked shorting is widespread and ... the SEC regulations are poorly enforced, although the SEC has denied these claims.

The "short sellers" have obliterated this market. They are to blame. Now, I'm not saying that they don't play a vital role in making the markets work; however, what I am saying is that left to their own devices, people with bad intentions, or not so good intentions, can effect bad outcomes.

They're jackals killing a wounded lion. I suppose for all the "free marketeers" that the stock market is like the jungle. But for most of us, whose retirements count on the stock market (after all, it's been the government whoring out the 401k and IRAs), it's not a jungle. Sure, it has its pitfalls, but there are rules to play by. 

And nobody's playing by them. Or, worse yet, the rules were changed and we didn't even know about it.

So, in short, President Bush appointed another friend with zero experience and intelligence in a high position of power and we got hosed because of it. "Brownie, meet Mr. Cox."

I'm not saying the market would be fine and dandy, but it surely would not have fallen so far so fast.

Of course, now that John McCain has announced he'd fire Mr. Cox, the media has jumped on the bandwagon. Here are some stories from around the 'net.

SEC's Cox Catches Blame for Financial Crisis
McCain says he would fire SEC head Christopher Cox
Fire Christopher Cox?
SEC Issues Temporary Ban on Short-Selling
Bush backs SEC's Cox after McCain says would fire him
Financial Crisis and Short-Selling

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Interview with Treasury Secretary Henry Paulson

Posted by billspaced | 5:01 AM | , , | 0 comments »

The architect behind the attempt to prop up the economy is US Treasury Secretary Hank Paulson, who faces the greatest financial crisis of our time.
Left open is the question of how to fix Fannie and Freddie and what they will look like down the road. The current plan is to let them grow until 2010, in order to buoy the housing market, and then cut them down to a manageable size. "We've got competing objectives," Paulson concedes. "We've got, first and foremost, stability in the financial markets. Secondly, we need to get through our housing correction as quickly as possible." Yet Fannie and Freddie also need to be managed conservatively enough to reassure creditors that they are well capitalized. "This is all about our financial system and about our economy," says Paulson. "It's orders of magnitude more important than Bear Stearns."
This interview with Fortune Magazine (save 77% off the cover) is very illuminating. Time will tell if Paulson will go down as the savior of the US (world?) economy or not, but rest-assured, this man is smart, works hard, and is very dedicated to the task at hand.

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Kids and Money -- September 17, 2008

Posted by billspaced | 1:36 PM | | 0 comments »

Welcome to the September 17, 2008 edition of Kids and Money.

Realm of Prosperity presents College Student Bought Home Instead of Renting posted at Realm of Prosperity.

Shaun Connell presents Is College Overrated? posted at Personal Development, saying, "Is the best choice the decision to go into debt for college? Find out why 1/7 bankruptcies are by college students."

KCLau presents How not to Spend that Money? posted at KCLau's Money Tips, saying, "Article on how to prevent spending unnecessary money. Also 3 methods on how to do so."

Jim presents How To Include A Baby In Your Financial Plans posted at Blueprint for Financial Prosperity.

FIRE Getters presents Save Your Wallet With These Penny Hacks posted at FIRE Finance.

Silicon Valley Blogger presents Upromise Survey: Saving For College, Getting Tougher? posted at The Digerati Life.

The Smarter Wallet presents Ways To Save on Seasonal Purchases: Time To Shop For Halloween!The Smarter Wallet, saying, "Save money on seasonal items, family occasions and holidays like Halloween!"

Joe Manausa presents The Sign Is Up - Is Your Home Sold? posted at Tallahassee Real Estate Blog, saying, "During the booming real estate market of 2004-2006, it seemed all a homeowner had to do to sell a home was put a sign in the yard and then start evaluating offers. This is not so much the case anymore, we are back to a “normal” real estate market, where buyers are drawn to value."

AmberJones presents Geezeo: Free Online Personal Finance Management Software, Budgeting Tools, Financial Advice and Community » Blog Archive » The High Cost of Teen Driving.

Steve Faber presents Best Gas Mileage Vehicles to Buy if You Have a Large Family posted at super gas saver.

Livingalmostlarge presents Frugal Baby Tips posted at LivingAlmostLarge, saying, "When planning for a baby what do you need?"

Concerning Kids presents Child Obesity posted at Concerning Kids

That concludes this edition. Submit your blog article to the next edition of Kids and Money using our carnival submission form.

Past posts and future hosts can be found on our blog carnival index page.

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Money isn't everything. Enjoy life. Spend time with your family.

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Next Big Market Mover: Goldman Sachs to Buy Major Bank

Posted by billspaced | 3:39 PM | , , , , | 0 comments »

I work in the banking industry; I'm naturally skittish right about now (and have been for over a year now), darn it!

Today, my "out-of-left-field" thinking led me to the idea that a major bank (let's call it WaMu) would merge with Goldman Sachs. This quote from GS' CFO cements the deal for me (which I read after my epiphany and to which I've added my emphasis):

Chief Financial Officer David Viniar appeared to strongly rebuff the market’s growing sentiment that the fabled Wall Street firm should find a traditional bank with whom it can merge. “Most assets we have couldn’t be funded by deposits” at a traditional bank, Viniar said on a conference call with analysts to discuss Goldman’s third-quarter earnings. In the last six months, two struggling Wall Street investment banks have been acquired by large commercial banks - including yesterday’s purchase of Merrill Lynch & Co. (MER) by Bank of America Corp. (BAC) - and a chorus of analysts and investors have speculated that Goldman will enter a similar merger. Traditional banks typically enjoy more stable businesses, as well as the ability to borrow money inexpensively from depositors. As a result, these commercial banks have become natural merger partners for struggling investment banks, whose businesses are typically more volatile in nature, and much more vulnerable to negative market sentiment as well as the need to borrow capital at expensive terms.
So here's the deal: Goldman will do the opposite of what's been done recently: Rather than a retail bank buying an investment bank, the hunter becomes the hunted and the investment bank buys the retail bank.

Bank of America just became the biggest investment bank in the country with this deal:
Overnight, the deal will make Bank of America the county’s largest player in wealth management. It already runs the biggest branch banking network and it is the biggest issuer of small business, home equity and credit card loans. The Countrywide deal made it the nation’s biggest mortgage lender, too.
Goldman cannot afford to let BofA get bigger. Goldman had to say what they said today. Their stock had already taken a bath based on the horrible earnings announced today. They have to wait for several days before they can do anything because their deal will most definitely be a stock deal. First, they have to wait until their stock rises a few dollars per share. Then, they do a deal. Now, of course, I have no inside information and haven't bought anything, but I think a deal is imminent. It's a matter of who buys whom. The "if" is no longer a question.

This is a time of unprecedented consolidation.
Mark my words.

Either that, or Schwab buys WaMu. Either one works and broadens the market coverage of the dealmakers.

Money isn't everything. Enjoy life. Spend time with your family.

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One Man's Opinion on the Financial Meltdown

Posted by billspaced | 10:11 AM | , , , , | 0 comments »

I think all of us "outsiders" feel a little like this today. First, Enron, WorldCom, and Global Crossing, now this. Screw You, Wall Street!

Maybe all this misery is just payback - The Bing Blog

The arrogance. The willingness to see hundreds, thousands, lose their
jobs as a result of their pronouncements and manipulations. Masters of
Business all, they have been taught to see corporations not as places
that employ people and provide a product or service, but as numbers on
a balance sheet, a balance sheet that serves only one group: Investors.

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Banking Crisis: No End in Sight

Posted by billspaced | 5:01 AM | , , , , , | 0 comments »

From BloggingStocks:
The IMF has predicted that total write-downs driven by the mortgage crisis will hit over $1 trillion. Only about half of that has hit the markets so far.
Happy Days will be here againWell, there is an end in sight, but it surely will mean the loss of trillions in equity for investors in the affected banks. I'll reiterate my call for perseverance, as the survivors will emerge from this wiser, richer, and much better-positioned to not only weather a future storm but also control their markets in a much more powerful way (read: Oligopoly-power).

The cooperation that is occurring amongst the bigger banks will also contribute to collusive powers that only make them stronger and you'll see these companies move in lock-step for a time. Eventually, there will be innovations in banking and some will break from the pack, but that will take at least 5 years. Probably more like 10.

But rest-assured, your deposits at any of these banks are safe. The government cannot -- and will not -- allow the FDIC and other insurers to fail.


So, please, hunker down. Hope for the best. Plan for the worst. Odds are, you'll end up somewhere in between in the short- to intermediate-term, but you'll get to the best sooner than the rest. And that's not a bad place to be.

Money isn't everything. Enjoy life. Spend time with your family.

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How to Choose An Exchange Traded Fund

Posted by billspaced | 5:01 AM | | 0 comments »

I recently published a paper on investing in ETFs, entitled "How To Choose An Exchange Traded Fund."

Exchange-Traded Funds are a lot like index mutual funds, but you buy and sell them like stocks. They also often offer lower fund management fees than their index fund counterparts.

They are ideally used when you're making a lump-sum purchase because you pay the stock brokerage fee of as little as $4.95 no matter how many shares you purchase; your purchase transaction cost per share drops the more you buy.

They're great for buying into markets in different countries, regions, and industries. While they should not be the bulk of your portfolio, they can round out your portfolio by exposing you to other markets that offer different risks and potentially higher returns.

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BREAKING NEWS: Lehman Is Dead, Merrill Gets New Life

Posted by billspaced | 9:20 PM | 0 comments »

Lehman Brothers is dead. Merrill Lynch gets bought by Bank of America. AIG seeks $40 Billion (BILLION!) bridge loan.

Times are tough. Hopefully, this will be a turning point.

In Frantic Day, Wall Street Banks Teeter -

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Stock Investing Basics: Chapter 5 -- Investment Accounts

Posted by billspaced | 5:01 AM | | 0 comments »

I've posted another chapter of my upcoming eBook, Stock Investing Basics, over at Your Money Is Your Life.

This is Chapter 5, and it's about the various investment account options you have available.

Here's an excerpt:

When you open an eTrade account, you can open a taxable brokerage account, an IRA, a Roth IRA, or an Education Savings Account (also known as a Coverdell Account). For most people, you'd open a taxable brokerage account or some sort of IRA to invest in stocks, stock mutual funds, and ETFs.

If you open an account with Fidelity, T. Rowe Price, or Vanguard (three of the most popular mutual fund companies), you can open a taxable or retirement account, with the investment vehicles being mutual funds. Some mutual fund companies are also brokerage companies (and some offer 401k services as well), so the water can get a little muddy; however, if you choose a company like Fidelity, you can conceivably manage ALL of your investments with one company and one logon.

Your 401k, if you're so lucky to be enrolled in one, is one of the better retirement plans concocted by the federal government...
Read more here.

Money isn't everything. Enjoy life. Spend time with your family.

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Kids and Money -- September 11, 2008

Posted by billspaced | 5:01 AM | | 0 comments »

Welcome to the September 11, 2008 edition of Kids and Money. This marks the 7th anniversary of the worst attack on US soil, so let's take a moment and cherish our kids and families. They're the most special people on the planet and we'd do anything -- ANYTHING -- for them.

Thursday Bram presents Start The School Year Off Right: A Few Frugal Tips for Getting Through the FallWise Bread

 Zaira presents The Answer To All Your Money Problems posted at Minor Money Matters, saying, "Speaking one kid to another, making money doesn't have to be hard!"

Sam presents Free Money for College. Claim Your College Cash ! Surfer Sam posted at Surfer Sam and Friends, saying, "College education is going to be expensive. Where will the money come from? You can get money for your education from many sources. Some college money is free, some requires your services, and some money must be paid back. The sources of free money for college are grants, scholarships, and financial aid."

Master Your Card presents How Young Is Too Young for a Credit Card? | Master Your Card posted at Master Your Card.

KCLau presents Secrets to Writing an Ebook in Three Easy Steps posted at KCLau's Money Tips, saying, "Why one would want to write an ebook and secrets behind writing one."

hank presents Are Stay-At-Home Parents Setting Themselves Up For A Big Fall These Days? posted at My Investing Blog.

Livingalmostlarge presents Back to School Financial Goal? posted at LivingAlmostLarge.

imarketing4s presents debt consolidation loans - September 6, 2008 posted at Blog Carnival: Loans and Finance.

Jim presents Babies Are Expensive! Total Cost of Having A Baby posted at Blueprint for Financial Prosperity.

rothira presents Roth IRA for Teenagers posted at Roth IRA Explained.

Silicon Valley Blogger presents Save Money With Unusual Savings Devices: An Illustrated Guide To Cool Piggy Banks posted at The Digerati Life, saying, "Fun with kids' piggy banks!"

The Smarter Wallet presents Eat Well for Cheap! How To Eat Out For Less posted at The Smarter Wallet, saying, "Eat out for less with your family, even with kids in tow!"

Nicholas Powiull presents How to Attract Money into Your Life & Get into the Mind-Set of Abundance (My Personal Experience) posted at Conscious Flex, saying, "This article explains what attracts money. The future of our society is in the kids knowing this about money.."

Woman Tribune presents FurReal Friends My Lovin Pup posted at Woman Tribune.

Dave presents Cheapo Food posted at Cheapo Groovo.

Raymond presents How To Generate Valid Credit Card Numbers posted at Money Blue Book.

Sandy Naidu presents Top 5 Dirty Little Credit Card Tricks posted at Future Nest Egg.

That concludes this edition. Submit your blog article to the next edition of Kids and Money using our carnival submission form.

Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: , .

Money isn't everything. Enjoy life. Spend time with your family. Remember those who have come and gone.

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S&P 500 Tool

Posted by billspaced | 5:14 PM | | 0 comments »

Here's a handy web site that has the S&P 500 data in it, at a glance. Very useful.

Political Calculations: The S&P 500 at Your Fingertips

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Presidential Nominee Tax Plan

Posted by billspaced | 5:13 PM | , | 0 comments »

Nifty little chart to see how your tax bill will fare under McCain or Obama -- 

TaxProf Blog: Calculate Your Obama Tax Cut

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Light On Money? Lose Your Clothes!

Posted by billspaced | 6:29 AM | 0 comments »

As you know, I'm a proponent of increasing your income and decreasing your expenses, rather than the one-sided approach most other personal finance bloggers advocate for making yourself more financially fit.

It's just like losing weight: You're better off if you decrease your caloric intake and increase your exercise.

And to be successful in the money-making endeavor below, you'd better lose some weight :)

Seriously, there are a host of folks making extra money by selling nude photos of themselves on the Internet. This WILL NOT be everybody's cup of tea; no, it's not for the faint of heart. Nor is it for prudes, shy people, or people simply opposed to the nude form. I am not one to judge here. Very few people will seriously investigate this option, but those that do stand to earn a significant extra income; some, no doubt, will make enough to quit their day jobs.

I believe in free markets; it's part of my DNA. Where there's demand, supply will meet it. Let's face it, the Internet is a fabulous market place for any number of enterprises. The adult entertainment industry has forged a solid business plan using the Internet.

So, if you try this out, feel free to let me know how you do! Since this is a family site, I won't be posting any pictures, but I will certainly post successes and any pitfall you may encounter.

Need Money? Get Naked! - Blog

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Fannie and Freddie Implications

Posted by billspaced | 5:01 AM | , , | 0 comments »

If you hadn't heard by now, the federal government took over Freddie Mac and Fannie Mae over the weekend, effectively demolishing the stock holders and giving a boost to the bond holders. Here are some of the implications that come out of that deal -- Fannie and Freddie: What You Should Know - Alpha Consumer (

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How to Choose a Stock Mutual Fund

Posted by billspaced | 6:41 AM | | 0 comments »

I wrote an article entitled, "How to Choose a Stock Mutual Fund," that's been posted here. It details the factors you need to consider when choosing a mutual fund. Give it a read and tell me what you think.

Here are the highlights:

  • Invest the bulk of your investment funds in index funds, most likely an S&P 500 index fund
  • Choose no load, low fee mutual funds
  • Dollar-cost average
  • Invest in funds that have low initial and subsequent investment so that you put your money to work sooner rather than later
  • Most importantly, with actively-managed funds, choose superior fund managers
Mutual funds are great ways to get quick diversification along with exposure into stocks. Now may be a really good time to invest in the stock market, since prices are very low. The last 8 years have not been good to this market. But the stock market has fared better than the housing market, that's for sure.

And over time, the stock market (think S&P 500) has returned over 10 percent per year (dividends included).

Money isn't everything. Enjoy life. Spend time with your family.

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Dog Days of Summer: Ways to Cool Your House

Posted by billspaced | 5:01 AM | , | 0 comments »

It's been over 100 degrees here for the past week or so; it's supposed to be in the 80s this week (whew!). We've had quite the time trying to beat the heat. A couple of years ago, we put in a central A/C system. This past year we put in an attic fan. While the attic insulation looks sufficient, it might be a good idea to replace it with some higher R-value material. I've even put a film on the west-facing windows.

It's all helped. A little.

Short of getting the whole house insulated (an expensive proposition for us as our house is very old and needs holes drilled from the outside in to inject the insulation, and then new paint to cover the patched holes) and installing a patio/awning on our west side, we've run out of ideas. Save for one (though I don't think it will help us here since the air outside at night never cools much during a heat wave -- a whole-house fan. The idea here is that you have an enormous fan installed in your ceiling, open all your windows in the evening, and have the fan suck in the cold air from outside and exhaust into your attic all the hot air from the house. Many people swear by them.

Summer Hacks: Save Money And Stay Cooler with a Whole-House Fan
Depending upon its size, a whole-house fan uses only 10% to 20% as much electricity as a central air conditioner. Also, it uses significantly less electricity than a window air conditioner, yet it keeps the entire house more comfortable, not just one room. Installing one generally provides a good payback on the investment.
So, if you're inclined to install one, read the above article. On paper, it sounds like a great idea.

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Kids and Money -- September 4, 2008

Posted by billspaced | 5:59 AM | | 2 comments »

Welcome to the September 4, 2008 edition of Kids and Money. There are some really fabulous posts here. Sit back and enjoy. Better yet, learn.

Ben Dinsmore presents 36 Ways to Reduce Your Home's Energy Use posted at Trees Full of Money, saying, "With energy prices on the rise, and the sustainability of our environment in question, I thought that it would be beneficial energy saving tips that you can involve you family in th improve you homes energy use."

Joe Manausa presents How To Dispute Your Property TaxesTallahassee Real Estate Blog, saying, "As long as the assessed value does not exceed the market value they will raise the assessed value, so it is important to know what your property is worth today!"

Del Sandeen presents 4 Secrets to Raising Money Smart Kids That Every Parent Should Know | Fiscal Liberty posted at Fiscal Liberty.

Ace Elliott presents Avoiding Mortgage Foreclosure posted at Care on Credit, saying, "As the home mortgage market sways find out what you can do to anchor yourself and weather the foreclosure storm."

Katy Bold presents What should kids learn about money? posted at Money To Live, saying, "Part of teaching and encouraging financial literacy is focusing on basic math skills. To be comfortable with money, one needs to be confident with adding and subtracting. This essay suggests games for children that promote math skills and confidence."

KCLau presents What Do You Know About Bankruptcy? posted at KCLau's Money Tips, saying, "an article on how one becomes bankrupt and how to be discharged from bankruptcy"

Todd presents Your Kids (probably) Aren’t Above Average posted at HarvestingDollars, saying, "I hope you like the post, and thanks for the comment about your carnival on my site! -Todd."

Concerning Kids presents Tips and Ideas To Help Child Proof Your Home posted at Concerning Kids.

imarketing4s presents Wise Debt Consolidation and Budgeting posted at Free Debt Consolidation: Qualified Financial Management.

Jim presents Babies Are Expensive! Total Cost of Having A Baby posted at Blueprint for Financial Prosperity.

Connie Prater presents Is the next generation already wrapped in plastic? - posted at, saying, "As children return to school, they and parents may be interested in how our children are becoming tech savvy and whether it is a good or bad thing for them moneywise..."

Livingalmostlarge presents GWP PF Bloggers: Rich People Gone Broke posted at LivingAlmostLarge, saying, "Do we learn about money from our parents?"

Kim Greenblatt presents Kim Greenblatt Asks If You Teach Your Children About Money While They Are Young posted at profitable, saying, "It always pays to teach your kids how to manage money and they are never too young to learn."

Alfa Mercado presents To Spank or Not to Spank posted at Unforgettable Blog.

Silicon Valley Blogger presents 3 Great Money Lessons from My Old Man posted at The Digerati Life, saying, "We were all kids once. Here is an article by someone who reflects on the financial lessons he's learned from his father."

The Smarter Wallet presents 8 Summer Fun Activities That Won't Break The Bank posted at The Smarter Wallet, saying, "Enjoy the summer with your kids without breaking the bank!"

Madison presents 10 College Money Myths posted at My Dollar Plan.

That concludes this edition. Submit your blog article to the next edition of Kids and Money using our carnival submission form.

Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: , .

Money isn't everything. Enjoy life. Spend time with your family.

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Why Banks Sell Your Mortgage

Posted by billspaced | 5:01 AM | , | 0 comments »

When my wife and I bought our house in 2004, the mortgage we negotiated was sold immediately to some company we didn't know. I knew this would happen, but it still bugged me. Here's a great article about why mortgage banks sell the loans they put together.

Yahoo! Finance

I wish a bank would adopt the slogans below:
I seriously doubt that any depository would commit to never sell its FRMs, but it is possible that they would do it for ARMs. The marketing possibilities are certainly intriguing. Here are some un-copyrighted tag lines: "We are your lender for life, guaranteed." "We don't abuse customers we plan to keep." "We believe in long-term relationships, not casual encounters."
Wouldn't it be great if somebody cared about their customers more than they cared about short-term profits? Besides, the greed in going after the profits really got the banks nowhere. In fact, many of them have posted significant losses, and some will fail.

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Money Problems? Life Issues? Remember This: It Gets Better

Posted by billspaced | 5:05 AM | | 2 comments »

Often, we place money at the forefront of our lives. In fact, it seems as though money makes the world go 'round. I have a companion site to this one that's entitled, Your Money Is Your Life.

Having money, and, more importantly, knowing what to do with it, makes life easier. You can afford to go on vacations or to buy safe organic food for your babies. You can buy your wife a ring to commemorate your tenth anniversary, to show her you care.

You can afford private schools. Or tutors. Or a fuel efficient, safer car than your 1986 Camry beater.

But money is not the "Be all, end all." There are many families who make less than you who are happier and can save more. They have a retirement fund. Their children will be able to attend a good college. They plan. They have different priorities.

Life sometimes hits you right between the eyes. Your mother could be stricken with cancer. Your child may get involved with drugs. Your wife could leave you. Remember this:
"No matter what horrible thing you're going through, when it's all over it only takes three seconds to sum it up. Remember that."
This comes from one of my favorite non- personal finance blogs, dooce. There is light at the end of a tunnel. And it's not a locomotive coming your way. Think about your issue. Make a plan. Execute the plan. Reflect on it. Refine it as you learn more and make progress.

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