I was watching some daytime TV (not a frequent occurrence haha) and caught Erik Estrada of “CHiPs” fame pitching $50,000 plots of land in the middle of nowhere in Washington State. He was touting the community’s waterfront location and resort-like amenities, but it looked like the place had zero infrastructure. Just a bunch of overgrown weeds surrounding some mucky body of water. He also conveniently forgot to mention the 300 days a year of rain. The commercial was very poorly produced. And I’m no expert, but judging from the TV spot, his golf swing sucks.

Saw Ernest Borgnine pitching some Internet software or service a while back on some crappy cable channel (what the hell is the target audience? 90 year-old bloggers?). Lots of cheapo special effects, touting some ridiculous service I hadn’t heard of since. Dude, Ernest is a real actor. He was Dominic in “Airwolf”! He won an Oscar, was in The Dirty Dozen, and lots of other notable movies and shows that I’ve never heard of (I know almost nothing about pre-70s movies. I just remember once, when I was a kid, my dad walked by while I was watching Airwolf and exclaimed, “That’s Ernest Borgnine!” He certainly never walked by and said “Hey! That’s Scott Baio!”).

Best for last: California’s one-time gubernatorial candidate himself, Gary Coleman, of “Diff’rent Strokes” fame. Currently (or was about 6 months ago when I last checked) pitching Cash Call, which makes unsecured loans to people whose credit scores are lower than their shoe sizes.

I’m the first to say that work is work, no matter where, how or what. I don’t care if I sell pork bellies or Lamborghinis- if I can make a decent living at it and it’s legal, chances are it’s not beneath me.

But to go from being worshiped by fans worldwide a few decades back to pitching utter crap in late-night cable spots today has got to be one of the worst things that can happen to a person’s self-esteem. That’s not even considering the miserable financial condition they must be in today to have to do this kind of work.

Maybe we should start a Save the Starving Actors Fund. Wait, that’d cover like half the population of Los Angeles. That is, if you pronounce “actor”, “waiter”. Let’s change it to the Save the Starving Once-Famous Actors With Negative Investing Acumen Fund. I’ll donate my collection of Airwolf action figures. The ones I blew up with firecrackers back in the 80s.

Actually, I don’t pity Erik, Ernest and Gary and their legions of career-zombie cohorts. They had it good at one point and lost it, while many people go through life without having seen much true success at all (I don’t always pity them much, either, but that’s for another post).

But it does make me wonder. Happiness and success I think are often defined in relative terms: How we are doing compared to our past circumstances, relatives, friends and neighbors is often more important to us than how we are doing in absolute terms. Considering that, is it preferable to:

1. Go from having everyone in the Western world (remember the Cold War?!) mimic you saying “wadjutokkinboutWillis!” two, three decades ago, only to wind up pitching $5,000 loans to drunks who think a freshly laundered wife-beater is “dressy casual”; or
2. Have not had that career former life in the first place. At least that way you’d spare your grandkids all the boring stories about the glory days, back when TV shows were all in 2-D.

tags :: humor : washed up : actors : Happiness : Success

A person’s approach to life, work and play can sometimes be summed up in a simple expression or two. In considering the phrases that I live by, I realized that they are rather simplistic. But I suppose that’s not necessarily a bad thing. These are the rules I try to live by:

1. Keep it simple
2. Giving is more rewarding that receiving
3. Don’t mistake luck for skill
4. Good judgment is key to success
5. When in doubt, deep fry

There are a whole lot of values missing from the list: spirituality, work ethic, civic responsibility, just to name a few. And my interpretation of each phrase may be much different from the obvious. Especially rules 1 (for me it also relates to materialism, in addition to work and other things) and 2 (pertains to family and friends, not to charitable organizations). But in the end these are the phrases that resonate most with me.

I’ve already discussed a bit of rule 1 in a previous post about my friend Jason A. At some point in the future I will elaborate on the rest of them here on SuckyBlog. For now, you can contemplate them as standalone expressions, totally unspoiled by my verbosity and open to your personal interpretation.

These are the words I live by. What are yours?

tags :: friendship : values : simplicity : generosity : success : deep fry

A few friends have asked lately about where to buy Treasury and California Municipal Bonds, so I am posting a little primer here. A quick word of warning: I am not a professional investor, so use the information below at your own risk!!!

Treasury bonds you can buy directly from the government at TreasuryDirect. You can also buy them through most brokers, like Vanguard or Fidelity or whatever company you use. For new issue auctions (when the government issues new bonds and sells them directly to investors like you and me), the brokerage may add a small fee of $10 or so, but sometimes it’s worth it to do that just so you can have everything in one place to ease the record keeping.

Brokerages usually also sell secondary bonds, which are previously issued bonds that the brokerage now owns and offers to sell to their customers. The price will be different (not $1,000 like most new issue bonds) depending on what interest rate the bond pays vs current rates. For example, if today’s prevailing rate for a 5 year bond is 4%, and a broker has a 7 year bond in its inventory that matures in 5 years (meaning it was issued 2 years ago) but that bond pays 4.25%, they will want more than the original $1,000 for it since it pays a higher coupon than the current yield for the same maturity. Treasury securities are exempt from state income taxes but not federal taxes.

For California municipal bonds, you can also go through your broker. Large brokers will have a decent sized inventory of munis that they can sell you. These are almost always secondary purchases. Bear in mind that there is no “exchange” for bonds like there are for stocks. Since there’s no common market for bonds, sometimes pricing can vary between brokers and you have to check a few sources before buying. Treasuries are very safe (if the federal government goes down, we’ve got much bigger problems than lost savings, so they’re considered essentially risk-free), but munis can vary in quality (remember OC went bankrupt in the mid 90s). You have to check the credit rating and whether the bond is insured, among other factors. That information is available from your broker.

CA municipal bonds for us CA residents are completely tax free at both the state and federal levels, which makes them an excellent deal if you are in a high tax bracket. To calculate the taxable-equivalent yield (i.e. how the tax-free yield of a particular muni compares to the yield of a taxable bond of comparable risk and maturity), it’s:
tax-free yield/(1-tax rate) = taxable-equivalent yield

Most people will ladder bonds- take the chunk of money they want to invest, and split it into 5-10 equal parts to invest in bonds that mature every year out to 10 years or so (for example, if you have $100,000 to invest, you will buy $10,000 of bonds that mature in each of 1, 2, 3, 4, 5, 6, 7, 8, 9, & 10 years). And then when the 1 year bond matures and returns the principal to you, you would simply take that money and buy a new 10 year bond with it at the prevailing interest rate. This method allows you to average out short- and long-term rate exposure, and also protects you from adverse interest rate environments because you have money coming back at least once a year that you can reinvest at the prevailing rate at the time.

Now lately short term rates have been rising very quickly (the Federal Reserve sets short term rates, although they seem to have little control over long term rates), so recently there has not been much difference between the yield on a short term money market account and a 10 year bond, or at least not so much of a difference that you would be willing to lock up your money for 10 years. As a result, a lot of people I know are not investing in long term bonds at all and just watching the short term rates in their money market accounts go up every few months. The Fed has recently announced that they will likely cool down on raising short term rates, and long term rates do look like they’re rising, so hopefully sometime in the next few years we will be in a more normal market with a regular yield curve where the long term rates are materially higher than short term rates.

Again, this is all based on my rudimentary knowledge- I have enough experience with these things that a lot of friends ask for advice on topics like this one, but I do not profess to be an expert in personal investing, nor is this meant to be a complete tutorial on bond investing (there are a lot of variations that would bore most people to tears if I were to post them all). A great resource with tutorials and calculators is Bankrate.

tags :: personal finance : money : investing : bonds : munis : Treasuries

Our friends Cung and Alice introduced us to this Maximizer/Satisfiser concept. I’ve since expanded on it so it’s probably unrecognizable to them at this point. Thank goodness for creative license. I guess one person’s creative license is another person’s bastardized brainchild.

Maximizers
Maximizers price shop. They compare. They check out floor samples. They do lots of research on the internet before making a purchase. They’re not necessarily cheap- they often like and want good stuff. They figure out what to buy based on the vectoring of such factors as features, quality, price, looks and cachet. I’m not quite sure how to graph that -there aren’t enough axes if your feeble mind, like mine, is unable to conceptualize beyond three dimensions- but you get the point. They always want it at the lowest possible price. Well, the lowest price from a reputable vendor that doesn’t sell their wares out of the trunk of an ‘82 Buick. Sometimes the cost in time and effort exceeds the actual dollar savings or the added utility of getting the best features in an item, but they go through the exercise anyway. For some, finding the best deal becomes a bit of sport. It’s not like they always need to get the best deal for something- it’s just that they can’t sleep at night unless they know they did. Maximizers can also sometimes fall into the grip of analysis paralysis, in which case they just don’t buy anything for a while to give them time to consider even more details that range in importance from earth shattering (well, maybe not quite earth shattering but somewhat important) to insignificant. Maximizers I bet are often insomniacs (Me).

I bet a lot of “maximizers” hail from middle or upper-middle class backgrounds. Pat’s friend from med school, Justin (he is an Australian heterosexual guy who wears cosmetics- go figure), once told us about his summer selling shoes at a department store. The kids from lower income families would save up for a new pair of sneakers, and when they finally had enough money they would walk into the shoe department, point to the pair they want, and wear them out of the store with the tags still attached. Easy sale. The rich customers would go in, usually without much of a clue, ask the clerk which one or two styles they recommend, take a quick look, and make a choice pretty quickly. Price is not terribly important to them, and they just buy what seems to look good and feels comfortable. Again, easy sale.

The middle class customers, however (especially the educated, working professional types) would go into the store and examine every little aspect of each style they were considering, to the most minute detail. They would compare and contrast the material, the price, the stitching (memo to shoe shoppers: it doesn’t matter if it’s American or European, Nike or Addidas- they’re all manufactured in the same shoe factory in China by some lady who used to be a farmer but now lives in one of the factory dorms, eats in the factory cafeteria, sends her two kids to the factory school, and now spends 12 hours of her day stitching your Nike running shoes that you just discarded last week after you accidentally stepped in a big steaming pile of dog poo). Definitely not an easy sale.

Satisfisers
Satisfisers are the store clerk’s wet dream. The rich shopper example from the shoe store is a classic satisfiser. They know what they want (”Honey…I stepped in some dog poo…I’m going to get a new pair of shoes!”). They drive to the mall to get it. They ask the clerk which one looks good. They might try one on to be sure the thing’s not a foot death-trap. They go “hmmm…I like the little bright red flap on the back of the shoe…let’s see…$250…sounds good!” Then they whip out the credit card, and are quickly on their way.

Satisfisers don’t do endless amounts of research. At most they’ll ask one of their maximizer friends what to get and where to get it. If their maximizer friend starts to expound too much on the pros and cons of the different choices, the satisfiser’s brain automatically switches to thinking about something totally different- this is a highly evolved defense mechanism designed to keep the satisfiser brain from being overloaded with seemingly useless details. Satisfisers I bet fall asleep before their heads hit the pillow (Pat).

Cheapskates
Ok so I called myself an insomniac and classified myself a maximizer. That’s not entirely true. I often have trouble sleeping, but I am not really a maximizer. I am a cheapskate. Cheapskates are cheap for cheap’s sake. They revel in being cheap, and they don’t care too much about quality. They just want it to do the job, and most importantly they want it cheap.

If Neutrogena Shampoo is considered good and reasonably priced (Pat), the cheapskate buys Suave anyway because it’s cheap and besides, it’ll take at least 15 years of continued use before it makes you permanently bald (me). In those 15 years, the cheapskate would have saved $2,343.53 in inflation-adjusted dollars by using Suave instead of Neutrogena. If that’s not more valuable than personal scalp-follicle longevity, I don’t know what is.

Cheapskates don’t throw anything away, because that AC/DC adapter for the cheapskate’s now-damaged, discarded calculator may come in handy someday in the future. Who knows, maybe one day they’ll make an iPod that needs the same voltage, wattage and plug size as that Canon calculator from 1988. Or that broken cordless phone. The one with so much static buzzing that you can’t actually hear any discernible sounds, and on the other end the person talking to you thinks you’re calling from Alpha Centauri. That thing’s still in the linen closet, with the power adapter neatly taped to it. Just in case McGyver shows up with some bad guys on his tail and needs to construct a morse code communicator with the parts.

Mind you this is all relative. Some people can afford a luxury car but still drive a Civic. They are cheap. If they drive a Lexus, they are likely maximizers (lowest maintenance luxury car). If they drive a BMW, they are likely satisfisers (fun to drive, but they didn’t quite consider the high maintenance costs when they bought it). Some people can only afford a 1985 Civic but drive a brand new Acura. They are headed for personal bankruptcy at worst, or a lifetime of renting their home at best.

Ok so now you know what I am. Which one are you?

tags :: personal finance : money : spending : expenses : humor : jokes : rants

Source: Alchemic Spot

Quite a few friends are looking to purchase a first home or upgrade to a larger home sometime in the next year or so. Helpful friend that I am, I put together a quick spreadsheet that people can use to see what their fixed cost budgets may look like.

A few things to keep in mind:

• The cells in blue are the assumption cells. These are the only ones that should be modified. The cells in black are all calculations based off the blue input cells.
• The spreadsheet is focused primarily on cash flow, not income or savings. Again, it’s to help you budget approximately how much cash you have coming in, and how much you have left over (if any) after you’ve paid all your fixed expenses. I would suggest using some of that leftover discretionary cash to contribute to Jack’s Totally Awesome and Earnest But Underfunded Savings Fund (that’s the technical name for my personal charity, whose primary mission is to enrich my personal savings account, and whose secondary mission is to buy me $12 movie tickets- it’s expensive living in L.A.).
• This spreadsheet is only meant to be a quick snapshot to see if a certain house payment load is a “no brainer” decision in either direction (easily can afford/definitely cannot afford), or if it looks like the budget will be tight. It won’t be accurate to the dollar. If you are one of my investment banker, private equity, finance, accounting friends, etc. before you email me about how i need to add several excel sheets, modules, and data tables to the file: I have not been a financial analyst with my butt parked in an aeron and my face parked in front of excel for about a decade now. i don’t care if this thing doesn’t reflect every little detail and nuance of an individual’s personal finances. my sense of self-worth is not in any way affected by the complexity or exacting accuracy -or lack thereof- of this quick-and-dirty estimator. take off your $20,000 watch, your hermes tie, and crackberry and put them in your drawer, leave the office, get in your m3 convertible, and get some fresh air. then go to yoshinoya for a beef bowl (my treat). just kidding. you guys are still cool.
• the annual mortgage interest deduction formula assumes that the loan’s principal has not been paid down. should be fairly accurate for the first few years- after several years, you’ll have paid down some of the mortgage principal so this deduction amount will be higher than the actual figure.
• I have the bottom section in monthly form because most people think about their budgets that way. However, certain tax deductions and expenses are large sums that occur only once or twice a year. The actual cash flow every month may vary widely from what the spreadsheet says, depending on how much you withhold from your monthly paycheck, what items and how much you deduct at the end of the year, when large bills come due, etc. But it should be a pretty decent gauge of the total cash in and out for the year, presented in monthly format for your analyzing pleasure.
• This spreadsheet assumes that you are itemizing your tax deductions and are not subject to AMT or take the standard deduction. Also a lot of the current assumptions and maybe some of the formulas are based on living and working in California. I have no idea what property and state income tax rates are in other states.

If you use it and have questions, or need me to modify it for your specific situation, please feel free to email or call. i’m always happy to help. but only if you are a friend, relative, a friend’s friend, a family friend, or a friend’s family member (say that 10 times fast and you get a special prize. i won’t say what it is but it comes w/ batteries) - if you don’t personally know me or any of my family & friends, definitely don’t email me about this spreadsheet!!! haha. well, haha but I mean it. If you have suggestions on how to enhance it or catch errors in the formulas, please let me know.

I am constantly revising the spreadsheet when I think of new things to add to it or new ways to enhance it. So when you need to use it, check back to this page to see the date and time of the latest update to be sure you are using the latest version. This is especially important because if I discover an error, I won’t be emailing everybody- I’ll just correct it and post the new version here.

Latest version of this file saved on:
26 March 2006, 9:00PM

To download the latest version, click here
(Microsoft Excel xls file)

tags :: personal finance : money : real estate : expenses : planning

So there are studies that conclude that most people with overarching ambition are from the middle class. Often one can find a study proving almost anything, but for argument’s sake let’s assume this one is somewhat true. So the theory goes that:

1) Children who grew up rich often don’t feel the need or drive to excel because they already have inherited material wealth.
2) And also the very poor don’t see so far beyond their limited means to strive for wealth or other kinds of success.
3) But the middle class has just enough to want to at least maintain what they have, and often to want more. And they also have a feeling that they could lose it all as well if they don’t maintain their drive. At least that’s what the study says.

Of course there are lots of exceptions to this rule. We all know people from all sorts of backgrounds who have achieved success on many different levels. The study though was talking about which demographic group exhibited the most drive overall.

Which leads to the more important question of whether the trappings of success in the end even matter. Are there relevant personal values tied to community, humility, philanthropy, and other -y’s that are more important to happiness? Some are happiest when serving others, and others are happiest when serving themselves. But the majority of people are probably somewhere in between. A lot of studies (yes, yet another study) have actually shown that our overall feeling of happiness or success is often a result of comparison with others around us- it’s relative to those in our immediate vicinity.

So do you want your own children to grow up to be overly ambitious? Not too ambitious? Ambitious for what? Money? Power? Fame? Love? Happiness? Respect? If you were super rich would you spoil them so they wouldn’t have to worry and struggle in life? Or, even if you had the means to spoil them materially, would you try to instill in them a hunger to strive and achieve?

tags :: ambition : parenting : children : success : wealth

private colleges today cost about $45,000 / year including room, board, tuition, books, expenses, health care, travel between home and school, and a little bit leftover for personal expenses. uc’s are significantly less- about half as much if you live on/near campus, and a quarter of the price of a private college/university if you live at home. about 15 years ago schools cost $22,000 if memory serves. so the cost of higher education, both public and private, has gone up at about twice the rate of overall inflation. $200,000 for four years is a lot of dinero for almost anybody. and it’s not just higher education- polytechnic school in pasadena, a private prep school, now costs around $25,000 vs free for public school.

then there’s always the debate of public school vs private school (at all levels). are smaller classes more beneficial than lecture halls? are participation and discussion critical to the development of a young mind? this is of course assuming larger student bodies at state schools have classes that are more lecture- than discussion-oriented, and vice versa for private schools with smaller enrollments. do hanging out with some of the nation’s elite brats help your child get ahead in life? do you measure “getting ahead” in the same way as trust fund kids and their parents? and if you do believe in the benefits of private education, how much of a premium would you pay? 50%? 100%? 200%? or better yet, consider the premium as a percentage of your income and savings.

anybody who’s attended private school knows that although every school has its share, not everyone at private school is a spoiled brat. there are lots of kids there from humbler backgrounds, and there are also kids from wealthy families who work hard and aren’t spoiled. and on the flip side it’s also nice to go to a uc, make good friends, and wind up near your hometown 15 years later with many of your college buddies living nearby. when you go across the country to attend college it doesn’t always turn out that way- you often wind up with friends scattered all around the world pursuing their very different lives, and as everyone gets older and busier it becomes harder to stay connected.

party on (that’s what college is about anyway, no? haha)

tags :: education : college : school : tuition : rants : money : parenting