Monday, 29 November 2010

Pension Seizure Precedents

One of the problems with out of control government spending is the way it affects the behavior of government itself. Like any other junkie, the government convinces itself it needs "just one more" fix and will do anything to get it. Again like a junkie, the government will prostitute itself and steal from friends and family to keep the drug supply coming.

We see a glaring example of the later when governments simply grab private property in order to pay off their own debts. We have already seen the precedent for pensions being seized by government. Just last week in Hungary the government grabbed $14 billion in private assets. Over the weekend, the Irish government decided to take 15 billion Euros from the future pensions of its citizens to give to the banks. Now France is taking 36 billion Euros from the pension fund to keep its bloated and unsustainable welfare state afloat for just a little while longer.

People need to understand that the United States is not immune to the same financial pressures that caused Hungary, Ireland and France to take these desperate measures. If you are counting on a future pension from the state, you might wish to start making alternate plans. In most states, there is effectively zero chance that you will get everything promised - the state government pension funds are already over $1 trillion in the hole. The gap will only grow as additional obligations are incurred but little new money is available to meet them from the state budget side. It would be completely unsurprising if the more desperate and foolish states attempted to raid these pension funds to "invest" in more unemployment payouts or other attempts to fund general budget spending.

Of course we won't have that problem with Social Security since it is funded entirely by current taxes. Since no such pension fund exists, we don't have to worry about the government grabbing it. Of course that raises the question of which assets the will try to take since the same financial imperatives and the same junkie behavior are at work in Washington as in Budapest, Dublin and Paris. That said, we need to be vigilant for any sign that similar asset seizures are imminent here in the United States since the precedent has already been set. We have been warned by events across the pond.

Monday, 1 November 2010

The Shadow Knows

Today's topic is Shadow Inventory - the foreclosed or soon to be foreclosed properties that banks are stuck with and which are not listed for sale. As a result, they are not found in any formal listing of housing inventory when existing home sales are reported. This has been a problem for a long time, as we mentioned many months ago in Household De-formation.

The media's silence on this issue has been almost total. Probably because any reasonable discussion of the topic would severely undermine the illusion of stability they are trying to project. This weekend, the Wall Street Journal took a stab at estimating the damage. Their conclusion is that it would take 107 MONTHS to clear the shadow inventory at current sales rates. Obviously not a number that the bankers and their apologists in government and media are anxious to publicize.

Over the summer, banks appeared to be making some headway. The government’s mortgage-modification program helped some people get current on their payments, taking their homes out of the foreclosure pipeline. At the same time, homebuyer tax credits helped boost sales. Combined real and shadow inventory fell to 91 months of sales in May.

Lately, though, a new wave of defaults appears to be coming in, in part related to the high rate of failures on government modifications. As of September, some 1.9 million homeowners had missed one payment on their mortgages, up 14% from March. Meanwhile, home sales have slowed sharply with the end of government stimulus.

The government "assistance" was never going to help many people, much less actually succeed on a large scale. However, it was helpful for the banks - aiding them in concealing the collapse of their collateral for another year or so (i.e. another Bonus Cycle).

But the good news is that we can expect the housing market to start to recover - in another eight or nine years.

Monday, 25 October 2010

The Harvest of the Incredible Front Yard Edibles

Call it editable estates, urban agriculture, reducing your carbon footprint, or a throwback to the American ‘Victory Garden’ of World War II -- Last year, we decided to plant at least one surprise edible in every garden plot in our back and front yard. Among the many fruits and vegetables, we had peppers beside are day lilies, strawberry plants as ground cover lining are front walk under the yews, and sweet potatoes climbing the fence as a back drop to the zinnias.

Not only have we been rewarded with the playful fun of edibles interwoven across the landscape, we have relished (no pun intended) in the harvest. We have feasted on fresh vegetables and fruits all summer and have been canning and freezing to carry us well past Thanksgiving with home goodies. Who knew that three cucumber plants would give us enough to can dozens of quarts of dill pickle spears and bread and butter pickles? This fall, our pepper jelly has been a huge hit at gatherings. We found a very simple, step-by-step recipe at With very little effort, we have been able to reap the bounty of the harvest.

As we pulled in the last of our harvest this past weekend, we are already thinking about growing our production next year. We challenge all of you to tempt the fun of it next spring, even if it is just a few small strawberry plants as ground cover or a blue berry bush next to your garage doors. Before you know it, you also will be indulging in the joy of fresh picked berries with your morning coffee and swapping zucchini muffin recipes with co-workers.
Nothing warms up a cold, grey, winter  day like browsing through a seed catalog such as that from and imagining your own little garden, full of ripe tomatoes and chilies and cucumbers and zucchini and carrots and ... :). -Happy planning.

Sunday, 10 October 2010

The Flywheel of Finance

You have probably heard it said before, “the first million dollars is the hardest to save.” As I continued teaching from Jim Collin’s book 'Good to Great', he speaks to how disciplined thought and disciplined action brings about disciplined results. It is like a  flywheel -- like starting a lawn mower, where it is hard to get started and then through continual little pushes (disciplined action) the flywheel begins spinning faster and faster until you reach breakthrough (the engine's running).

As I am reading this, I keep thinking about how hard it is to make your first million dollars (I’m a long way from my first million) and how the flywheel provides a great analogy to saving your first million. It takes disciplined thought and disciplined action to start saving on a regular basis. If you start out saving $25 a month, you are starting your million dollar flywheel moving. Every time you get a raise, receive a bonus or a cash gift, you can add more to your monthly savings and you are pushing the flywheel faster. The more money you have in savings, the faster the flywheel turns because of compound interest. If you have $100,000 saved and you get a 5% annual return, you have just added $5,000 a year ($416.67 a month) to your savings. If you have a million dollars in savings with a 5% return, you are adding $50,000 a year to your savings or $4,166.67 a month.

When you look at your retirement flywheel, what ever your magic number for retirement, it is a big, heavy flywheel. It takes disciplined thought and disciplined action to get disciplined results. The best way to get your retirement flywheel moving is through monthly automatic transfers to your retirement savings; 401k, Roth IRA, traditional IRA or other retirement investments. Whether you start off with $5, $25 or $250 a month, you are starting your flywheel moving. The more you contribute the faster your flywheel moves and the quicker you will reach your goal.

The goal should be to have your flywheel move on its own without you adding money to it with enough to cover your expenses. At that point, you are independently wealthy and reach your point of financial independence. Your passive income is making enough to cover all of your expenses. Jim Collins would refer to this as “breakthrough.” What is your breakthrough number --$1,000,000 in savings returning 5% so you get $50,000 a year? $2 million in savings returning 5% so you get $100,000 a year? What ever your number, you can’t get there unless you start making contributions to your retirement savings.

Start Pushing Your Flywheel…..TODAY!

Sunday, 3 October 2010

Leadership and Personal Finance

In my Senior Seminar class at Mount Mercy University we are reading "Good to Great" by Jim Collins. Chapter 2 is on Level 5 Leadership. As I read this chapter, I couldn’t help but to think how each one of us can be a leader in personal finance and how we can take some of the principles from Jim Collins and apply them to our daily lives. Collins describes a Level 5 Leader as someone who “builds enduring greatness through a paradoxical blend of personal humility and professional will.” We all want our families to be successful and I want my kids to be more successful than me (building enduring greatness).

A central theme of this chapter is setting up the company for future success and not worrying about individual success. Our last blog entry was on how much money it will take to retire so I naturally put the two together. I want my kids to be able to retire and live successful lives, so I want to set them up for future success. The questions are how do I do that and am I doing the right things.

What we decided to do is a Roth IRA "parent match"; matching up to a certain dollar amount each year, dollar for dollar, that the kids put into a Roth. For the kids, they are doubling their money. For us (the parents) we are giving them their inheritance early and hopefully instilling in them the importance to save for retirement. At age 17, Clay has a Roth IRA which will be tax free income when he retires. Fifty years of compounding will really cause his Roth IRA to grow.

We have also helped the parents of our grandchildren to set up 529 college savings. I know it doesn’t sound exciting, but at Christmas and birthdays, we contribute to their 529 accounts. We like to look at it as long-term love. Over 15-18 years, 3-year-old Jordan’s and 5-month-old Emmy's money will grow and ease some of the cost of a college education.

So I guess what I’m trying to say and do is that it is not so much about us anymore as it is about the future of our family. We all try to do the right things, share our love, and now share our knowledge and finances. We make a comfortable living and it would be nice to have more, but I would rather cut back a little so we can help the kids and grandkids with their future expenses and saving goals; in personal finance and leadership, taking our family from "Good to Great".

Sunday, 26 September 2010

What is it Going to Take to Retire?

In reading the Sunday, September 26th Cedar Rapids Gazette, there was an article “From Boom to Bust” by Susan Tompor that got me thinking what it would take for me to retire. Susan also wrote the article “How to Prepare for Retirement” to help you plan. One of the things she stated in her “How to Prepare” article is “that you want to spend 4 percent or less each year from your retirement saving.” So….how much is it going to take? Other experts say that you will need 80-100 percent of your pre-retirement income in retirement.

If we put together all of this, and for ease of numbers, say you make $100,000 before you retire, you want 100 percent of your pre-retirement income, and you are only going to spend 4 percent of your retirement per year, you would need $2.5 million in retirement savings.

Now this does not include your Social Security income. Right now, you can start collecting Social Security at ages 62, but if you want to receive your full Social Security benefit, you must wait until you are 67. It might be earlier deepening on your ages. You can check what you will receive from Social Security at

All I can say is that I’m really glad that I have a job that I love and that it is a secure job. I don’t know when I will actually retire or if I will just slow down and travel more. It’s good to know your retirement numbers; no matter how scary they look so you can plan. A favorite quote of mine as it relates to retirement savings is “The best time to plant an oak tree is 20 years ago. The next best time is today.”

Wednesday, 11 August 2010

Bank Debt Spiral

The zero interest rate policy (ZIRP) will kill the banks. Falling interest rates help banks by increasing the value of their bond and loan portfolios. This is the well understood inverse relationship between discount rate and present value of a future sum. But you see keeping interest rates at zero does virtually nothing for the banks as rates cannot fall further. There is a short window where ZIRP is a positive but an "extended period" (in Fedspeak) is just slow death for the banks.

During that short period, the banks are still collecting on portfolios constructed when rates were higher but as those higher-yielding assets mature, there is nothing comparable to replace them. We hear constantly how banks can just borrow at zero and invest in Treasuries - pocketing the difference. That would be fine if yields on Treasury debt were not low and falling along with everything else. The other problem is that this simplistic formula assumes that banks' operating expenses are negligible. Both unstated assumptions fail any sort of reality check.

Back in the real world, T-bills yield virtually nothing. The 2-year note is now at 50 basis points as of today. The 5-year is at 1.43% and the 10-year at 2.68%. Assuming zero borrowing cost (which is overly generous), net interest is equal to gross interest. Large banks generally require a net interest spread of more than 2% to cover their expenses, so they will lose money even buying 5-year Treasuries. If they invest their entire portfolio in 10-year notes, they'll make about a 50 basis point spread on assets pre-tax. But the 10 years is a lot of risk in terms of time for rates to change and also a long time to tie up the money. And banks care BARELY eke out a profit by taking this extreme level of maturity risk. There is a reason why you never see loan portfolios with 10 year average maturities.

For those advocates who think banks can rebuild their balance sheets by buying Treasuries, you might ultimately be correct but there are so many things that can go wrong with that scenario. First consider the size of the hole in bank balance sheets. Recent activity at the FDIC suggests that many troubled banks are overstating the value of their assets by 30% or more - that is the average size of the hit when the FDIC takes them over. At a rebuild rate of 50 basis points annually (with a lot of risk) it would take a literal lifetime to repair the balance sheets via this strategy. It was much easier in the early 1990s when rates for the 10-year started at 9% and never went below 5.5%. There was plenty of room to generate capital gains on bank bond portfolios wit falling rates and still leave a reasonable current yield at the end. Anybody using that era as a template for bank recovery is going to be sorely disappointed. Does anybody still wonder why Japan is trapped despite 20 years of ZIRP?

All of this assumes that ZIRP is sustainable over decades and that the financial system is sufficiently stable to endure the pressure over the long term. Neither one is proven and the ability to fund the debt implied by ZIRP is particularly shaky. If it works, it will take 60 years As one one of our favorite bloggers Karl Denninger says "the math is never wrong."

Wednesday, 23 June 2010

Fraud and Failure

Recent news on the housing front confirms what we have been saying about that market since the inception of Financial Jenga. In sum, there is no real stabilization much less recovery, the costs of attempting to maintain the illusion continue to rise rapidly and any cessation of government interference and manipulation results in rapid breakdown of the fake "market" which was created by those policies.

In the first instance, we now see the failure of HAMP as redefault rates among those "helped" by the program soar. An absolute majority of the government-sponsored loan modifications have now re-defaulted but they did give utterly baseless hope to debtors, thus trapping them into making continuing payments on a hopeless mortgage.

The ongoing cost to prop up Fannie Mae and Freddie Mac continues to rise. Last week the
NY Times reported that the cost of those bailouts has now reached $148 billion and will likely total $389 billion. Bloomberg cites a "reasonable worst case scenario" for the ultimate tab which could be $1 trillion or more.

The creation of the tax credit for housing purchases induced a temporary uptick in the number of sales. But like many other government actions, this merely succeeded in pulling forward future demand into the present - which is now the past. We have now entered the void created by that pulling forward. The existing home sales number yesterday and the new home sales number today both demonstrate that in clear terms. Today's existing sales number was nothing short of a disaster. The headline on
Marketwatch says:
New-home sales plunge 33% to record low in May
But that fails to reflect the full scale of the drop. In addition to May being down, April was also revised lower. This is a game we should all be familiar with by now. Actual may sales were 300k annualized. But the April report had 504k units sold but it has now been revised to 446k. That allowed the comparison to be reported as merely 33% down rather than over 40%. Either way it's not good and May set a new record low. Apparently, new houses just don't sell unless a big tax credit is piled on top of the subsidized mortgage loans.

Yesterday's existing home sales number was less dramatic but still indicated a housing market in trouble. The decline of 2.2% contrasted with an expected gain of 4%. The tax credit doesn't seem to have accomplished anything of value but at least it
fraudulently paid out $9 million to 1,300 prison inmates.

Monday, 7 June 2010

THe Keynesian Comeuppance

During the current economic crisis, most of the major countries have tried to spend their way out - either with government programs funded with new debt or by forcing debt directly into the private economy through guarantees, regulations and action by quasi-government bodies. We discussed the implications for China in Command and Control and for the US in The Federal Funhouse. These initiatives were based on Keynesian economic theory - that government should make up for any shortfall in private demand by spending (likely
incurring deficits) sufficient to stabilize aggregate demand.

This is a temporary band aid at best and the governments and central banks were hoping to buy time and convince everyone that things were OK so they should go out and spend. This was doomed to fail as prior private demand was based on nearly universal lending at suicidal risk levels. One of the key objectives of Financial Jenga was to document the extent of the madness in credit. Enough people have seen through the wishful thinking so that there will be greater caution on the part of both borrowers and lenders for the foreseeable future.

The massive deficits that various governments have run can only be sustained as long as there are lenders out there willing to finance them. Several bond auctions have failed or nearly failed in the last several weeks. Now we see the appetite for debt drying up and some key nations beginning to talk about austerity. A good example is this statement from the G-20 Meeting Communique:

The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances... We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions.
Clearly, the finance ministers are signaling a new mood of fiscal responsibility here - in sharp contrast to the "stimulus" measures that have previously reigned. This change in emphasis is further reinforced by the recent statements from two key European governments. From the UK we have (Prime Minister) "Cameron warns of painful cuts to tackle debt" as a headline. In Germany, Chancellor Merkel is cutting the budget by nearly $100 billion according to Bloomberg. This is not only a sharp contrast with the Keynesian program here in the US, it is a direct slap in the face of Tim Geithner at Treasury and the entire Obama Administration:
German Chancellor Angela Merkel’s Cabinet approved levies on banks, air travel and nuclear-power plants as part of what she called an “unprecedented” round of budget cuts, rejecting U.S. calls to spur growth.

Bux Populi
Austerity is the new watchword and it is showing up first in places where governments either have their backs to the wall or are less under the influence of the banks. Yet even here in the US, where we have the best government the bankers' money can buy, things are starting to change. Actual voters concerned about the rapidly growing deficit seem to be a stumbling block to Congressional spending with less than 6 months until the elections. Web-based My Way News reports:

Obama's proposed $250 bonus payment to Social Security recipients was killed by the Senate. Also gone is an $80 billion-plus Senate plan that promised money to build roads and schools, help local governments keep teachers on the payroll and stimulate hiring in the home improvement industry with rebates for homeowners who make energy-saving investments.

Just last month, deficit concerns killed $24 billion in fiscal relief to prevent state workers from being furloughed. It was a measure that earlier had won initial votes in both the House and Senate.

The battle over extending jobless benefits for up to 99 weeks for the long-term unemployed typifies how the Democrats' jobs agenda has foundered. What originally was a $200 billion measure combining the jobless benefits with renewing popular business and family tax breaks was cut to $115 billion by House leaders after moderate Democrats who are particularly vulnerable in November refused to support it.

The Federal Government has been able to finance large deficits so far. Partially this results from capital flight as Europe's problems become more apparent. Part of the equation is an increased preference for Treasury bonds over stocks and lower-grade private bonds. Finally, there is the large-scale purchases of MBS by the Fed, which has indirectly funded Treasury auctions by putting more money into the hands of bond buyers and Primary Dealers. Despite a very favorable environment for Treasury bond demand, huge issuance pushed yields upward until the recent resurgence of Europe's problems.

The difficulty financing our debt led the Obama Administration to float several proposals for major tax increases in an effort to convince bond buyers that there would be enough tax revenue to support the debt. This included a VAT. Notice how little we have heard about that and other taxes since the Euro crisis made the dollar and Treasuries the only game in town. Even so, the easy period of debt finance is coming to an end - even for the US government. Washington had best not expect to fund large deficits easily into the indefinite future.

A lot of bankers have to be asking themselves a question. If governments are cutting back, who is going to bail me out?

Saturday, 5 June 2010

The Visible Fist

The Visible Fist of government that is. The Visible Fist is about to crush the property market in China, exploding one of the most egregious bubbles on the face of the planet. The specific blow will take the form of imposing a property tax nationwide - in guidelines recently approved by the State Council. It was reported earlier this week in China Daily.

Although the measures have been considered for some time, the recent push has been given urgency by the dangerous levels that China's property bubble has reached. One of the key contributing factors has been the number of speculators buying property and then holding it off the market to profit from the price run up. Morgan Stanley's Andy Xie estimates that such properties number in the 10-20 million unit range.

Some of his other comments portray a China going through the same stages of economic madness that the US has over the last 20 years. But China is passing through each stage much faster as the (well-deserved) lack of trust in their financial system causes people to only chase really big potential profits. Look at this paragraph and tell me you don't see the parallels:

China's policies have travelled the path of least immediate resistance - monetary expansion and asset inflation. The main purpose behind asset inflation is that the government can tax it. It provides a place for people to chase their get-rich-quick dreams and is popular as long as the market goes up. It also offers insiders who have disproportionate influence to play the game at the expense of little people. It is no coincidence that China's policies have been so pro-asset-inflation in the past few years.
His comments seem to suggest that the lack of a property tax was a deliberate strategy to encourage land speculation and bid up prices in a frenzy. This would make sense as the state was by far the biggest landowner and wanted to extract the maximum price for it. With a large amount of land now in private hands, it can be taxed as the taxable base can now replace diminished land sales as a source of government revenue.

Increasing the carrying cost of speculative assets is one of the surest ways to burst a bubble. That is why rising interest rates nearly always do the trick. Rising ownership taxes have the same impact. China is doing both. The government is both instituting a property tax and requiring higher interest rates on properties other than a primary residence. The impact has been dramatic and nearly immediate and so far, it's just the new financial rules and property restrictions. The tax will aggravate the impact. Here is a report from two weeks ago in China Daily:

The Shanghai market has already felt the chill of the tightening housing policies with new apartment sales falling in April. Over 13,185 units of newly built apartments were traded in April, down 43.7 percent from the same period in 2009, according to data from China Real Estate Index System Shanghai.

Trading in the secondary market in Shanghai also saw a dramatic slump since April 16.

A total of 13,865 housing units changed hands between April 1 to 16, but only 7,974 units were traded from April 17 to 30, said Ma Ji, consulting manager at property consultancy Shanghai Centaline China.

Local media also reported that a property tax might be imposed in the next few months. Houses that fall into the definition for charging property tax will be levied an annual fee of as much as 8 percent of the apartment's total value, the Shanghai Securities News reported on Wednesday.

While I applaud the Chinese government's belated return to sanity, they are now being forced to take action to rein in the monster they created. Recall that we criticized the massive push to force credit through the system last year in Command and Control and The Price of Ponzi. The Sinophiles bragged about how smart the Chinese government was and how the money was going into useful projects. They completely forgot (or never learned) that money is fungible and much of it was bound to end up wasted in financial speculation in stocks and real estate.

China is trapped in a massive inflationary spiral of its own making. Wages are rising rapidly - undermining their major competitive advantage. But the average worker is still falling behind in terms of housing and other necessities. Just as in the US during the 1970s, inflation's initial effect is seen a purely positive - a feeling of rising prosperity that seems costless. China went through that over the last 18 months and it's time to pay the piper. It is going to be impossible to tame short of crashing their economy to subdue the fundamental labor supply picture, crash the RE market to increase purchasing power in terms of land or crash the stock market through contraction of the overall money supply. I expect more than one will be needed and likely all three will happen when they try to trigger any one readjustment.

One final comment. The divergence between Chinese consumer inflation and US CPI dis-inflation is strong supporting evidence for the Austrian and Monetarist schools view of the matter. Both consider inflation to be a matter of increasing amounts of money (really credit). Private credit is tanking in the US and has been for some time while China forced their banks to lend massively more.

Friday, 4 June 2010

Lies, Damn Lies and Statistics

This morning, the Bureau of Labor Statistics release triggered news report to put up a huge headline:
431,000 Jobs Added in May

That sound impressive on the surface but the reality is much less than it seems. When you dig down into the numbers you can see just just how little really is there. First, the Census Bureau hired 411,000 temporary workers who were counted as part of the 431,000. The BLS claims 41,000 private-sector jobs were created, with the discrepancy likely coming from net layoffs at state and local levels of government.

Let's drill down a bit farther and take a look at the Birth-Death model that we have written about before. When we look there, note that the "model" has added 215,000 private-sector jobs for May. By backing out this estimate, we can conclude that the actual survey measured a net loss of 174,000 jobs in the real economy.

We can also dissect the Unemployment Rate in the same fashion. This statistic is based on the Household Survey, where the jobs created number is based on the Establishment Survey of employers. The Household Survey again shows that the number of people with jobs shrank in May - in this case the measured loss was 35,000 jobs. That is not as bad as the Establishment survey but still pointing in the wrong direction. The only way the BLS was able to report a lower unemployment rate was because they reduced the Labor Force by 322,000 workers, even while the pool of employable citizens rose by 170,000 people. Basically. BLS arbitrarily said 600,000 people ceased to exist for purposes of their calculations this month - so they could report a lower unemployment rate.

This is clearly a piece of propaganda designed to keep the ignorant public "confident" and spending despite reality. Like much else that comes from government, BLS reports have become riddled with accounting tricks that amount to fraud in order to paint a rosy picture. Don't be taken in.

Thursday, 13 May 2010


On Monday, our oldest son returned back to Colorado Springs from Afghanistan after being deployed for 13 months. We were able to meet him at the Denver International Airport after his 72 hours of travel from Kuwait. It was so good to get the hugs and see him face to face. We helped him get settled into his apartment, pick up his new Jeep and took him out for non-army food, complete with non-disposable tableware and actual glass goblets.

As we sat eating dinner at the Blue Star Restaurant in Colorado Springs, Nate said something that really stuck with me. “Everyone should be required to spend a few days in Afghanistan. They would really appreciate what we have here in the United States a lot more.”

Our army captain has been deployed 25 of the last 30 months, first to Iraq and then he volunteered for Afghanistan. He enjoys the little things a lot more; like a shower that he doesn’t have to walk 200 meters to, a bed that fits his 6’5” frame, with more than a 2” mattress, no sand or dirt in his coffee. I can only imagine what life was like on his deployments.

Some families have been up against some financial hardships and it calls for tough budgeting to pull through these times, to really draw a hard line between needs and wants. I would like to challenge everyone reading our blog is to mentally go to Afghanistan or Iraq for a moment and think about what your life would be like. When you return from your mental trip, I hope you feel as I did; the appreciation of everything you have, what the United States has to offer, and for the men and women deployed away from friends and family.

Thanks to all the men and women serving in our armed forces; And may every son and daughter serving, return home safely.

Sunday, 9 May 2010

Fitness and Financials

Four weeks to my bucket-list triathlon sprint. It is the last hour panic of must get healthy, must get fit activity. I had forgotten how good you feel when the endorphins kick in after a run. What’s so great is that you can do it all so cheaply. 

You don’t need to spend money on a gym or buy equipment to get fit. Running outside beats the tread mill for cost and keeping you fresh and inspired. Public Television broadcasts workout programs you can record and follow. The internet has a great yoga videos you can follow along for free. Staying healthy- staying fit helps keep your healthcare cost low and keeps you feeling great.

If you are paying a gym membership, now might be the time to suspend it and spend your time outside running or riding a bike. Grab friends to join you on the run or bike ride and make a day of it. Not only will you be saving the cost of your gym membership but you are building a tighter community of friends; all getting healthy together.

Monday, 12 April 2010

Tax Time – The Psychology of Taxes

Okay, so I have my MBA in finance and I know that we should have our tax withholdings set from each paycheck so that come April 15, we still owe $1,000 or more on taxes. My propblem is that I really like getting a tax refund. Financially I know that if we get a tax refund, we have just given the government an interest-free loan. We could have invested the money or paid off debt instead of having a “forced savings of 0%” by overpaying taxes.

If we owe money come tax time, I REALLY dread doing my taxes, put it off until the last minute, get moody and am generally no fun to be around. I feel that the government is taking way too much of my salary for taxes and look for every possible deduction that I can find.

 When I know that I’m getting money back on my taxes, I look forward to getting them done to see how much I get back. I’m in a much better mood and feel good that I’ve done my civic duty of paying taxes. I then put the money towards debt reduction, investing, savings or vacation. It is “guilt free” money that I feel good about spending.

Are a few dollars in interest (or more) worth the reduced stress come tax time? Financially and psychologically, I have two different answers. In this case, my mental soundness wins over my financials.

Hope you are, as well, on your way to a pain-free April 15th tax day.

Saturday, 13 March 2010

A Jewel in the Rough

We found another mini-vacation site only 35 miles from where we live. It is the Ladora Bank Bistro, in no other place than Ladora, Iowa, population 286. Proprietors, Brad Erickson and Colleen Klainert purchased the 1920-built “jewel box” style bank and turned it into a bistro of fine wine, phenomenal food and an atmosphere that an old banker loves.

The structure maintains its marble teller windows and the iron teller cages, original wood floors and the two original vaults, now being used as a wine cellar and a kitchen storage closet. Engraved in the wall, next to the 24 foot high ceilings are four pillar statements that warm my heart:

“Frugality is the the Parent of Fortune”
“Integrity in the Companion of Success”
“Wealth is the Achievement of Thrift”
“Diligence is the Mother of Virtue”

On the outside of the bank, above the entrance etched in stone reads “The wealth of this community embodies the richness of her soil, the integrity, frugality and diligence of her people.” On the first visit, Kristy bought me their t-shirt with the sayings.

Colleen and Brad have a great menu of small plated appetizers meant to be shared. Our favorites are the Prosciutto, Maytag Blue Cheese, Stromboli and mini mushroom tart coupled with the California blend Snap Dragon. Colleen is a wine expert and pairs the wine with your taste and food to make the culinary experience extraordinary. We end on either the chocolate covered cherries or the Turtle Minis, both wonderful.

Chocolate, Red wine, a Fortress of old money….is this heaven?

If passing through Iowa or a nearby resident, we invite you can take an afternoon or evening mini vacation and experience the comfort and fun of the Ladora Bank Bistro. Check out the website for the story on the bank, Brad and Colleen, pictures, the menu and hours. Let us know what you think.

Saturday, 6 March 2010

Save Energy -Save $$$

If you have a primary residence in Iowa and are served by MidAmerican Energy, then you are most likely eligible for a free energy inspection audit. We had our EnergyAdvantage® HomeCheck this past week. Not only was it FREE, but they made energy-saving improvements to our home during the audit. Outcome of the visit:
  • A FREE report of the condition of our home's insulation, heating and cooling efficiency, water heating equipment and windows
  • Replaced bulbs with FREE energy-efficient light bulbs
  • Swapped out two FREE shower heads with energy-saving, massaging shower heads
  • Installed a FREE energy-saving faucet aerator on the guest bathroom sink
  • Provided us with a 70% rebate for additional insulation in the attic (value of $750!)
There were a number of other things that they would have done, had our home needed it (such as water pipe insulation, water heater insulation blankets and programmable thermostats).

Check with your energy provider to see if they are offering the same service. Not only were the upgrades free, but they will help us save money on our future energy bills, the updates conserve energy and reduce the demand on natural resources needed to produce energy, reducing our carbon footprint.

Sunday, 28 February 2010


It’s the end of the month and time to assess how we are tracking fiscally into the new year. As we continue to reassess our spending habits and values, we still crave for a more simplified lifestyle. Not so much about spending less time at work, we both love our careers. But we both feel the need to spend more time with our family, our extended family and our friends. We love meals at home, movie night with homemade pizza and popcorn, playing dominos, cards or watching the boys take on marathon nights in the game of Risk, soccer games and story-time with our grandchild. Those times are starting to seem more few and far between.

It is difficult to keep a healthy balance between work and time for family and friends. There is always one more report to write, another meeting to prepare for and another e-mail to answer. We have to consciously make family and friends a priority. We know that balance is important in reducing stress and maintaining our health. How convenient that doing the simple things at home with family and friends is also better on the budget and living within your means.

Wednesday, 24 February 2010


Staying healthy and fit is one of the best things you can do for your bottom line and your waist line. You get to that point where a little voice in your head starts to think that if you don’t get going, you’ll be too far gone to ever be fit again. How to get there? Aim high. Isn’t a triathlon on everyone’s bucket list? Are you in the Midwest? Check out the June 6th Pigman Sprint Triathlon in Palo Iowa. Not in the Midwest? Find a USA Triathlon sanctioned event near your hometown.

Yes, we are recruiting first-time participants, preferably over the age of 50. We like good company and would be thrilled to have some still with us at the finish line. This year, it’s all about finishing and all the endorphins between now and June in prepping for the big event.

Saturday, 20 February 2010

A Phenomenal Alfredo

Yes, Bob did it again. You must try this! Friday night we had Chicken Alfredo for 4 for $12. (Cost of paired wine excluded).

We followed the Alfredo recipe from RecipeZaar with the addition of ½ cup of shredded Asiago cheese. This sauce went over a bed of thin egg noodles from Kalona and was topped with chicken (cubed) browned in olive oil and 1 cloves of garlic. For a wine, we paired it with Mayo 2008 Sauvignon Blanc. If you are a die-hard red fan, then a pinot noir will work very well. Mighty fine dining at a mighty fine value!

Monday, 15 February 2010

Linen Liners

Have you ever received a gift where the wrapping paper is so beautiful, you can’t bear to toss it? I love to upcycle beautiful gift wrapping as linen linings in my dresser drawers. A special treat is to sprinkle them with lavender oil. Even if the paper only stretches for one drawer, I love the mix and match of each drawer having it’s own characteristics. Seeing the lovely paper when I root to the bottom of the drawer reminds of the event's special celebration day. 

Friday, 12 February 2010

Valentine's Day Panic

It is almost Valentine’s Day and with all the other chaos, you have yet to prepare for how you will let your loved ones know how much they mean to you. Short on time or money, the following action plan will save you:

1) Relatives and parents for whom you have not yet mailed a valentine: Take a picture of yourself/family blowing a kiss from your phone; and then send off to their cell phone their ‘Happy Valentine’ picture-card.

2) Write tons of little notes to your kids/husband/wife and hide them everywhere they will pass that day. Example places with sample messages:

a. For your kiddos: coat pockets “Pocket full of love for you”, toothbrush “Your smile lights up the room”, math book “1-2-3, my love for you will always be”, I-pod “Your voice is like music to my heart”, steering wheel of car “Even when you drive me crazy, I still love you”.

b. For your hubby or wife: in their shoe “You are my soul-mate” , bathroom mirror “ lip-stick kisses”, remote control “You turn me on”, light switch “You are the light of life”.  You get the picture - the sillier, the better.

3) Plan a dinner where everyone participates. A favorite of ours is homemade heart-shaped miniature pizzas.
Hope you all have fun-filled day with your loved ones.

Wednesday, 10 February 2010

Snowy Sundays

It’s Sunday afternoon, there's a lot of snow on the ground, it’s cold and we have no energy to do all the things we need to do. Solution: Escape on a mini 4-hour vacation. Last Sunday, we went out with another couple to chase away the winter day and take a time-out from our overwhelming list of 'not-done's.

We landed at Fireside Winery, located in Marengo, Iowa about 30 minutes from our home. We had great fun browsing through their gift store and sampling their wines. Who knew Iowa could produce such lovely reds? Levi, our host, shared warm brie and bread with everyone in the tasting room.

Our favorites? The Frontenac and Hearthstone, which pared well with the artichoke spinach dip, our meat and cheese plate, the good conversation and wonderful company. The scenery of the snow covered field was peaceful and relaxing. You don’t always need an expensive vacation to escape. There are discoveries to be made in your own backyard. 

Monday, 8 February 2010

Household De-formation

One of the themes we have alluded to repeatedly at Financial Jenga is trends and sustainability. When a trend is not sustainable, reliance upon it can cause massive errors in analysis. The old adage "there's nothing more dangerous than an analyst with a ruler" illustrates the danger of extrapolating such trends. In our very first blog entry we mentioned one unsustainable trend:

We are at the front end of the suffering now. It was easy to see it coming when new houses were adding 2% or more to the existing supply for years and the population was growing at half that rate or less. The Census Bureau confirms that the number of empty houses has never been higher.

The only way that such a wide disparity between housing demand and population could be supported was for the average household size to shrink constantly. This is obviously unsustainable since you eventually reach an average household size below 1.0. Calling that eventuality 'unlikely' is a tremendous understatement. We have contended that consumption has been bloated by credit for years as part of our central UDB (Universal Debt Bubble) thesis. Housing is no exception.

Over-consumption of housing has taken many forms. Square footage per person grew steadily for decades. Increased amenities is another aspect of the same phenomenon. But an absolutely key trend was privacy as a luxury item. For generations, single people have lived with roommates as a means of saving money. The UDB allowed many singles the luxury of privacy by having their own place - whether rented or purchased, thus increasing housing consumption further. In many cases, this could not be justified on a sustainable basis. Credit was the key to the lifestyle of the $40,000 millionaire class.

This has all changed drastically since we started the blog two and a half years ago. Household formation has stalled out and is now considerably LOWER than population growth. Singles are moving back in with family, parents with their adult children or vice versa. Others are going out and getting roommates. And even population growth itself is slowing due to immigration falling. This is even more true if one includes the illegal alien population. All of this is described in analytical piece by consultants IHS - U.S. Household Formation Is Down Sharply. Some particularly salient quotes:
...the number of households increased by 398,000 between March 2008 and March 2009. This was the smallest increase since 1983, and the second-smallest increase in the history of this statistic, which dates back to 1947.

The decline was particularly sharp for those who live alone. The number of women living alone declined by 398,000, while the number of men living alone fell by 112,000.

The recession is behind the slowdown in household formation. Hard times have forced many of those who have lost their jobs, their homes, or both to move in with family or friends. In addition to this, immigration is down. As a result, the number of persons per household, which had been dropping in recent decades, increased in both 2007 and 2008.

The data pretty much speak for themselves. The trend of over-consumption reversing is certainly manifesting itself in housing. These secular trend reversals are occurring in addition to the cyclical factors of inventory and shadow inventory overhangs. The elephant in the room is the future overhang of selling by the Baby Boomers. The big cash-out and trade-down secular trend as the Boomers retire is still mostly ahead of us. That trend ought to be good for retirement homes and other senior communities but will be putting pressure on the housing market at large for at least 15 years and more likely 20 years.

The trend reversal of households consolidating appears to be the new normal. It is simply correcting a period of gross distortion due to the UDB.

Sunday, 7 February 2010

The Non-Comparison

It seems quite popular in these days of crisis for certain commentators to compare struggling individual states within the USA to the troubled Eurozone PIIGS (Portugal, Ireland, Italy, Greece and Spain). ECB President and Apologist in Chief for the Euro Jean-Claude Trichet (and boy isn't that a bunch of Capitalized Words strung together) is a prime example. A couple of weeks ago in a speech about the Greek Financial Crisis his remarks were summarized by Business Week:

He [Trichet] also played down the importance of Greece's economy on the euro region, which he said represents less than 3 percent of the bloc's GDP, especially when compared with the size of a U.S. state such as California.

A number of news outlets and blogger have echoed these sentiments so it behooves us to examine the validity of the comparison. On the pure surface level, Trichet is correct: California had a GSP of $1,850 billion in 2008, whereas Greece's GDP was less than one fifth as large at $343 billion. So we can conclude that he in not lying outright but what of the implied statement that California's financial problems are more important to the US than Greece's are to the Eurozone and EU? For this analysis we will leave aside the issue of the rest of the PIIGS.

For perspective, let's start with raw numbers. The debt of the Greek government hit 300 billion Euros two months ago making headlines around the financial world. At current exchange rates, this is over $400 billion and is surely higher today. The total general fund debt of California is LESS THAN $85 billion as of January 1, 2010. So in absolute terms, the Greek Problem is nearly FIVE TIMES LARGER than California's. In terms proportional to the size of the respective economies, the disparity becomes even more striking.

Implications of Federalism
With a little thought, the reason for this disparity should be obvious. California's state government brings in tax revenue of just under 5.0% of GSP and plans to spend 5.5% of GSP in the FY 2010 budget. Greece taxed 32.2% of GDP and spent 43.0% of GDP in 2009 as estimated by the CIA World Factbook. The state government of California is not the top-level sovereign even within its own borders. Federal taxation and spending within California far exceeds the comparable activities driven by Sacramento. In terms of government impact on the economy, the key is at the Federal level, not the state. So in addition to California's government problems being a much smaller deal overall, the consequences of failure would also be less for the population than would be the case in Greece. We can safely conclude that Trichet's statement, while true at first blush was highly misleading in its implications. There is simply no comparison between the gravity of the current crisis in Greece and the looming one in California.

Having dealt with that nonsense, let's talk about the rest of the PIIGS. These are all similar, top-level sovereign situations. It would appear that Portual is next, with Spain not far behind from the trading activity in CDS and the rising risk premiums being demanded. Italy is not nearly as badly off and it may be unfair to lump them in with the rest of this group; the market appears to be taking note of that as well. And then, there is Ireland.

Celtic Hedge Fund
Ireland is in for a tough time. Their total external debt was 1,637 billion Euros (roughly $2.23 trillion) as of September 30, 2009 with an economy of $177 billion per the CIA. Irish banks alone account for 41% of the debt. Another way to express this is that their banks owe foreigners over 500% of the nation's annual GDP. Many financial institutions are counted in the "Other" category which is nearly as large in terms of foreign obligations. The largest components would be insurance companies and pension funds. In all, Ireland's financial sector probably owes nearly 1,000% of GDP to overseas entities. This is a time bomb comparable in design to Iceland but with many times the explosive power. This is another nation being run like a hedge fund but Ireland currently owes more than 30x as much as Iceland going into their meltdown.

None of this is to suggest that the US doesn't have truly huge problems. But let's not be distracted by specious comparisons involving the states. In the US, the fate of sovereign credit will be determined almost entirely by the actions of the Federal government and the market's reaction to them. In the Eurozone, that same process will be resolved in the national capitals and possibly also in Berlin. Barring a decision by Germany to bail out other members, individual European nations can and will choose austerity or default themselves.

Tuesday, 2 February 2010

Ties that Bind Us

Our office moved into a new location. With cutbacks this year, there was no budget for art. Our solution was to create our own artwork. To start, most everyone contributed at least one old necktie from their household.

This past Sunday, volunteers pulled together and created the tapestry for our reception area, titled ‘Ties that Bind Us’. The backing, stuffing and neckties were all repurposed from previously discarded items. Our work of art is a great example of “Upcycling”, where you repurpose discarded items to give them a new life. Turning trash into useful items goes a long way in saving you money and the environment.

Not only do we have a lovely work of art; the pride, joy and teaming together to create the work of art is priceless. Wearing the remaining portion of the clipped neckties will add to the fun during our open house next month. :)

Saturday, 30 January 2010

Less-Stress Investing

New Bank Rules Sink Stocks”, “Turn at the Capitol Rocks the Market”, “Stocks Set to Bounce” -The stock market and individual stocks are susceptible to headliners, rumors and speculation. Daily monitoring of the ups and downs can be disheartening or exhilarating. Remind yourself that stock market fluctuations are relatively short-run and investment in stocks should be for the long haul. Historically, prices recover over time. If volatile stock investments are too stressful for you, consider growing your investment portfolio through low-cost index funds (i.e. check out Vanguard 500 Index at Index funds reduce the effects of individual stock fluctuation by diversifying your portfolio and have performed comparably well.

In order for your savings to outpace inflation; you will need to take on a certain amount of risk with your investments. Low-cost index funds are an option for the road-weary.

Friday, 29 January 2010

Never Shop Hungry

Yesterday I stopped at the store on my way home from work to pick up a few items on a list. Being close to dinner time, I was hungry. I ended up filling my cart with junk food. My intent was to pick up a battery, laundry detergent and milk. While I did get the items on my list, such items as Tostitos, Velveeta cheese, salsa, crackers and Oreos also populated my cart. Bad move to grab a cart vs. a basket which further enabled caving into my hunger cravings. The kids at home were happy to see the junk food but it was not what we needed. I ended up spending over $50 on what should have been a $20 trip.
Lessons learned:

Don’t go grocery shopping when you are hungry. Food and low prices (I’m always looking for a deal) were just too hard to pass up.

Stick to the list. Even though I had a list, all the end caps, large stacks of food and low prices were too good to pass up. Even though I got a great deal on all the extra munchies, it cost me twice as much as I should have spent.

Use a basket not a cart. I had plenty of room in the grocery cart and it didn’t weigh me down when I added the additional items not on my list. If I would have used a basket, I know I wouldn’t have been as tempted to purchase items not on my list.

Wednesday, 27 January 2010

The 28-Day Challenge

Feeling cash strapped? Trying to dig out of debt from December? February is the shortest month of the year and is a good time to challenge yourself to simplify. Experiment with cutting out non-necessary expenses for 28 days to see the impact on your cash flow and your happiness. What would happen if you made most your meals at home with your family and friends; If you invited your friends over to make a meal together instead of going out on the town; If you didn’t watch the cable add-ons for the 28 days; If you packed your lunches and not buy anything from a vending machine?

Only you can decide what your wants are, what makes you happy and what is worth the cost. Try the 28-day experiment. See how much money you can churn toward reducing your debt, build up your emergency fund or give to a cause like Haiti. The challenge is on… go for it!

An Elegant Solution

The heads of the global banking cartel are currently gathered for their annual meeting in Davos, Switzerland. They have received enormous subsidies and bailouts at the expense of taxpayers in many nations all around the world. Those nations that possess representative governments are now beginning to respond to the outrage of their citizens at this gross injustice. In Britain, this has taken the form of a proposal to tax financial transactions. In the US, President Obama recently proposed regulations to limit the risk-taking activities of banks and to force the "too big to fail" institutions to shrink. The bankers' response is a proposal to take regulatory power away from national governments according to a British Press outlet.

This of course would be precisely the WRONG action. National governments in representative systems are forced to respond to the concerns of their citizens. The bankers' proposal would push the power even further away from the people and vest it in unaccountable supra-national bureaucracies. Our response should be precisely the opposite - devolve regulatory power over the banks back from the Federal government back to the state level. This should be particularly true for commercial banking. First, power should be as close to the citizens as reasonably practical so that the exercise of government power will be as responsive as possible to the average citizen. Second, power should be decentralized so as to reduce the incentive to abuse it and to minimize the damage when such abuse does occur.

One very positive effect would be to create a framework that automatically penalizes large organizations. Giant banks constantly lobbied to reduce the role of the states in banking regulation in the name of "efficiency" starting in the 1970s. One of the chief claims advanced during that period was that US banks would be unable to compete with foreign (especially Japanese) banks without consolidation. That turned out to be correct as the US banks produced a bubble very comparable to the one that has led to a 20 year depression in Japan.

The collapse of the states' role led directly to the creation of corrupt TBTF mega-banks by reducing the cost of geographic consolidation, just as the weakening and then repeal of Glass-Steagall enabled the growth of financial conglomerates via acquisition across business lines. President Obama has called for limiting the ability of banks to take risk and also breaking up the TBTF banks. We agree and call upon the president to immediately re-implement Glass-Steagall in order to confirm the seriousness of his words via corresponding action. In addition, we call upon him to remove all federal roadblocks to state banking regulation.

The mega-banks object to state regulations because it would increase their cost of compliance. We agree that it would increase such costs and further state that such an outcome would be a GOOD thing. It would create an automatic systemic incentive not to expand. It would be far better for the banks to decide to break themselves up rather than to mandate such an outcome. The legal and regulatory environment can provide the proper incentives and then leave the implementation to the individual players when they find such actions to be in their self-interest. The explicit repudiation of the "too big to fail" doctrine should be sufficient as the only reason to create such behemoths was to become large enough to hold the US economy and financial system hostage. But it never hurts to create the right incentives - all that Washington DC needs to do is stop interfering with the states' ability to regulate.

This seems to be an elegant solution.

Friday, 22 January 2010

Trembling Pillars of Fraud

Over the last two weeks we have seen a series of indications that some of the key elements supporting manipulation of market pricing mechanisms are beginning to tremble. We have seen equity prices rise despite the lack of any significant increase in profits. We have seen commodity prices spike without much increase in real demand. In our opinion the key institutions behind this mess are the major Wall Street (TARP) banks, government agencies and the Fed. They have all played a major role in creating credit inflation, with subsequent asset bubbles and debasement of our currency. But understand this: if you 'look through' each of those institutions you will find the US government backstopping each and every one of them. Each of those has come under increasing attack and as the supports have begun to shake, the fraudulent pricing they have promoted has also begun to unwind. As politics has supported bubble dynamics, so it can destroy them - live by the sword, die by the sword.

Fear and Loathing
First, Yahoo Finance reports that Wall Street's bonuses being paid out now will total $145 billion. That is greater than 1% of US annual GDP. In a normal year that number would be insane. After the disaster those same players inflicted on the US and global economy, that number is downright obscene. Bailouts were indefensible to start with and now you can add infuriating arrogance to the list of offenses. Public anger may be getting through to Congress and without siphoning off taxpayer money via the legislature, the rest of the Wall Street con game doesn't work. It has now gotten so bad that according to Dow Jones Newswire the TARP still exists only courtesy of a Senate filibuster by its supporters.

Fear of angry constituents has taken on a new urgency for our elected officials in the wake of a shocking Republican victory in the Massachusetts election for Senate. With citizens realizing that the Fed's actions have been a pure handout to Wall Street, the reconfirmation of Ben Bernanke as chairman is now very much in danger. Today, the NY Times reports that two additional senators abandoned him. With Geithner at Treasury already under serious scrutiny by Congress for his role in the bailout of Goldman via AIG and the subsequent attempt to hide the details, the two most prominent faces of bailout nation are both in danger of being forced out.

Friendly Fire
The biggest blow psychologically may be the rhetorical broadside from President Obama against the big banks that are a key leg of the credit inflation machine. His speech yesterday called for them to be cut down to size and shackled. This was a frontal attack on the concept of Too Big To Fail, with its implicit taxpayer guarantee for the stupid risks taken by big banks. The Obama Administration has given Wall Street nearly everything it wanted so the Street must now feel shocked that their tame politician has turned on them viciously. We have long felt that once the anger of the populace rose to sufficient levels, the political class would throw the financial elites under the bus in the interest of self-preservation.

Our government has betrayed our nation's citizens in many ways - from the TARP to the uncapping of taxpayer losses on Fannie and Freddie on Christmas Eve. The failure of those policies to make things better or even to stop them from getting worse is now obvious. The failure has become political kryptonite - so much so that Rep. Barney Frank is calling for Fannie Mae and Freddie Mack to be abolished. Frank has been one of their main defenders and cheerleaders for years if not decades. For him to even contemplate such a call tell us that taxpayer bailouts have become the political equivalent of Ebola.

Political support lies at the very foundation of attempts to revive the bubble by inflating credit and eroding the dollar. It is clear that this political support is evaporating before our very eyes and the state of the markets is beginning to reflect that. Suddenly the political foundation of Bailout Nation isn't looking too stable and the pillars resting on it are beginning to tremble violently.

Thursday, 21 January 2010

Home Maintenance

Last week, a broken kitchen faucet led to an accidental remodel of our first floor bathroom. We love home improvement and a trip to Lowell’s is like a visit to the candy shop. The bathroom remodel was part joy and part good ongoing upkeep.

Home repairs play an important part in protecting your investment. Doing it yourself can be a fun challenge and a source of pride. In taking on the task, it is important to do your homework. Taking advantage of the free classes at your local home improvement store is a great way to build skill and befriend an expert. We believe we cut our remodeling costs by more than half in doing it ourselves and are very happy with the outcome.

‘Labor of love’ or just plain ‘labor’, doing it yourself is a great way to keep your maintenance cost low and your home value up.

Tuesday, 19 January 2010

Dieting and Dollars

Has January always been plagued as diet month? Ads plaster the newspapers, commercials are everywhere and we hear of the excessive holiday weight complaints throughout the day-from ourselves as well as others. Our excess weight is a sign of how we spend our money. Over 10% of American's disposable income is spent on food. This is twice what the typical family spent in 1929.

We know we don’t need to join a club or start a fad diet to lose weight. We could cut two-thirds of our fat, shave 700 calories and save at least $7 a day (> $2,500/person this year), simply by selecting healthy food options compared to eating processed fast junk food. If we eat healthy, we will lose weight, save money and live a longer, healthier life.

Diet and dollars – may both our weight and budget reflect healthy losses and gains in this coming year :)