Financial Brain Dump

So, anyone that knows me knows that I've been wallowing in financial articles for the past few months. Basically, since I decided to repair my credit I've been trying to wrap my brain around how to manage my (rather limited) money to it's greatest effect. My mind is starting to get a bit full, so I figured I could dump some stuff on a blog entry and see what it looks like in a month or so.

Since this all started with credit repair, I may as well start there. It turns out, credit building is super easy. Pay off recent collections and lates. Wait out super old collections and lates (these fall off your credit report after about 8 years most of the time). Get a secured credit card, if you don't have a card already. Pay stuff on time, every time. After a couple of months get another credit card (unsecured, if you can), but watch out for cards with excessive fees. After a couple of months get another. Keep getting cards if you want, but I stopped at 3. Try to keep card balances below 10% of their limit. That's it. In 6 months my FICO has jumped from around 500 to around 650. It will probably keep rising to about 700+ over the next couple of years.

So, now I can borrow money (sorta). That takes care of today's needs. What about tomorrow's needs. My thinking on this is still hazy. I'm still learning a good deal, so most of the stuff I'm about to write may well be flat wrong. Time and research will tell.

I prefer to use a problem solving method, because it puts things into a real-world perspective. I think up likely problems and try to solve them before they happen.

What if my bike breaks tomorrow....I'll have to use credit cards to fix it and then pay them off.
That's pretty stupid. If I had money saved I wouldn't have to lean on an 18% loan.

What if I get fired tomorrow....I'll have to live on my credit cards until I can find another job.
Again, that's dumb. Doing that would ruin all the credit building that I've been working on this year.

Solution 1: Save up around 3k in a savings account. This should cover any immediate curve balls life throws at me, or pay my living expenses for 3-4 months. If I socked away 20% of my pay into a savings account it'd take about a year to build that big an emergency fund, but I could probably take care of it in 6 months if I really cut back on money-blowing fun stuff.

3k in savings = 20% pay cut for a year. Next!

Next up are a couple of short-term fears I've had for a while with no easy solution. What if I get in an accident, get hurt really bad, or get really sick. I'm a fairly young guy, but shit happens. The obvious answers are insurance. Catastrophic insurance and Long-Term Disability insurance. Unfortunately, this stuff isn't cheap. Bare minimum for a HDHP is 50 bucks a month (600 annually). Bare minimum for Long-Term Disability insurance is 25 bucks a month. So, for 75 bucks a month I can have a little protection in the event that I have to be fed baby food for the rest of my life. It's something to seriously consider, but I haven't made my mind up yet.

$900/year = coverage in the event of catastrophe

So, I've thought about today. I've thought about tomorrow. I've thought a little about next year. What about the next decade? I'm closing in on 30, and I'm betting 40 is gonna show up faster than I want it to. How am I going to ensure that I'm looking better in my 40s than I am now? Well, other than the typical career building song and dance (which I plan on following) I'll be investing. For me, investing makes the most sense if you think about it backwards. My Dad died at 62. My Grandfather died in his 50s. My Great-Grandfather died in his 60s (I think). With modern technology and a quasi-healthy lifestyle, I'll probably die at around 65-70. That said, I don't want to be working after 60. I'd rather not be working after 55, though that may be unrealistic. So, I'm starting my investing with my eyes on age 55+ (that's 2034).

I started with a Roth IRA. The conventional wisdom is that you should open a Roth as soon as you start working and chuck a little money in it every paycheck, and you'll be a millionaire when you retire. That is baloney. If you were born in 1939, started investing in 1959, and cashed out in 1999 then you'd be a millionaire. Because you rode the Econ-Bubbles up to the top and cashed out at the right moment. In short, you got lucky. I've heard the compound interest story so many times I could puke, and it always relies on that canard of, "The stock market historically provides a 12% return." HA! If you're lucky. Gone are the days of chucking money at a mutual fund and forgetting about it. Retirement. Accounts. Don't. Pay. Interest. They do provide returns, if properly managed. We can call this return "interest," but I've always found that word misleading about the amount of risk involved.

That being said, Roth IRAs are an incredibly useful tool for retiring. This assumes you are willing to study a lot on where to put the money inside the account. Since this is a 25-30 year project it puts me in an uncomfortable position of having to be patient and rush at the same time. I've decided to break my investing into 3 tiers. The first tier is a Roth IRA that won't be available to me until 2039. This is where I'm going to stick my long-haul purchases. Since I'm relatively young I'll try to buy some solid stocks with a good reputation for paying dividends and simply reinvest the dividends over time. Lucky for me, many of those stocks are quite cheap right now. Ford is way down. Alcoa is way down, and pays a decent dividend. Coke looks like it's going to dive after their 4Q Reports come out. There are a few others I've had my eyes on. There'll be a few other things I throw in there over time, but nothing too risky. I'm looking for stable, consistent bargains where I can find them.

My second tier is mostly for education. This is more of a medium-term trading account. I don't plan on owning anything in it for longer than a year, and I don't plan on dumping much money in it until the rest of my finances are sitting pretty. I may drop this idea altogether, but there is so much to learn here that I have to at least dip my toes in the water.

My third tier is for fun. This is for learning how to manage short term, high risk avenues of trade. This will be minimally funded. I'll be looking at stock-options, for the most part. I'm generally not a gambler, but a little bit can be entertaining. In addition, learning how options work is a great addition to learning how to protect investments once you've made them. Case in point, if you owned AIG last year and kept a few conservative Put Options covering it then you'd be sitting quite pretty despite their plummet to the bottom.

As I'm still in the research phase, I don't have a lot of budgeted numbers to go with this grand plan. Since my income is rather slim, then I don't expect huge returns. Even so, I see a solid investment plan as the only way I can avoid living out my "Golden Years" as a greeter at Wal-Mart.

I've had a couple of other ideas knocking around my head. I've thought of enrolling in a government backed IDA to help fund education and home purchase expenses down the road. I've considered enrolling in a few Drip programs to help grow my investment purchases over time. I've thought about enrolling in a HDHP and pairing it with a HSA to mitigate the high-deductible risk. I've considered, if my finances really improve in the next few years, starting an ESA or 529 account for my nephew's college education.

In addition there are a couple of things I've decided to avoid. Selling option contracts sounds like a bad idea in most cases. Covered Calls might be a decent income supplement, but I don't think I'd be comfortable with the Risk:Reward. Selling Puts might be a decent way to discount an intended long-term purchase, but I'd have to have the numbers down to the finest detail. In general, I don't like the notion of risking a lot of money to make a little bit of money.

Well, this has been a rant. There may not be much continuity, but like I said...this is a brain dump. I'll try to make a little more sense out of it in a week or two.

Malcolm Gladwell and squandering talent

I love Malcolm Gladwell. Whether i agree with him or not, he's always got a way of forcing me to look at old problems from a new perspective.

In this video he touches on a topic that is near and dear to me. Talent. Not just brains, but talent. Talent at anything. Computer programming. Football. Stock trading. Whatever. In America we have a very simply method of discovering and exploiting human talent. I like the term YOYO. You're On Your Own. The only way to get good at something is to try, but you'd better not suck at it when you start. We want instant results. Meaning NOW. There is no patience for allowing someone to grow a skill. If you can't beat the other kids your first time out then you "Suck." We do this all over the place, with all kinds of things. Academic pursuits. Sports pursuits. Certainly occupations.

I think the rest of the world sees us as lazy because of this. It's the stereotype, right? Fat, lazy Americans always wanting something for nothing and too impatient to wait for the really good stuff. I don't think that's really the right answer. We aren't lazy. We work damned hard. I don't have the statistics on hand, but Americans work harder than our European counterparts and nearly as hard as our Japanese counterparts. We bust our asses! And I don't think we're necessarily impatient. We're willing to wait for the 401k payoff to retire. We're not all slavering for the winning lottery ticket all the time.

I think the problem, when it comes to nurturing a skill in ourselves or our children, is two-fold. Firstly, we don't know. We don't know that it takes a LONG time to develop a skill at anything. It takes us months to learn how to tie shoes, and we expect people to learn a job in 90 days and ROCK at it! That sort of attitude is contagious and toxic. I don't think it's rooted in impatience (except on the part of shareholders). I think it's rooted in ignorance. The second problem is related to the first. We don't give a fuck. America is really sliding into this Social-Darwinist, Law of the Jungle, Dog Eat Dog, Survival of the Fittest sort of cultural grudge match. If you're "meant" to be a oncologist, then you'll do what it takes to be one no matter what your circumstances. If you fall flat, then it's your fault. You should have worked harder, and it ain't nobody's problem but your own. Horatio Alger, Ra Ra Sis Boom Ba.

This whole Don't Know Don't Care attitude is rooted in so much sickening cynicism that it's difficult to even contemplate. Even when it tries to be positive, like every time someone's told you, "I'm sure you'll figure it out" it still smacks of negativity. "I'm sure you'll figure it out" has "on your own" left implied but still there. It screams, "I've got better things to do than give a shit about other people's problems." But there's a flip side. How many people's lives have to be wasted reinventing the mousetraps of life "on their own," and how many doctors, scientists, and engineers do we have to see waste away as waiters, cashiers, and dishwashers before we realize that there's a better way? And it's not that complicated really.

It's called giving a shit.

Not made in America.

One of the many reasons I voted Obama...

A wonderful speech from Barack Obama's 06 Senatorial race on religion in America.



Full text at : http://obama.senate.gov/speech/060628-call_to_renewal/

It's so wonderful to hear a politician speaking about religious faith in terms that are unifying rather than divisive. Much of the Us vs. Them garbage spouted by Moral Majority shills this past decade has done nothing but divide America in a way that is completely unnecessary, and solely done in an effort to fracture the electorate for selfish gain. It's nice to think that maybe Americans finally saw through the trick this time. And I'd like to tip my hat to John McCain for not trotting out that tired old pony in this past election. Say what you will about him. He at least had enough honor not to sully the most precious beliefs of those he would lead so as to enrage them into voting for him. If there ever was a man who deserved to almost be president, that point of honor qualifies John McCain. I cannot say as much for his Republican brethren.

Fortunately, the sun has very nearly set on that obscene political strategy. Jerry Falwell is, thankfully, dead and it looks as though he has taken the real teeth of the Moral Majority with him. Bush's Neocronyism is fast fading from this earth, along with the careers of his fellow gang members. Reagan's voodoo economics are whirling down the drain, along with our floundering economy. The Preemptive Doctrine has been revealed as the hopeless rantings of a deranged paranoid lunatic in the blood soaked sands of that quagmire that is Iraq.

I believe President-Elect Obama. Change is coming. Like it or not, change is coming. And it has precious little to do with the election of a new president or senate. Change is coming because the ideology that we've operated under for the past three decades has been utterly discredited, and good riddance. The work of repairing our nation will be arduous and largely thankless, but in rebuilding this country I hope we never forget the lessons of our own history. A house divided against itself cannot stand. We have nothing to gain by demonizing our own people beyond poverty, war, hatred, and paranoia. We are better than that. We must be.

My Hope. My Fear. The day before the election.

It's the day before Election Day, and I am filled with hope for my country. I am, and have always been, a staunch liberal. The odds are good that my party of choice, The Democrats, will do quite well tomorrow. The odds are better than even that my party of choice will also inhabit the White House. One would think I would be ecstatic at this long-awaited opporunity. I am happy about this election, but I have my doubts.

My first doubt is whether Obama will actually win. No matter what the polling says, I still have a hard time believing that he might actually win. It's simply too unlikely. This is a pro-choice, pro Social Medicine, black man with a funny name and a Muslim father. His middle name's Hussein, for crying out loud! I simply can't believe that we might elect this guy, even though I know we need to. Call this my pessimism of the public in general. I hope to be wrong.

My second doubt is whether our political system will allow even a huge majority of Democratic seats and a Democratic presidency to accomplish anything at all. I feel as though our government has been hobbled by free-market right-wingers and well-heeled moneyed interests for the last 3-4 decades, and I'm not sure it's up to the task of repairing itself that quickly. The last 3 Republican administrations have left this country looted to the tune of 10 TRILLION dollars. Can there be any room in any budget to do anything but try to repair this damage? I hope to be wrong here as well.

My third and final doubt is whether Obama is the man he appears to be. I will break an unspoken liberal rule, and criticize Clinton about this. I think Bill Clinton was a far better politician than he was a Democrat or a president. We liberals aren't really allowed to talk bad about Clinton in public, just like conservatives aren't allowed to trash Reagan in public. That said, Bill Clinton helped gut the US Welfare system, signed off on NAFTA, and was working on privatizing Social Security before he spooged on that lady's dress (Thank God for premature ejaculation). He was (apparently) anti-Union, involved us in several foreign wars, and slept at the wheel on the widening gap between The Rich and Everybody Else. In short, he was a TERRIBLE Democrat! I fear a similar occurrence with Obama. I have no good reasons for this, but it is a pessimism with politics in general.

I think this lack of hope in the foundation of our democracy is a symptom of the slow dismantling of what made our country great. If everyone on television is screaming that "Government IS the problem" then you start to wonder if they're right. This demonizing of government is so puzzling in a country such as this one, because it is outside the very nature of our culture. We have no system of hereditary rule (excepting our sitting Moron in Chief). We have no system of iron-clad castes. We have no system of intractable aristocracy, or even slavery anymore. We ARE the government. So, if "Government is the problem" then by extension, WE are the problem. Shills and salesmen told us that taxes were unjust, and we bought it. They told us that income inequality was irrelevant, and we bought it. They told us that providing a safety net simply encourages laziness, and we bought it. And by they, I mean us. These slimebags go to our schools and churches. They used to shop at our grocery stores before they got too rich to need to. They used to work with us before we bought their faux-philosophy of "Rules are Bad (unless you're poor)."

It has been a point of unrelenting irony and pain for me that our country was founded by a bunch of Liberal, Elitist, Atheistic, Epicurean, Academics of moderate wealth. And now Americans in general HATE those people! Our founders were intellectuals to a man, and now we (self-included) have trouble trusting Barack Obama because he's the same kind of man. What have we done to our America? That we would even consider giving the reigns of our nation to an ignorant hawk like McCain and his more ignorant wing-nut of a VP pick Palin is tragicomedy at it's most absurd. And so, I will vote for Barack Obama tomorrow. And I will hope that he does right by all of us. And I will hope that the new Democratic congressmen and representatives will do the same. It might be a fool's hope. But I hope to be wrong.

Tidbit to remember...

"You don't rise to the level of your expectations. You fall to the level of your training."
-Some military saying I want to remember for later.

I'm single, and I love Valentine's Day

It's the eve of Valentine's Day, and I'm supposed to be shagging someone senseless or lazily necking under the moonlight. But, I'm not. I'm single, and dateless, and I had to work anyway. A lot of people would use these things as an excuse to hate Valentine's Day. I hear it a lot. "Single-Awareness Day," they call for. There's so much bitterness that you could almost choke on it. Aesop's fable of sour grapes seems quite apropos.

Even so, I've tasted those grapes before and they are quite sweet. Love is a fantastic experience, and I'd be positively hypocritical to sneer at it simply because I'm not currently in the throes of passionate bliss. I am no longer a prisoner of that youthful naivete that once informed me that Love was The Greatest Thing in The World. Life is too full of rich experiences to catalog and classify just one of them to be "The Greatest." That said, Love is still quite incredible. I, for one, enjoy at least a single day formally dedicated to the celebration of it.

I have been single for a good while now, and I don't think I'll ever know Love like I used to. It was so overwhelming, and so all-encompassing. Everything else in my life took a back seat to it, and hinged on it. That's too big a burden for any one idea to bear, even one so grandiose as Love. Honestly, my last Love left me so worse for wear that I'm not sure I even want to go through all that turmoil again. I like drama as much as the next person (perhaps a little more), but life is a little too delicate to take that kind of Sturm und Drang very often. I'm convinced there's a middle-ground.

I've met so many people that loathe the fallout of Love, and yet long for it anyway. I'll celebrate Love with those people. There are people that want occasional companionship, but not to be smothered. People that crave passion, but cringe at insanity. People that desire the giving and receiving of pleasure, but also have other things to do. Love is strong stuff, but one can take even the strongest drink in moderation. It doesn't have to be teetotaling or total drunken abandon. That's the Love that I'll celebrate this Valentine's Day. It might be mere illusion, but who can say that Love isn't an illusion altogether?

So, happy Valentine's Day everyone. Daedalus knew what he was about. One can soar on wings of the softest down, and bask in the warm sunshine. Just don't fly too high!

I did it!

It took me a month, which was pretty much what I had planned for, but I found a decent job at a great hotel! I'm now the newest member of the Hilton family! Not only that, but so far they appear to be the best company I've ever worked for. They are offering me a fair wage, respectful treatment, and a definite possibility for advancement. I think I've really struck paydirt with this place.

There isn't much more to say at this point. I've only worked 2 days, and that's been mostly training manuals (snore). Even so, I'm hopeful for the future. I almost can't believe it. I actually did it. I started over again.

Return to The Holy City

I haven't blogged in about a month, but the past month has been incredibly busy. Much has happened, so I'll catch anyone not in the loop up to speed.

A couple of months ago I got absolutely fed up with life in Reevesville, and I decided to do something about it. After the incredibly fortuitous offer of a FROG from a friend of a friend, I realized that I had no more excuses and put in a month's notice at my place of employment. I would be out of Reevesville by year's end! That was November 23.

The following month was a nerve-wracking experience in limbo. Neither working or unemployed. Preparing for a move, yet not able to enact it. It felt as though I were at the edge of a ledge, with one foot dangling out over an inky-black chasm, preparing for a leap of faith. On New Year's Eve I jumped.

Stacy and I drove Michael's (the new roommate) truck to Reevesville and picked up the bulk of my furniture. Before midnight I had moved, but even today I'm in freefall. The question of work rears it's ugly head. In times past I would have been reluctant to bother with it. I would have hoped for things to just work out on their own, or simply avoided the topic entirely through reality denying hobbies. I'm so happy to have learned at least a little.

I've since had a few days to get settled in, and can now begin the real work of finding work. It's frightening stuff, but I'm confident I can find something quickly. My former boss has promised to write me a letter of recommendation, and I'd like to stick with the hotel industry. The contradictory nature of inns appeals to me. They are neither home or destination. Both incredibly public and incredibly private. The tenants are at once secured by their own anonymity, and rendered vulnerable by it. I find the limbo-like nature of the business interesting in the extreme.

Despite my interest, I'm not dead-set on it. I'm not stubborn enough to insist on hotels or bust. That is folly. There will be time to get back to what I want. Now is a time to take care of necessity. Speed is of the essence. Better an ill-fit today than a perfect fit far too late.

Until next time,
Douglas.