Archive for February, 2009

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City of Houston considered paying deadbeats’ credit card bills!

February 24th, 2009

Where will the insanity end? A proposal under consideration under the name ”Credit Score Enhancement Program“, the City of Houston would use surplus funds from a program to repair Hurricane Ike storm damage to pay off debts for first-time homebuyers to help raise their credit scores so they could better qualify for a mortgage. The program would have provided up to $3,000 per applicant to pay off personal debts.

Yet another example of our government rewarding bad behavior. While Houston Police are so underfunded they cannot respond to an active alarm call until 45 minutes later, our brilliant mayor wants to give away money to let deadbeats pay off delinquent debts so they can get a mortgage that they’ll probably default on as well. Yet another reason I’m glad I aggressively fought my property tax appraisal so I would give as little to this useless government as possible.

Thankfully word of this program got picked up on the Drudge Report and mentioned on Rush Limbaugh, leading to a deludge of calls to Houston City Hall and the announcement that the program has been pulled from consideration. Not to worry though, as I’m sure they’ll find some other way to waste our money. 

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Dealing with a layoff BEFORE it happens: Part 4 – Preparing for the steps ahead

February 23rd, 2009

I posted three installments discussing steps to take before you get laid off (saving vital information, limiting expenses, and retirement and savings account considerations), and here is the final installment on preparing for the next steps ahead.

If you do get laid off, you’re primary objective is to find new employment for the purpose of replacing the income you lost in the layoff. This list of items are aimed at keeping you qualified, searching out new employment, and collecting unemployment benefits until that new job comes along.

  1. Update your resume now! If you are going to need to find a new job, you will need an updated resume. If you’ve been in your current job for a while, it could have been years since the last update. Spend some quality time on the update, capturing relevant skills and experiences gained since your last job search and researching your line of work to identify hot trends and ways your experience aligns with those trends. After you’ve updated the resume, have a trusted friend or colleague (one you are sure won’t disclose that you have updated your resume to others) review it. 
  2. Begin reviewing job listings and making contacts with recruiters. Ironically it is a lot easier to find a new job if you already have a job, so now is the best time to start looking and making contacts. With some exceptions, companies looking to fill vacancies now have an absolute need to fill the position (they are as aware of the current economic environment as the rest of us), so it is unlikely you would be jumping from one vulnerable position to another.
  3. Get trained up. Do you have a professional certification that required continuing professional education (CPE)? Get as much as you can on your employer’s dime before they kick you to the curb. Many companies have web-based training courses you can access through your company intranet without any upfront cost or supervisor approval required. Take the courses now so you don’t have to pay for the credits yourself to renew your certification.
  4. Accelerate any reimbursable expenses. Have memberships to professional organizations coming up for renewal? What about professional licenses that are soon to come due? Go ahead and renew those while you know your employer will pay for it. Keeping your certifications and licenses current will be essential in qualifying for a new job, and access to professional organizations will provide good networking opportunities to find available positions.
  5. Research the process for applying for unemployment benefits. If you are a typical middle class American, this will probably be the only good thing your government will ever do for you (and even then it is really paid for by employers), so make sure you know how to take advantage of it if you qualify. Unemployment benefits are administered through state labor departments (just do a search for your state with the terms “department of labor” or “workforce commission”), and application procedures and rules differ by state. It won’t be a huge windfall (when I was on Texas unemployment I got the state maximum of a whopping $378 a week), but every little bit helps.

This wasn’t meant to be an all-inclusive list, but these are the things I think are important based on my own experience. A job loss is a major disruption in your life, and while you can’t completely eliminate the effects of the job loss you can prepare to minimize its impact.

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“The government is promoting bad behavior” – Rick Santelli for President!

February 19th, 2009

Is there actually a voice of dissent in the media about what Obama and the Democrats are doing to this country? CNBC reporter Rick Santelli expresses his outrage over the mortgage bailout plan and is applauded by traders on the floor of the CBOE. He sums up my feelings about this pretty well.


Here’s a part of his comments to give you a flavor, but you really ought to watch the whole video.

“Mr. Ross has nailed it. The government is promoting bad behavior. We certainly don’t want to put stimulus pork and give people a whopping $8 or $10 in their check and think that they ought to save it.

And in terms of modifications, I tell you what. I have an idea. The new administration is big on computers and technology. How about this, Mr. President and new administration. Why don’t you put up a website to have people vote on the internet as a referendum to see if we really want to subsidize the losers mortgages? Or would they like to at least buy buy cars, buy a house that is in foreclosure … give it to people who might have a chance to actually prosper down the road and reward people that can carry the water instead of drink the water?

This is America!  (he turns to the traders nearby)

How many people want to pay for your neighbor’s mortgages that has an extra bathroom and can’t pay their bills? Raise their hand!

President Obama, are you listening?

You know Cuba used to have mansions and a relatively decent economy. They moved from the individual to the collective. Now they’re driving ‘54 Chevys.

It’s time for another tea party.

What we are doing in this country will make Thomas Jefferson and Benjamin Franklin roll over in their graves.”

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Dealing with a layoff BEFORE it happens: Part 3 – Retirement and investment account considerations

February 17th, 2009

I posted previously about some things to consider before a layoff hits. The first of four installments discussed saving vital information and the second installment discussed work-related expenses. This third installment discusses items to consider as it relates to your retirement and savings accounts. Decisions you make in your final few months of employment could make a difference of thousands of dollars.  

  1. Pay back any loans taken on your 401(k). In almost all cases any loans taken from your 401(k) are immediately due when you leave your employer. If you can’t pay it back, you will owe income taxes and penalties on the unpaid amount.
  2. Consider accelerating your 401(k) contributions. If you otherwise have a sufficient emergency fund to cover your expenses for an extended period, consider accelerating your 401(k) contributions ahead of your layoff. You have to be actively employed to contribute to your current employer’s plan, and you may be delayed in your ability to contribute to a new employer’s plan, even if you find a new job relatively quickly.
  3. Consider accelerating contributions to your Employee Stock Purchase Plan. This will depend on the terms of your plan, but if you participate in an ESPP and leave your employer during the year, you may still be eligible to purchase discounted shares with whatever money you have deposited in the plan up to the date of your termination. I did this several years ago when leaving the big evil oil company I worked for. I knew I was leaving (voluntarily in this instance), so I accelerated by ESPP contributions to the highest percentage possible so I would be maxed out when I left the company. Then at the beginning of the next year I got to purchase shares at a hefty discount with the money I had contributed.

Part 4 about preparations for the next step comes tomorrow…

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Dealing with a layoff BEFORE it happens: Part 2 – Limiting expenses

February 16th, 2009

I posted previously about some things to consider before a layoff hits, and this is the second installment of that list. This section discusses work-related expenses. We all expend some money because of our employment, some of it reimbursable by our employer and some of it not. Regardless, here are a few things to make sure that the money going out of your pockets permanently is as little as possible. If you lose your job, you’ll need all the cash you can get.

  1. Cut your work-related expenses now. For those of us working for the Man, there are certain expenses that are nearly unavoidable, such as lunches, laundry, and commuting expenses, that aren’t reimbursable by your employer. However, in many cases there are ways to minimize these expenses. Bringing a lunch from home is a great way to reduce expenses, as is packing your own snacks and sodas. Consider forgoing the daily stop at Starbucks. Find a cheaper dry cleaner to reduce laundry expenses. Consider taking public transit or carpooling to reduce commuting expenses. These are things to consider at any point, but especially when your income may be severely reduced in the very near future.
  2. Get current on your expenses. Especially if you travel for your job, you probably have quite a few business receipts that you need to submit for reimbursement, but you just haven’t had the time. Make the time! Once you are let go, your ability to submit expenses for reimbursement will be severely limited (if not eliminated), and even if you are allowed to submit expenses they will probably be subjected to a much higher level of scrutiny.
  3. Don’t forget about any unused airline tickets and other credits. Did you have to cancel a trip at the last minute for a more pressing client need and were told to just expense the ticket on your next business trip? Well, if you don’t have immediate plans to use that credit, request reimbursement for it now. If asked, just say that money is tight and you can’t afford to front that expense any longer.

Parts 3 and 4 to come…

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Excuse me, sir. Could you spare $65.5 TRILLION?

February 14th, 2009

So are you not scared by the $787 billion spend-ulus package being rammed down our throats, or the idea of our national debt being a whopping $10 trillion (and that’s before the Obama Road to Communism Act of 2009). Well if the idea of our country being on the hook for $10 trillion doesn’t scare you, maybe this will. The true measure of the obligations of the federal government is a mind-boggling $65.5 trillion!!!

Why is there such a big discrepancy between this number and the $10 trillion that is widely reported? It comes down to a difference in the method of accounting. The federal government figures deficit and debt numbers on what is called a cash basis of accounting. Cash basis accounting basically is a measure of the actual cash coming in and going out in a given period, with no recognition of any other obligations incurred that may not have been paid out in cash. For instance, under cash basis accounting if you made $100,000 and spent $90,000 but owed an additional $20,000 in taxes you would still have a surplus of $10,000 because the $20,000 you owe but did not pay would be ignored.

The method of accounting used to derive the $65.5 trillion number is U.S. GAAP, which is called an accrual based accounting system. Accrual based accounting is what is typically used by corporations to determine profits and losses. In accrual based accounting, income is recognized (counted) as it is earned and more importantly liabilities are recognized as they are incurred. In our example above, under accrual based accounting you would have a deficit of $10,000 because you would also have to count the $20,000 you owed in taxes for the year but did not yet pay.

In the instance of the federal government, the cash basis accounting numbers don’t include the massive liabilities the government has incurred from entitlement programs such as social security and medicare. However, if the federal government were to keep its books like corporations normally do, they would have to count those liabilities (discounted back to present value, since some of those liabilities aren’t due until well into the future). This gives you the result of total federal obligations being a staggering $65.5 trillion, or an amount higher than the annual GDP of the entire world! In case you are curious, this same accounting treatment would put our true federal deficit for 2008 at $5.1 trillion, versus the $454.8 million reported using cash basis accounting.

In case you are wondering about the validity of these numbers, these are not created by some special interest group or a right-wing nut job like me. These are created by the federal government itself, and you can read the report from the U.S. Treasury here.  You can also read commentary about these numbers here.

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Dealing with a layoff BEFORE it happens: Part 1 – Saving essential information

February 12th, 2009

I have seen quite a few lists and articles out there about how to survive a layoff, but I’m not sure I’ve seen any with real practical tips on how to prepare for one. Once you’ve lost your job is not the time to figure out what you should have done before it happened and what the next steps are.

 

As much time as many of us spend at the office, it is very easy for us to allow much of our lives to become intertwined with our jobs. We make our workspaces our home away from home. But if you were to be laid off, would you have the opportunity to leave with everything you need? There’s a good chance you would not, as the day you are told will likely be your last day there. It is not uncommon to be escorted to your desk and given five minutes to pack personal belongings and then escorted to the door.

 

So based on my own experience, here are some things to think about and to take care of if you think a layoff is imminent. I have divided these items into four parts: saving essential information, employment expense issues, retirement and investing account considerations, and preparations for the next steps. This post will include the first of these sections: saving essential information.

 

As an employee, you have access to a great deal of information in the course of your work. Likewise, you leave quite a bit of your own personal information with your employer, especially on your work-issued computer. Here are a few items to make sure you take what you need and don’t leave behind anything you shouldn’t.

 

  1. Backup your contacts list from your work computer. If you are like I was, you track most of your professional contacts and even many of your personal ones in Outlook on your work computer. This is even more so if you have a BlackBerry or Treo issued by your employer connected to your work email. These contacts will be invaluable to you as you begin the search for your next position, so make sure you print a report of the contacts on your work computer periodically and bring it home. It is also a good idea to export the data to a backup file if you use a compatible email program on your home computer. Also consider bringing home any company/office directory in case you need to contact someone on the inside after you are dismissed. Former coworkers, clients, and other professional contacts are your first step at networking to find a new position, so don’t leave their information behind!
  2. Backup any personal files on your work computer. In addition to the numerous spreadsheets and TPS reports that likely clutter your work computer, there are probably many personal files on your computer as well. Make sure to copy these to a USB drive or other removable media and bring them home. Also be sure to copy any personal email you want to hang onto.
  3. Delete personal files/emails/bookmarks. After you have copied all of the personal files you wanted and successfully transferred them to your home computer, go back and delete all of those files to keep them from prying eyes later. Also remember that your computer will likely be reused, so save both you and the recipient of your computer some embarrassment and delete your bookmarks. At one of my old clients where I was issued a computer for their office, the bookmarks still included various links discussing the treatment of genital herpes. Talk about awkward!
  4. Download copies of your online payroll records. Many companies now only distribute pay statements electronically, so you may want to go and download them before being laid off. These will be important if you need to prove your prior employment or the amount of your pay.
  5. Download copies of any relevant human resources policies. Does your company have published policies regarding layoffs and severance packages? It may be a good idea to review and print those policies while you are still an active employee. Armed with this information you can know what you are supposed to get in terms of severance and can challenge your employer if you are offered less.

Parts 2-4 coming in the next few days…

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Chase: Just because your rate is fixed doesn’t mean we can’t add new fees!

February 9th, 2009

Here’s a gem for you, courtesy of USAToday.com: apparently Chase is assessing new fees and raising minimum payments on credit card customers who are floating balances under promotional fixed rates.

In the latest fee rolled out by a bank, JPMorgan Chase, the nation’s largest card issuer, has begun charging hundreds of thousands of borrowers a $10-a-month, or $120-a-year, fee. Industry watchers say the fee is unusual because of its size but also because Chase is adding it to borrowers’ monthly balances, where it accrues interest. The bank is also raising the same consumers’ minimum payments to 5% from 2%.

The change affects consumers with low promotional rates who have carried a large balance for more than two years and made little progress paying it off, says Chase spokeswoman Stephanie Jacobson.

So let me get this straight: customers who took advantage of a promotion offered by Chase and are in every way abiding by the terms and conditions set forth by Chase and making the required payments on time are going to now be charged an additional fee simply for carrying a balance? This is absolutely outrageous! Consumers shouldn’t suffer just because they took advantage of a promotion that didn’t go as Chase thought it would.

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More preparations for an economic depression

February 4th, 2009

I posted back in October some thoughts on preparing for a major economic downturn and argued that frugal living was an excellent defense against the hard times that are to come. Well, I happened upon another list of preparations to make for an economic depression that are a little bit more detailed. Suggestions are given in four categories, and I will give you my thoughts on each.

Food

• Begin stocking up your cabinets, pantries, and closets with non-perishable food items.
• Purchase a portable camping stove in case your home’s electricity is shut off.
• Start consuming a healthier diet so your body isn’t dependent on the processed and junk foods we’ve grown accustom to.
• If your have the space in your yard, plant and grow a garden.
• Stock up on vitamins and necessary supplements to ensure you stay healthy in the next Great Depression.

I think all of the above are excellent suggestions. One of the main points of my earlier post was to stockpile for the day when either you can’t afford to buy food from the grocery, or the food distribution channels we now know break down.

In addition to the camp stove idea, I would also suggest a gas grill, as you will be able to cook a lot more efficiently with a larger appliance. Also, be sure to have extra fuel for your alternative cooking appliance.

Household

• Discuss emergency plans with your family, roommates, friends, and/or loved ones.
• Store a stockpile of hygiene items including deodorant, toothpaste, towels, washcloths, and toilet paper.
• Make sure you have a hefty reserve of bottled water on hand, stored in a safe place.
• Keep extra pillows, sheets, and blankets in your closets.
• Have at least one shotgun, rifle, or handgun, if not more.
• Ensure you have enough ammunition to defend yourself, your household, and your loved ones in emergency situations.

I would agree with all of these, although I wouldn’t put the extra pillows and blankets as a big priority. Hygiene items are very important and something that can be easily and cheaply stockpiled (see my various posts about CVS and Walgreens deals).

The guns and ammo one is probably the most controversial, and it is one that our family is presently pursuing. If things get really bad we definitely want to have the means to protect ourselves and our property, especially living in an urban area. Add to this the legitimate concerns about the legislative and executive branches being controlled by a party that is historically anti-2nd amendment and the likelihood of sweeping gun control measures in the future, and you should make this put a very high priority.

Community

• Get to know your neighbors.
• Know who you can and cannot trust in your local community.
• Gather together with like-minded individuals in your community, choose designated methods of contact, and choose a few leaders.
• Pick a safe house, where your community coalition will go in emergency situations.
• Pick two alternative safe houses, in case the primary safe house becomes compromised.
• In times of peace, continue to make your community aware of political, social, and economic dangers.

This is where things start getting a little more extreme. I do think it is important to know your neighbors, although I do think these points sound more like organizing a militia than getting through a depression. I would say you should definitely get to know at least a few of your neighbors and make sure you are looking out for one another in case something does happen. From an economic standpoint, it would be good to take an inventory of skills of your neighbors so you can know who can assist with needs when paying for services with money isn’t an option.

Money

• Save paper and coin money in a safe place in your house.
• Invest in a small or medium size safe to store your money and other valuables.
• Slowly begin withdrawing from your savings and investment accounts on a regular basis. Store this money in a safe location.
• If you can purchase gold, buy it. Gold retains the same value no matter how low or high the currency markets go.
• Stop paying taxes to save money and force government leaders to listen to the citizenry, the people who put them in office.

I will somewhat disagree with this. While I think it would be good to have some actual money on hand in an emergency and it is definitely smart to secure it and other valuables in a safe, I don’t think withdrawing all your money from the banks is wise. For one thing, having excessive amounts of cash does make you more of a target for thieves. Secondly, you have to also prepare for the probability that nothing will happen at all. If you completely take your money out of the financial system you are earning no return, meaning that unless you just happen to have enough money on hand to support you for the rest of your life, you are pretty well screwed.

Hoarding cash also is unwise because of the real possibility of inflation, which means that the money will be worth less tomorrow than it is today. And remember that our money is backed by the U.S. Government, and if the U.S. Government fails the money very well could be worthless.

The idea of no longer paying taxes is an absolutely horrible one. I hate income taxes as much as anyone, but if you really believe things are going to get bad the last thing you need is the U.S. Government coming after you. If you are going into pure survivalist mode you want to stay as far below the radar as possible, and not paying your taxes is counterproductive in that regard.

Anyway, just some additional food for thought. I do believe things will get bad and that we should all make preparations for a prolonged economic depression.

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Another $200 Chase Business Checking Bonus – Expires 3/28/2009

February 3rd, 2009

Our buddy over at Hustler $$$ Blog found this offer for a $200 bonus with a new Chase business checking account. Simply print the coupon found here (go ahead and print it now, as Chase has been pulling online coupons early recently) and go into a branch to open. If you fund the account with a minimum of $500 within 30 days of opening you will receive a $200 bonus.

I’ve done these bonuses before without issue. It seems to vary slightly as to what credentials are required to open a business checking, but I have opened them before simply using my drivers license and state-issued CPA license and told them I was operating as a sole proprietor. You can read about my previous experience with opening a business checking account here.

Hustler $$$ Blog reports that you need to have a Chase Business credit card, link it to your checking, and carry a balance on it to qualify, but I honestly don’t see that requirement anywhere on the offer.

Also remember that you will need to keep the account open for at least six months, or they will debit the account for the bonus received when you close it. Have fun!

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