Home > Archive: December, 2006

Archive for December, 2006

Love's Sweet Words: 'Rebalance My Portfolio'

December 30th, 2006 at 05:01 am

My spouse does not watch his 401(k) balance too often. When he asked me for help with asset allocation I thought I would swoon with delight and pride. I won't go into excruciating detail: I'll just say that, left unchecked for a few years, 67% of his portfolio went to large capitalization funds (!!!) and 9% was in bonds.

I advised him to be more equitable and conservative with his asset allocation categories -- he moved his percentages, double digits in most cases to index funds, and distributed 5% to "Stocks Gone Wild": Science & Technology.

I am breathing a little easier about possibly going into debt next year.
My Schizoid Budgeting Style

* SpongeBob [my husband looked over my shoulder and said 'THAT'S ME! I AM SPONGEBOB!']: "WAIT! DON'T TELL ME!! You want me to run down to the store and buy Mrs. Puff something she doesn't need! Then you want me to run back here so you could say" (imitates Mr. Krabs and looks likes Mr. Krabs with the eyes), "'Arr SpongeBob, you're spending all me money!'. Then I'll say 'But Mr. Krabs, I'm only doing what YOU SAID!!!!!!'. Then you'll say we're not talking about this" (SpongeBob draws a square in the air with his fingers), "or this" (draws a triangle in the air with his fingers and starts to get frustrated), "WE'RE TALKING ABOUT THIS!!!!!!!!!!!!!" (He draws scribbles all over the screen until the whole screen is black).

Mr. Krabs [uh, me?]: But I really need this! (spongebob runs down and buy Mr. Krabs the item, and runs back)


Spongebob: But I'm only doing what you told me to!

Mr. Krabs: Well I can't help it, if you're loose with other people's money.
Gee, I wonder why my husband runs away when it's time for our monthly Finance Chat.

Nearing Financial Simplicity

December 23rd, 2006 at 08:02 pm

Closed out my Bank of America checking account and emptied the safe deposit box I rented. No, I am not telling you where I live. I plan to move the contents to a credit union and rent its safe deposit box.

I was asked by the personal banker if I'd looked into other BoA accounts that would suit my needs. "This one suited my needs," I said, "and they're changing it to one that doesn't. I'm being forced to change."

I am sad that the bank's change in policy drove me out of my inertia. It likelily is just me, but my take was that the longer you are a paying customer, and the better your credit is established, the less the bank wants to change account terms to the point where it's disadvantageous for you to continue the relationship.

However, huge banks swallow smaller ones, not to continue the smaller banks' policies, but rather to feed on the plankton that is the customer base.

This is why I'm not in banking, and why I only begrudgingly use credit cards for convenience. Bank of America swallowed MBNA too, but MBNA was on a downward spiral when its CEO Alfred Lerner died.
I'm always torn about closing my credit card accounts -- there's no protection against a longstanding account being changed by the banking superGoliath into one that isn't quite so advantageous to the customer, so why chase after Visa, MasterCard, Discover, or Capital One? I had a Visa, then it was changed to American Express without my asking.

The ironic thing is that I saw local friends at the bank! My friend Susan, our mutual former coworker Curt (a personal banker there), and near the bank we saw a friend of my son, and the friend's father.

Banks can be good wealth-building tools, if you're a shareholder. So can credit unions, if you're a member.

I'll probably just buy a DRIP of Royal Bank of Canada (RY).

Whoa! Not all US male boomers/Gen-X are savers?

December 12th, 2006 at 08:30 pm

A friend sent me this

Text is link and Link is,0,4921051,full.story?coll=la-home-business
link to an article about an egregious case of a "pay option loan."

I suspect that newspaper journalists do seek out extreme cases such as these, leaving out salient facts like funding long-term care for parents, or fighting leukemia or AIDS for five years, that may change our sympathies, and we readers ponder: "Golly, how many people are there like this?" Me, I was floored there even was someone like this: a 56-y.o. man, twice-divorced, no kids, in a Covina CA house which he bought 11 years ago for $130K, filled with his stuff, and took $190K out of through refinances. Cowabunga, dude, get a roommate and put the additional rent income into your mortgage.

I took a second job to pump up my Roth IRA 2006 contributions, and told this to a fellow contractor. He confided he didn't have a Roth IRA set up, that the 401(k) thing wasn't a going concern as he had 25 years to retirement. We've got $163K in retirement and about 30 years left to go.

See, I'd have thought the earlier you pay into a retirement plan, the less you have to sock away in future years. These guys being kidless and spouseless have oodles of disposable income.

These are able-bodied and competent men, who've spent pretty much all their lives in the United States. What circumstances does one have to be nurtured in to trust corporate America with its offshoring jobs, layoffs, reduction of benefits, to think everything will be okay, that savings can always wait? Middle-class? Stable? Executive, VP or Board Director?
What will almost certainly go wrong is that the homeowners will have to cut back. Then, the lenders and hedge funds will be in trouble too. Get this - the last six years have seen the biggest property boom ever. Yet, the average American homeowner actually has less equity in his house than he did in 2000. What he has a lot more of is mortgage debt. And when his house falls in price, that debt is going to chafe his neck like a noose.

Am I in denial if I want to believe that the average American is not this ignorant or trusting to luck?