In In A Market Like This, What Do You Do?, I intimated to you that I'd do some research and report back to you on what I found. Here's a first attempt at that. "Stock Screeners" like the one offered by Yahoo! are awesome! You can filter on TONS of different criteria.

For this stock screen, I used the article, 40 Stocks for the Long Haul, as the starting point. Here's my criteria:

• Return on Equity >= 15 percent
• Zero total debt
• Free cash flow > $1 Billion

Here's what I found.

• Apple (AAPL)
• Texas Instruments (TXN)
• Google (GOOG)
• EBay (EBAY)
• Nvidia (NVDA)

 Apple has over $6 billion in free cash flow, an ROE of 27 percent, and a PE of 16. They are the market leader for mp3 players. They're gaining in PC sales. And it's because they are a tremendous company comprised of excellent management. Market share for their music and cell phones is very good.

In fact, as consumers tighten their belts, they will go one of two routes: Cheap or premium. Here's why they'll go premium: Kids won't have anything but an iPod to play music. You're wasting your money buying anything else. You're better off buying the bottom-end Nike than the top-of-the-line Converse, if you know what I mean.

Oh, yeah, in this credit-seized economy, Apple has no debt. And more cash in the coffers than Microsoft.

Texas Instruments makes the inner-workings of high-tech products like computer chips. As businesses shed employees, they'll look to technology to meet some of their challenges. TI also makes calculators for the education market that more kids will need if they want to compete in the global economy. I'm not overly-bullish on technology companies right now; they're usually capital-intensive enterprises, where bad quarters lead to worse quarters. But TI has no debt.

They've also returned 24 percent on shareholder equity (ROE), they have $3.8 billion in free cash flow, and they're the leader in their industry.

What more is there to say about Google? Free cash flow over $3 billion and a 21 percent ROE, they are the only player right now in the online search market. They have geniuses at the helm and all throughout their organization, and the key thing? Search isn't even what they're best at! Nope, it's advertising. They're VERY good at using every one of their pages as a billboard for a business. And they charge for it. It's a highly-effective and -efficient model.

While I believe ad sales will decline as businesses try to cut costs, they won't go to zero, and, like Apple above, there is no real competition for the services that Google offers.

Ebay is likely to get even bigger as consumers cut spending on unnecessary goods. Note, though, that people will not stop buying things; they'll just stop spending as much. The logical places to go are Ebay, any of a number of discount stores like the Dollar Store, and Wal-Mart.

Ebay has an ROE of 18 percent and free cash flow of $2.3 billion.

Finally, I wasn't sure I wanted to include this one, but I was going for the top 5 in the categories I chose, so I'm including it. Nvidia, the video card and motherboard chip maker, is the leading brand (there's only one other, ATI, in the high-end video card space) and is only getting better. I know, I have their motherboard in my PC and it's the best one I've ever had!

Nvidia has a free cash flow of just over $1 billion and has an ROE of over 22 percent.

Like the other market leaders in this bunch, they are likely to gain market share now while others pull back. This rise in share will allow them to maximize their profits in their niches. This is a long-term play for sure.

In conclusion, all of these companies that I've talked about here are well-run, profit-making, and market-share taking machines. They've been beat down with the rest of the market, but because of their innovative businesses, sound management teams, and excellent free cash flow, not to mention zero debt, they're poised to make a quicker and more profitable comeback when this economy finally stabilizes and starts to grow again.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

Welcome to the October 29, 2008 edition of Kids and Money.

Little Thomas couldn't submit a post because BlogCarnival.com (read about that in My Love-Hate Relationship with Blog Carnival Is Over) was down for like, a year, but he sent me an email with this article -- Thanks!!! Many great things here.
Teaching my Children About Money

Michael Cintolo presents Kids and the Economic Crisis posted at The Iconoclast Investor.

Raag Vamdatt presents Goal Based Investing :: RaagVamdatt.com :: Financial Planning demystified posted at RaagVamdatt.com, saying, "The philosophy of goal based investing can be a great way to create a fund for your kid's higher education."

Andrea Smith presents Debt Consolidation Facts: Know Everything About Becoming Debt Free | Consolidate4Free: Free Debt Consolidation ArticlesFree Debt Consolidation: Qualified Financial Management.

Hustler Moneyblog presents Cash Back Rebate Shopping Strategy posted at Hustler $$$ Blog.

Raymond presents New FDIC Insured Limit Covers Bank Deposits Up To $250,000 posted at Money Blue Book.

Jim presents Teaching Kids About Money: Tessy & Tab Money Manager Kit

Mr Credit Card presents Teaching Your Kids About Credit and Money posted at Ask Mr Credit Card.

Dave presents The Proper Use of a Debit Card posted at Cheapo Groovo.

That concludes this edition. Submit your blog article to the next edition of Kids and Moneyusing ourcarnival submission form.

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

Technorati tags: kids and money, blog carnival.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

My affair with Blog Carnival is over. Their database has been "unavailable" now for at least 3 days! I work in tech; there's no friggin' way their database could be down for 3 days, unless they're complete IDIOTS.

And you know the best part? Their home page loads. It has a "contact us" link. Guess what happens when you click it?

Nothin'.

So, I guess they're idiots. I don't want to associate with idiots, so I guess I'm out.

Now, the service is free, so I'm getting what I paid for. The question now becomes, How do I conduct these carnivals (Kids and Money)? Is there a viable alternative? I'd be willing to consider paid if it meant I'd get reliable service...

Anyone?

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

What does an investor do in times like these? The market is volatile and falling far more than it has risen the last month. Do you bail? Invest in Bonds? Put your money in banks?

One strategy you can try is to pick individual stocks. What should your criteria be? I'd suggest choosing only high-quality companies (note I didn't say "stocks") with flawless balance sheets, huge cash flow, zero debt, and high yields. Are there any companies with these qualifications? I'll do some screening tomorrow to find out and I'll report back here.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

Several months ago, I began preparing for a precipitous fall in the stock market (because I'm omnipotent -- NOT) by selling a lot of assets and using the proceeds to buy an ETF that shorted the market. I did quite well during the downturn, maintaining my overall capital through the worst of the market fall.

When the government announced that they were going to be investing in banks, I sold a lot of the ETF but I also sold a lot of my other positions.

Here's my conundrum: What do I do with a lot of cash in a 401k plan? I mean, I'm not losing 5 percent every day, but I'm not gaining either. This, coupled with the fact that I think we've got farther to fall, makes me inclined just to stand pat. But I don't want to miss the bottom, either.

The strategy that I think I'd employ if I thought we were near the bottom would be to start picking up individual stocks that had solid, high dividend yields.

What do you think? How has your 401k stood up to this market downturn? Do you think we've hit bottom? Are we on the way back up? Leave your answers in the Comments.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

Welcome to the October 22, 2008 edition of Kids and Money. 

Aussie Investor presents Stock Market Education For Beginners - Learning From Your Mistakes saying, "We all make mistakes with our investments. This article describes how you can learn valuable lessons about investing by going back and analyzing your stock market losses."
And don't we all have losses right about now?!!!

KCLau presents The Malaysian Insurance Planning Guide by Meshio.com [REVIEW] posted at KCLau's Money Tips, saying, "A review about an ebook on insurance planning. The book is specially written to guide Malaysians on their next insurance purchase."
Let's not forget about the critical importance of having proper insurance!

Erika Collin presents The Ultimate Guide to the GMAT: 100 Tips, Tools, and Resources posted at BSchool.com Business Schools Directory.

Livingalmostlarge presents Growing up frugal posted at LivingAlmostLarge, saying, "Can frugality be taught?"

Raymond presents How To Become A Millionaire and Get Rich In 10 Steps posted at Money Blue Book.

Jim presents Teaching Kids About Money: Tessy and Tab Money Manager Kit posted at Blueprint for Financial Prosperity.

Joe Manausa presents Dave McCormick On Restoring Global Stability posted at Tallahassee Real Estate Blog, saying, "Under Secretary David H. McCormick made the following remarks about the current economic turmoil while speaking at Wharton’s Eleventh Annual Investment Management Conference. He identified how the chaos basically got started and acknowledged that we are now paying the price."

Madison presents Help a Reader: Save and Invest for Kids posted at My Dollar Plan.

imarketing4s presents How To Broker A Consolidation Service Debt Settlement posted at Free Debt Consolidation: Qualified Financial Management.

The Shark Investor presents Be Freaking Productive posted at The Shark Investor, saying, "Don't you feel that too much productivity makes you miss the important things in life?"

KCLau presents Are you part of the NEET Generation? posted at KCLau's Money Tips, saying, "About NEET (Not in Education, Employment or Learning), the NEET generation and why there is NEET."

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: kids and money, blog carnival.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

Yeah, this is a big post. I haven't written anything substantial in a while. As you may know, if you're a subscriber or frequent reader, I work for a company that's been -- ahem -- "acquired" and I'm going to be looking for a new job real soon. I could lament about the fact that it's the 4th quarter, nobody's hiring, the holidays are near, nobody's hiring, I'm a single-income family, soon to be zero-income family, nobody's hiring...but...

You didn't come here for that!

You, like me and thousands of others, either are looking for new jobs or soon will be. The economy tanking, the government doing its best impersonation of Sergeant Schultz ("I see nuuuthing!!!"), and companies increasingly getting by with less have all lead to higher numbers of unemployed, and an almost-never-uttered underemployed. That is to say, there are thousands, maybe millions, of people who have full-time jobs that don't pay much or they have several part-time jobs that -- again -- don't pay well. In any event, neither group is making ends meet nor are they counted amongst the unemployed (if you're not looking for a job, you don't count).

This post will cover three ways of earning an income. Mix and match, go solo, or do all three -- it's completely up to you. There's the "traditional" way, the "alternative" way, and the "passive" way. First, the traditional way. But with some unconventional twists.

Traditional

Most of us want a "job" where we trade our time and knowledge (otherwise known as "work") for money. We produce a product, sell a service, build a bridge, write a book, etc., all in return for a paycheck that either comes once a week, twice a month, or once a month.

Millions of people -- the majority, in fact -- who consider themselves "employed" (as opposed to unemployed or self-employed) have jobs. It's supposed to be -- and usually is -- a symbiotic relationship, in that both the employer and employee gain something from the relationship.

I've had lots of jobs. Too many in fact! If there's one thing I know how to do, it's how to get a job! And I've had many different kinds of jobs. Here's a short list:

• Concession stand salesman
  
• Yellow pages seller
• Retail store manager and salesperson
• School teacher
• IT help desk
  
• Systems Analyst
• Auditor
• Manager, credit card operations
• CEO, computer consultancy
• Print press operator

(not in chronological order)

With each job, save for one, I boosted my income considerably from one job to the next. However, that one set back killed my income growth for 3-4 years!

Nevertheless, here's what you need to do to get a job. It's a long list. The short list will come later.

• Make yourself employable. This means get a college degree if the job you want requires it, the technical certification if the job requires it, the law degree and BAR exam passage if you want to be a lawyer, the credential if you want to be a teacher, etc. This step requires the most planning, patience, and time. But short-cuts abound.
• Get a long list of references together. Get names, phone numbers, addresses, and emails. Get letters of recommendation. In short, network!
• Speaking of networking, sign up for LinkedIn. There are a whole host of things you can do here. Check out Guy Kawasaki's blog post about using LinkedIn to its fullest. Get LI "endorsements."
• Keep in touch with all of your classmates, teachers, co-workers, and employers (past and present). Talk to them long before you need to, lest your calls be labeled what they are -- job calls.
  
• Seek out companies you want to work for. Research them. Find out things about them that is not common knowledge (but make sure it's objective and flattering). Put together a list of companies that you want to target for job opportunities. Find out who works there (using LinkedIn or other resources). Talk to them!
  
• Be especially mindful of the Human Resources department where you currently work or worked. Use the recruiters there to find recruiters at other companies or headhunters / job search firms (they all talk to each other). If you're currently in school, utilize your Employment Opportunities folks. Turn an internship into a job!
• Open accounts at Monster.com, HotJobs.com, and CareerBuilder.com. Submit resumes and create cover letters. Update daily.
• Find local job and resume boards and post your resume there. 
  
• Use Craigslist.com for job opps. Post a "jobs wanted" ad (free) listing, using it as an announcement that you are available. It's another form of broadcasting your resume.
• Network!
• Be on the lookout for opportunities at companies that you didn't target. For example, you may prescribe a solution to a company that takes a real liking to you. Don't forget that the CEO of Craigslist got his job by posting his resume on Craigslist. Obviously not a common occurrence, but if him, why not you? Luck = Preparation + Opportunity
• Network!
• Don't be afraid to "go home." If you liked a job but left out of frustration or the need to explore other opportunities, go back if that's what your heart desires. We all get caught up in "you can't go back home -itis" but you can. It's your life. Do what makes you happy. Swallowing pride is not that hard if the outcome is what you truly want.
• Did I mention networking?
  

 The short list:

• Network
• Work the Net!

Nearly every good job I got through knowing the right people. I'd like to think that I got the interview because I had a good recommendation but that I got the job because I deserved it. Maybe. Maybe not. But whatever the case, knowing people and interacting with them bears fruit!

Alternative

This post is tied to several posts (Learning to Earn, Part 1 of ... Many?, Ten Commandments of Personal Finance, 7 Things You Must Do Financially) I wrote a long time ago about alternative income. You'll find "alternative income" all over the Personal Finance blogs; I implore you to read these articles first, and then come back. I'll wait.

(Tapping toes. Joyously waiting for your return. Here are a few more from very reputable sources.)

• 40+ Alternative Income Ideas and Resources : Moolanomy 
• My Sources Of Alternative Income And How I Make Them Work For Me ... 
• The Simple Dollar » Why Many “ Alternative Income ” Ideas Aren’t ...
• Alternative Income Idea: Stringing Tennis Rackets | The Passive Dad 
• my 2008 financial resolution
• Solo-preneuring™: Get Paid to Do What You Love to Do 
• The 8 Levels Of Income | Amateur Asset Allocator

The short story is that there are literally hundreds of alternatives to the traditional job. They all require that you start your own business, or at least require that you earn money outside the typical employer/employee relationship. Here's a short list of alternative income ideas:

• Self-employment -- service business. Can be lawn mowing, landscaping, computer repair, energy consultant, home painting, mobile car detailing, closet organizer, Tupperware, etc. Mostly labor-intensive.
• Affiliate marketing. Best done through having your own web site (or sites). You sell somebody else's product(s) and earn a commission or fee. (Warning: Affiliate links ahead!) Some good affiliate programs are Site Build It!, oneNetworkDirect, and ClickBank.
  
• Blogging. You earn money through ads, affiliate marketing commissions, and other sources (see How to Make Money From Your Blog by Steve Pavlina for a great blog post about this).
• Sell your own products, like books, eBooks, videos, newletters, photographs, drawings. Amazon, Lulu.com, and eBay immediately come to mind.
  
• Network marketing like Amway, Pampered Chef. Thousands of others. Many seem to place an emphasis on recruiting other salespeople. Not my cup of tea. BUT many folks have more than replaced their traditional income with income earning in Multi-Level Marketing (aka "MLM").

Passive

So-called passive income is derived from doing as little as possible. The classic case is income from investments, such as interest and dividends. Wealthy people can afford not to work because they have assets throwing off income. Generally, this comes in the form of cash dividends from stock investments and interest from bond investments. You, of course, probably don't have this luxury. That is to say, if you had assets like this, you wouldn't be reading a blog about how to make money (you already have).

But there something to be said about this, from an asset perspective. In any income-generating endeavor, whether it is from working for somebody else, generating affiliate income, or building your own business, all the income you derive comes from an asset. Your ability to labor is an asset. Your ingenuity is an asset. Your capital is an asset.

Strive to make as much as possible of what you own a performing asset. If you're at home sitting around watching TV, you're wasting an income-generating asset (your intellect, or your ability to create something). If you're delivering pizzas, you're using your car (an asset) to generate income. If you buy a new gadget like an iPod, ask yourself if it can generate any income. If it can't, think twice twelve times about buying it. See?

For most of us, it's our time that is our most valuable asset. Time is finite, too. We only have so much of it. But we can turn that thinking on its head and instead of trading time for money, we can use an asset to produce an income. Think about that a bit.

When you think in these terms, your future becomes limitless. Time doesn't matter any more. It's what you do in the time you have that determines whether you earn a generous income or not.

I hope that I've given you some food for thought. To summarize, most of us just want a fair wage for the time we put in. That's perfectly acceptable. However, I think I've given you some ideas about how to generate more than just a trade of your time for money. You can certainly enhance your monthly take-home pay by incorporating alternative and passive revenue streams into the mix.


Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

Bush critic wins 2008 Nobel for economics | U.S. | Reuters

The Nobel committee said the award was for Krugman's work that helps explain why some countries dominate international trade, starting with research published nearly 30 years ago.

Wow, that's a L-O-N-G waiting period!

Dogbert the CEO on stock pumping and dumping.

 

Money isn't everything. It's the only thing. Wait. That's only for football.

Enjoy life. Spend time with your family.

Here's a politically-enlightening view of stock market performance under each of the two parties. Counter-intuitive, to say the least. Shocking, surprising, what's wrong with the data?

Click for larger view.

Op-Chart - Bulls, Bears, Donkeys and Elephants - Interactive Graphic - NYTimes.com

Welcome to the October 15, 2008 edition of Kids and Money. There are some gems in here. Lots of thoughtful posts! Thank you!!

Silicon Valley Blogger presents The Price Of Preschool posted at The Digerati Life, saying, "Preschool in California!"
Bay Area private schools are prohibitively expensive -- about the same as Stanford!

Kun presents Mortgage Rescue Scheme – A step in the right direction? | Talk About Debt posted at Talk About Debt.
Unfortunately, we had to swallow the very bitter pill. Home values are at the heart of personal wealth. With the trillions gone in both the stock and housing markets, households feel FAR less wealthy than they were just 3 years ago. This wealth effect severely limits what a family can afford to do, greatly affecting children.

The Shark Investor presents Build Wealth By Moving Away posted at The Shark Investor, saying, "Can changing the place where you live help you become wealthier?"
We're certainly thinking along these lines. However, we're underwater in our home so much that it might be impossible to move without foreclosure or a short sale, which we're loathe to do. It's not that we can't afford (well, until I lose my job!), but that our dollars would stretch much farther elsewhere.

Michael. presents RIAA Settles Kazaa Copyright Battle with Bronx Woman posted at International Law News, saying, "Do your kids download music online? Read this blog post to find out how to protect yourself from big lawsuits."
When I first saw the title of this post, I almost didn't include it in this carnival, thinking it was just another article on how to steal music. But it's not. This is serious stuff. Your kids probably have downloaded music from a Peer to Peer site.

Kay Bell presents Kids, money and economic chaos posted at Don't Mess With Taxes, saying, "The market meltdown is causing parents to reassess the financial education of their kids."
Exactly!

Heather Johnson presents 100 Interactive Websites That Will Make You Forget You're Trapped in a Cube posted at Career Overview.

KCLau presents How Fundsupermart will Revolutionize the Unit Trust Industry in Malaysia posted at KCLau's Money Tips.

Nursery Admin presents Becoming a Nursery Assistant posted at Nursery Jobs, saying, "Some tips on becoming a nursery assistant"

One Family presents List Of Elementary Public School Textbooks - ISBN Numbers, Used And List PricesOne Family's Blog, saying, "The posts lists the textbooks used in Elementary Public Schools in the US with full details on ISBN and pricing."

Jamie McIntosh presents Keep Halloween Fun and Simple posted at Jamie's Blog, saying, "Parents don’t have to break the bank for children to have a fun Halloween."

Jim presents Should You Quit Your Job To Stay Home With Your Baby? posted at Blueprint for Financial Prosperity.
Economically speaking, probably not. For the good of the baby, ABSOLUTELY!

Card Blogger presents The Best Chase Credit Card Offers posted at Credit Card Blog.

Raymond presents The Top 5 Online Banks For High Interest Savings and Checking posted at Money Blue Book.

Livingalmostlarge presents Choosing a stay at home parent? posted at LivingAlmostLarge.

Weight Ladder / Rich Leverage presents Learning Basic Money Management Skills posted at Rich Leverage, saying, "Some basic tips for adults and kids."

The Smarter Wallet presents Why Work At Home? Top Reasons For Staying Home To Work posted at The Smarter Wallet, saying, "A big reason why we'd work from home is to be able to spend more time with family and kids."

Sandy Naidu presents Warren Buffet's Advice posted at Future Nest Egg.

Michael Bass presents How to get a cell phone with no i.d., no passport, and no credit card posted at Debt Prison, saying, "I thought it would be a great idea to write an article about getting a cell phone if you don’t have a credit card, a passport, or even an i.d… These phones are called ‘pay as you go’ and work quite well."

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: kids and money, blog carnival.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

Here's a good primer on how our financial system is supposed to work. Could be very helpful in figuring out what's currently going on as well as finding out what went wrong.

Fed101

I've posted another (short) chapter from Stock Investing Basics here.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

The link below will take you to a new headline reader called Streetread. I signed up just a few minutes ago. This is a very promising news aggregator.

Streetread | Wall Street. Simplified

U.S. to pump $250 billion into banks | U.S. | Reuters

The Treasury will buy stakes in Bank of America Corp, Wells Fargo, Citigroup, JPMorgan Chase & Co, Goldman Sachs, Morgan Stanley and Bank of New York Mellon Corp, said two sources speaking on condition of anonymity.

One more example of the US overstepping its bounds. While I believe the bailout plan is necessary, I don't think the government ought to be in the business of equity investments in private enterprise.

Seems like fascism to me.

Lehman Brothers cost of failure to foreign entities said to be $300 billion. Astounding.

The financial fallout outside the United States from Lehman Brothers‘ bankruptcy has been about $300 billion, the head of Germany’s financial regulator said on Monday (October 13 -- I'm a little behind in my reading).

Lehmans Failure Said to Cost Billion Abroad - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times

Lehman debt auction gives clue to potential losses: Financial News - Yahoo! Finance

In a best-case scenario, Silbert said, financial firms who sold CDS contracts would make their payouts in the coming weeks, have enough capital to cover all the positions, and take their losses and move on. In a worst-case scenario, sellers of the swaps would not have the cash to make the payments and would have to liquidate their assets to cover their positions.

"The next two weeks will be very telling," Silbert added.

It really sucks when you have to pay the piper.

Paul Volcker is the last Fed chairman to have taken some tough policy stands on getting the economy back in order back in the late 70s. Most people think he was a Reagan appointee, but President Carter actually appointed him...

He's a very respected financial wizard who turned a faltering economy around. Of course, the nature and severity of the crisis then was not nearly the same, but he at least has dealt with dispensing tough medicine, unlike Ben Bernanke.

Here's Volcker's take on the current economic crisis we find ourselves in.

Unattractive or not in normal circumstances, the point is the needed tools to restore and maintain functioning markets are there. Now is the time to use them. To that end, the immediate and critical need is determined, forceful and persistent leadership -- extending across administrations and Congresses. Both the public and private sectors must be involved.

There is, and must be, recognition of the essential role that free and competitive financial markets play in a vigorous, innovative economic system. There needs to be understanding, in that context, that financial ups and downs -- and financial crises -- will be inevitable, even with responsible economic policies and sensible regulation. But never again should so much economic damage be risked by a financial structure so fragile, so overextended, so opaque as that of recent years.

We Have the Tools to Manage the Crisis - WSJ.com

Andrew Tobias - Money and Other Subjects

However hard it is to know how to navigate these waters, one thing is simple and applies to everyone: live frugally, light on the land, saving for the future, and recognizing that many of the best things in life are free, or nearly so.

Hence it makes sense, I think, to spread your money—if you’re fortunate enough to have enough to spread—over the “four prongs” I have written about from time to time: some cash/liquid money first (money-market funds, T-bills, whatever); an inflation hedge in case the world reflates (your home, stocks over the long run, though inflation would kill most stocks at first); a deflation hedge (long-term Treasuries); and a “prosperity hedge” in case we really have already hit bottom (stocks). How you best weight these prongs depends on your own circumstances (80-year-old widows and 29-year-old eye surgeons are not the same) and your own view of what might happen (or at least your own view of how unhappy you would be if certain things happened, so you can try to stay within your tolerance for pain).

So it's all about asset allocation. Here's the plan, in step form:

1. Liquidity (Cash)
2. Inflation hedge (real estate -- there may never be a better time to buy some)
   
3. Deflation hedge (US Treasuries)
   
4. Prosperity -- or "muddle through" -- (Stocks)

It may be easiest, and most prudent, to split out your allocations 4 equal ways -- 25 percent cash, 25 percent real estate (your house qualifies, but only that portion above which you'd be paying rent), 25 percent in safe US bonds, and 25 percent in a stock index.

AIG Executives Blow $440,000 After Getting Bailout - FOXBusiness.com

The committee on Oversight and Government Reform held a hearing on Tuesday at 10:00 a.m. Eastern time. to address and examine downfall of AIG, the world’s largest insurance company. The committee planned to discuss the financial excesses and regulatory mistakes that led to AIG’s government bailout.

One of the items discussed was AIG’s expenditure of $440,000 for a corporate retreat at the St. Regis Monarch Beach resort in Dana Point, Calif., about midway between Los Angeles and San Diego. These funds were spent on Sept. 22, a week after the Federal Reserve extended an $85 billion emergency loan to AIG to keep it from going bankrupt due to insurance liabilities.

Gotta love the greed in Corporate America.

I love it when company execs spout off about "shareholder value." My guys did that, too. And now my stock (thankfully, I don't invest in the companies that employ me, so I had very little) is worthless. So is yours, if you owned WM.

Welcome to the October 8, 2008 edition of Kids and Money. The submissions just keep rising in quality. You surely are the creme of the Kids and Money crop.

Stay tuned for a "Best Of Kids and Money" before the year ends. If you want to remind me how awesome one of your posts was this past year, email me at billspaced at money-hacks dot com or leave a comment!

Shan presents What Your Four-Year-Old Should Know About Money posted at The Apostle of the Turtle.
Interesting perspective and rationale on how to tailor money lessons to 3 and 4 year olds.

Jim presents Five Personal Finance Teaching Gifts for Kids posted at Blueprint for Financial Prosperity. 
Great gift ideas, by age bracket!


Livingalmostlarge presents The $100k Baby posted at LivingAlmostLarge, saying, "Should we pay for children?"
Only if you buy them. If they just "show up" they ought to pay!

Ben Dinsmore presents Guide to Your Employer's Benefits Package Part 1: Health Insurance posted at Trees Full of Money, saying, "Choosing the right health insurance plan during your company's "open enrollment" period can be a stressful proposition, especially if you are already stretched for time between work and family obligations." 
True. Open enrollment is always stressful for me, too. This year it's especially stressful due to the fact that my company no longer exists (for all intents) and our open enrollment period, while open and you have to make a choice, is for naught, since we'll all be fired soon.


NtJS presents College Kids and Credit Cards posted at not the jet set, saying, "Here's one for the big kids!" 
Practical advice about kids and credit cards. I fell for it and it took me a long time to recover. In some ways, I think I still am!


Raymond presents Where Are The 12 Month 0% No Balance Transfer Fee Credit Card Offers? posted at Money Blue Book. 
All the money is gone! It all disappeared with my home value.


Raymond presents Where Is The Safest Place To Save Or Invest Your Money? posted at Money Blue Book. 
Timely post!


Silicon Valley Blogger presents Toys R Us Coupons and Age Discrimination posted at The Digerati Life, saying, "There are coupons out there that aren't very clear about eligibility requirements. Who exactly is a "grandparent"?"
Those 3 words cause me constant grief: Toys R Us! But to answer the question, I think any one can consider themselves a "grand parent" if they're a parent. They don't need grand children, nor do they need be buying for their family!


Weight Ladder / Rich Leverage presents Getting Motivated to Organize Your Finances posted at Rich Leverage, saying, "Teens and up." 
Organization of personal finances is something I struggle with every day! I hope that my kids can learn some ways to organize their finances that have eluded me. I certainly will not be their role model for this topic!


Lazy Man and Health presents Working Two Jobs at the Same Time posted at Lazy Man and Money, saying, "Post would be best for teens/adults." 
I think Lazy Man is onto something! The future may have in store for us less full-time work but more opportunities -- your child may indeed have to become very adept at "multi-tasking." 


Michelle McFarland-McDaniels presents Autism Assistance Resources and Information: Upromise is a Promising Resource for College Savings posted at Autism Assistance Resources and Information. 

Save Money presents Customer Service Issues At CVS posted at How I Save Money.net.

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: kids and money, blog carnival.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

The Fed and other central banks around the world cut rates by 50 basis points, turning the S&P 500 futures index on a reverse of it slide.

How long will this rally last? About 15 minutes. The market is scared out of its mind right now.

Are we headed for a repeat of Japan's economy for the last 17 years? Or will we come out of this smelling like a rose?

CNNMoney.com Pre-Market Report - Oct. 8, 2008

My partners over at The Finance Blog Network have begun a new group writing project where we've been asked to make our end of year predictions related to personal finance.

There are two topics that immediately come to my mind: The financial crisis and the presidential election.

First, the easy one. The financial fubar we're in will worsen as the year ends, compounding with a further reduction in the global stock and bond markets. As time goes on, and the few remaining big banks experience their own pain, stocks will shrink, sending the Dow down near 6,000 (yeah, you read that right) and sending bonds down with it. After all, who wants to own corporate bonds? The only "safe haven" will be Treasuries and they'll pay next to nothing, if anything at all.

Sectors that will stay strong (i.e., won't fall as far as fast) are staple industries, like food and beverage companies (e.g., Coca-Cola, Pepsi, and McCormicks, to name three).




There will be more bank failures, worse in Europe than in the United States, though the failures here will occur (but they may be quiet); we'll call them "mergers." I don't think there will be many bank runs, but there will be some.

Inflation will stay in check, but it won't feel like it because food prices and the seasonal upswing in energy prices will happen, just like they do every winter. Unemployment will rise to a nationwide 8- to 9 percent. This could get really ugly.

(It's a good thing I'm independently wealthy.)
(What? I'm not? Oh, crap!!!)

The dollar will appreciate relative to the Euro, not because the US economy improves, but because Europe's economy will decline relative to ours.

The US presidential election won't matter. Really. Obama brings hope to roughly half the population. McCain brings Palin. Either way, we'll feel better about things for a while.

I think Obama will win, but I've been wrong many times on these sorts of things. I thought Kerry would trounce Bush. That's my most recent failure in picking these things. So maybe I'm due for a winning bet.

Either way, we won't get that big tax cut both parties have promised. Nor will we get health care relief, war relief, or better corporate governance.

America is a huge ship, not easily righted. It cannot turn on a dime, nor can it be started quickly if stalled. We'll -- at best -- muddle through. At worst, we'll re-live the 1930s.

On this one, I hope I'm wrong.



Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

There may never be a better time than now to establish a stock investing plan. With the stock market down 20 percent, everything is on sale. Be selective, though, because some stocks will surely move down.

Bet on staples, like food, water, and beverage companies.

If you open a TradeKing account today with $2,500, TradeKing will deposit $50 into your account when you make your first trade.

This is an easy way to make $50 without doing much. Take your $2,500 and open and fund your account today. Might be a good time to establish your Roth IRA...


Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.

Scott Adams, aka Dilbert, conducted a poll. Yes, a poll. Of economists. On who would be better for the economy, McCain or Obama.

Commentary: Dilbert guy's economic poll on McCain, Obama - CNN.com

Congress OKs historic bailout bill; Bush signs it: Financial News - Yahoo! Finance

The comments are the best, especially about the "W drawn by a drunk" one!

The track record - Paul Krugman - Op-Ed Columnist - New York Times Blog

If you are weary of the financial news, stay away from here for a few weeks because I'm going to offer different viewpoints from prominent money professionals. We know this debacle will last for many more months...

Here's Robert Reich's take on the crisis, taken from his blog: Why Wall Street is Melting Down, and What to Do About It

The sub-prime mortgage mess triggered it, but the problem lies much deeper. Financial markets trade in promises -- that assets have a certain value, that numbers on a balance sheet are accurate, that a loan carries a limited risk. If investors stop trusting the promises, Wall Street can't function.

But it's turned out that many promises like these weren't worth the paper they were written on.

That's because, when the market was roaring a few years back, many financial players had no idea what they were buying or selling. Worse, they didn't care. Derivatives on derivatives, SIVs, credit default swaps (watch this one!), and of course securities backed by home loans. There seemed no limit to the leverage, the off-balance sheet liabilities, and what credit rating agencies would approve by issuers who paid them to.

Two years ago I asked a hedge fund manager to describe the assets in his fund. He laughed and said he had no idea.

Is this crazy or what?

That is the question.

So, which is true? There's some uncertainty about China and its banks. Will they lend to US banks or not? I, for one, would not lend any money to US banks until the Treasury bailout is agreed on. But I would not tell the US that I had made that decision...

China banks told to halt lending to US banks-SCMP | Markets | Markets News | Reuters

Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

China bank regulator denies report of lending ban to U.S. banks - MarketWatch

China's government moved to calm financial markets Thursday and denied a report that it had ordered mainland banks to curb lending to U.S. banks, a day after rumors of financial stability led to a run on a Hong Kong institution.

Anybody know? In international politics, I think the US could win this one. It might also start another war...

Talk about getting it wrong! Read this from Power Line: That Hissing Sound Is Krugman and you'll note that the author couldn't be more wrong about the housing bubble. I guess he has egg on his face!!!

It must be depressing to be Paul Krugman. No matter how well the economy performs, Krugman's bitter vendetta against the Bush administration requires him to hunt for the black lining in a sky full of silvery clouds. With the economy now booming, what can Krugman possibly have to complain about? In today's column, titled That Hissing Sound, Krugman says there is a housing bubble, and it's about to burst:

Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn't have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?

Now we're starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone - not just those who own Zoned Zone real estate - should be worried.

Well, if we believed anything Krugman writes, we'd be worried all the time. Or at least until we have a Democratic administration, when everything will be rosy again. Krugman's description of the housing bubble is amusing for what it reveals about how Krugman views the country:

When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.

In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns [Ed.: Huh? I don't think Krugman gets out here much.], just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can't even get started.

But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions - hence "zoned" - makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles.

I don't doubt that some people in places like San Francisco and San Diego have paid too much for their houses. But it isn't clear, and Krugman doesn't even try to explain, why that constitutes a bubble or why level or declining home prices in selected areas around the country will somehow imperil the economy. Here are Krugman's reasons for claiming that a housing bubble exists:

One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller "Dow 36,000" are now among the most vocal proponents of the view that there is no housing bubble.

There are, of course, obvious differences between houses and stocks. Most people own only one house at a time, and transaction costs make it impractical to buy and sell houses the way you buy and sell stocks. Krugman thinks the fact that James Glassman doesn't buy the bubble theory is evidence in its favor, but if you read Glassman's article on the subject, you'll see that he actually makes some of the same points that Krugman does. But he argues, persuasively in my view, that there is little reason to fear a catastrophic collapse in home prices.

Krugman will have to come up with something much better, I think, to cause many others to share his pessimism.

I'd say these guys should be eating crow about now, don't you, though none of us really have the energy to gloat on this. I wish Powerline were wrong. We'd all be better off.

Read this -- Banking Crises Around The World -- for a prescription that's worked before when dealing with banking crises.

Welcome to the October 1, 2008 edition of Kids and Money. This is a short one, but it's filled with thought-provoking posts.

Jason presents I Was Wrong: Scrapping the Child Chore Chart for a New Allowance System posted at The Frugal Dad.
This seems to elaborate for me, but Jason has undoubtedly thought this through and has come up with a great plan.

Initially, they will be paid each week on Saturday (chore day) because I want the reward of receiving payment to happen soon after the bulk of the work is performed.  As they get older, we will likely increase this to a biweekly payment plan, and then possible monthly, as they improve their budgeting skills.

What a great idea! Positive reinforcement of ANY desired behavior is the best way to instill the value of the behavior! I also like Jason's attempt at mimicking how the "real world" works. Bravo!!

Our kids being between the ages of 1 and 3, my wife and I have yet to put together a plan. But we're clearly in need to do something, since our 3 year old is always saying, "I wish I could buy a [blank] like that!"

Ugh.

Livingalmostlarge presents More money, More kids? posted at LivingAlmostLarge, saying, "Is money the deciding factor in the number of children you have?"
I'm in this boat!

It got me thinking is that how people really decide how many children they have?  They put a price tag on it and say they cannot afford more children because of cost?  But then I heard from others the exact opposite.  That children are only as expensive as you make them.

We have two boys, 1 and 3 years old. We want another (child, not necessarily boy, but that would save us some money!). I'll have to find a way to make a lot more money because for us, 2 is right at the tipping point, financially. If my wife goes to back to work, daycare skyrockets.

Silicon Valley Blogger presents Water Fun Activities To Cool You Off This Summer posted at The Digerati Life, saying, "Squeezing the last bit of fun out of summer."
Great ideas! We live in the land of the sun (often times over 100, most of the summer in the 90s) and we burn/melt...we went to the community pool quite a bit this summer.

KCLau presents Credit Counseling and Debt Management Agency: FREE Financial Education for Malaysian posted at KCLau's Money Tips, saying, "A success story one how one avoided bankruptcy as well as features of AKPK and how u can benefit from the agency."


Joe Manausa presents Bailing Out The Banks? Actually Bailing Out America! posted at Tallahassee Real Estate Blog, saying, "While mainstream media refers to this as the "fat cat" bailout for Wall Street, you might be surprised who really needs this bailout to occur. What would happen to your job if the credit market stopped for even 1 week?"
This market mess and devaluation of real estate and all securities related to it was made by the same type of folks who ran Enron, it would seem! Off balance sheet, backroom deals, and ignoring generally accepted accounting practices...all led to our economy's demise. The question we face now is, What do we do about it?

Michael. presents Consumer Debt Worst Offenders: Banks, Advertisers, and Advisors posted at Michael Emilio, saying, "This is a blog post about how our culture is a consumer-based culture - focused on spend, spend, spend. Unfortunately, our kids feel this impact through the barrage of commercials encouraging them to buy more and more."
Debt is clearly the scourge on our economy. Individually and collectively, we are on the hook for trillions. It will NEVER be paid back. However, we can whittle away at it and make it a smaller percentage of our "income" (GDP or individual income).

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: kids and money, blog carnival.

Money isn't everything. It's the only thing. Wait. That's only for football.

Enjoy life. Spend time with your family.