Entries Tagged 'Economy' ↓

According to various measurements, the price of food and energy have increased anywhere from 6% to 9% in the past year. Meanwhile the interest rate on savings accounts have been slashed dramatically to less than 2%. In this environment, it is easy for a saver to feel like a fool, but there are ways you can mitigate the effects of inflation and still save for the future.

1. Stockpile food - Obviously, you can’t stockpile fresh food for very long, but you can certainly keep quite a bit of dried, canned, and freezable goods.  If you have room for storage, things like pasta or wine can be kept for a pretty long time. Sales are even better for stockpiling. For example, in my story about Safeway’s promotion I got quite a bit of pasta roni,canned tomatoes, and toothpaste for very little money. Now I wish I bought more because we went through the food pretty quickly. Stockpiling food is a form of non-financial investment that could pay off better than stocks as long as you do eat the food before it goes bad.

2. Invest in High Yield Dividend Stocks - I have a few stock holdings that have been giving out very high dividends. The ones I own are mostly natural resource and mineral stocks. I’m not an expert in stock picking, though, so the percentage of my individual stock holding is about 6% of my entire portfolio. There are a lot of ways to pick your dividend stocks and a simple and popular method is The Dogs of the Dow. In the current market, you have to be careful with the stocks that give too high of an yield because some of them may be dying financial services. As always, do your research before you invest.

3. Buy a Reasonably Priced House to Live In - If buying a house makes sense in your area it may be a good hedge against inflation. I am a staunch bubble sitter here in San Mateo because home prices are still way too high to justify buying a home. If inflation actually drove rent to within 10% of mortgage prices, I would consider buying, but the situation I am facing now is that home prices are falling but rent is still 1/3 to 1/2 the price of a mortgage on a comparable unit. However, if you can afford a home and in your area it is cheaper to buy than rent, it makes sense to buy a house to protect yourself against further rent hikes. As long as you get a fixed rate mortgage, your payments will stay the same throughout the term of a home loan.

I am sure there are many other ways people protect their savings from inflation. I have read that many people invest in I-Bonds or TIPS, which have variable rates related to inflation. I actually own some I-Bonds because they are state tax free. The problem is that these treasury bonds fluctuate with the core inflation rate, which doesn’t include food and energy. The result is that the return is lower than the real inflation, but they are generally better than dumping all your money in the bank or in a money market. The key is that you can manage your money well and diminish the effect of inflation when you put a little time into it. What have you been doing to fight inflation?

Share This

Hello everyone, welcome to the Carnival of Twenty Something Finances for the week of April 7th, 2008. In this edition we have more than forty articles on a variety of financial subjects that twenty somethings could learn about. Read on for some financial enlightenment!

Editor’s Picks

Investing Man presents 10 Tips On How To Negotiate posted at Wealth Building Lessons. This reminds of my post where I said everyone should haggle. Investing Man’s article expands the idea to all types of negotiation.

Finance Girl presents Childhood Money Memories, Part I posted at Finance Gets Personal. Finance Girl followed my post and wrote about her childhood money memories. There are some great stories here!.

Monevator presents Four ways to stop a financial crisis derailing your money goals posted at Monevator.com. Monevator gives great advice about not panicking in this economic environment. This is a very detailed and well written article.

Tip Diva presents Tip Diva | Top Ten Tips - Going Dumpster Diving posted at Tip Diva. This is a pretty interesting list of tips. I haven’t gone dumpster diving, but in the past I have gotten clothes, furniture, and books that were discarded on the side of the street. I am wearing a pair of my neighbor’s unwanted jeans right now.

Sarah presents The cost of graduating where she discusses how expensive a diploma really is! I never got my diploma because I was too lazy to order it. I think it’s still in Sproul Hall somewhere and employers verify everything online these days so I never needed my physical paper diploma.

Budgeting & Saving

Heather Johnson presents 8 Ways Women Can Save the Whole Family Money posted at wpersonalfinance.

GBlogger gives us Silly Rabbit, Budgets Are For Kids—How We Do Use Budgets posted at Can We Get Rich on a Salary?

zork presents 15 Ways to Exercise Your Budget during Recession posted at It’s the Recession, Stupid!.

Dividend Growth Investor presents Back test Results of one Rule of Thumb posted at Dividend Growth Investor.

Livingalmostlarge presents Budget backwards with priorities posted at LivingAlmostLarge.

Faron Benoit presents Establish Financial Goals posted at Financial Learn.

Seb presents Five things you should buy used posted at Pinching Copper.

Credit and Debt

Michael Bass presents What You Should Know About Credit Cards posted at Debt Prison.

Steve Faber presents - How to Get Out of Debt Fast posted at Debt Free.

FIRE Finance presents Three Quick Steps To Get Out of Debt! posted at FIRE Finance.

Shuchong presents I Thought it was Supposed to be Good Debt! posted at But WHY Doesn’t it Grow on Trees?.

Ray presents How To Avoid A 0% Balance Transfer Mistake posted at Money Blue Book.

Michael Bass presents What You Should Know About Credit Cards posted at Debt Prison.

College

Ted presents Cheapest Textbooks Online posted at CampusGrotto College News.

Patrick A. Sizemore presents 10 Guilt-Free Splurges for Students posted at College Information for Smart Students.

Realm of Prosperity presents Great Financial Aid Advice For College Students!!! posted at Realm of Prosperity.

Career and Income

Shanti presents WWSD #3: How Can I Work at Home Successfully? posted at Antishay Ventenne.

Tracy Kiss presents Conscious Flex: How to Find Your Passion and Make It Your Career: by Nicholas Powiull posted at Conscious Flex.

Passive Income Investor presents How I Generated $2,667 In Passive Income Last Month posted at LIVING OFF DIVIDENDS & PASSIVE INCOME.

Karin Verbeek presents From Nine-to-Five - That?s All You Need posted at Time Management Blog.

Economy

Wenchypoo presents Inflation—Here We Go Again posted at Wisdom From Wenchypoo’s Mental Wastebasket.

Free Stuff

Sally Thompson presents The Freeloader?s Toolbelt: 50 Tools to Help You Get Anything Free Online posted at Free Geekery.

Investing

Rio presents The Easiest Way to a Start a Roth IRA [del.icio.us] posted at Get Financially Fit!.

Charles H. Green presents Great Moments in Self-Regulation: Financial Planners and CFP Board posted at Trust Matters.

David Carter presents Why I Invested in Gold posted at David Makes Cents .com.

Richard M. Rothschild presents Bond Market Index Funds posted at Bond Market Index Funds.

Jorge H. presents Have We Hit the Bottom? posted at My Adventures into The Street.

Moneywise presents Largest mutual funds and their expenses posted at The Real Returns.

Real Estate

Ana presents Foreclosure Crisis Means A Buyers Market posted at DebtFREE-Revolution.

Dorian Wales presents The Personal Financier: How to Make Sure this is your Dream Home: 7 Practical Tips posted at Personal Financier.

Roshawn Watson presents Is Home Ownership A Good Investment? posted at Watson Inc.

Other

David presents $10 Bus Fares: Frugal or Frightening? — Money Under 30 posted at Money Under 30.

KCLau presents Financial Security: How you feel it? posted at KCLau’s Money Tips.

That is all for this edition. Thank you all for submitting your wonderful articles and make sure to link back and promote the carnival via social bookmarks! If you want to participate in the next carnival it will happen in two weeks and you can submit your articles here.

Share This

Several years ago, many of my classmates graduated into a recession and had hard times finding jobs. It seems that this situation may repeat itself again in the next couple years. There have been studies that state graduating in a recession sticks with a person’s career for a long time. Those who start off their careers in a recession generally has lower pay because they started at a lower point. Here are some tips for my younger friends who may suffer the misfortune of getting a diploma in an economic downturn.

1. Don’t devalue your time - In a recession, I have seen people accept jobs at firms who paid very little or jobs completely outside of their field of study just because it is the only jobs they could find. I don’t think it is necessary to devalue yourself just because the general economy is in the ruts. Your time could be used to learn things or start your own ventures. If you are not desperate for money it is probably best to continue searching for a job that you want and a company that would value you for your services.

2. Consider graduate school or professional training - Recessions are popular times to get more schooling because jobs are scarce. However, a full graduate school program can be extremely costly and you need to consider carefully if it is worthwhile. It may be cheaper and quicker to get professional certificates. I know there are many different certifications in IT and finance that could enhance a young person’s career without costing an arm and a leg.

3. Be frugal - A lean economic period is probably the best time to learn to be frugal and use your money wisely. You may have to be a boomerang kid and move back home with the folks or eat 50 cent spaghetti, but you may be unemployed for a while and learning to survive on a shoestring is essential.

4. Keep your eye on the economy - Make sure you keep yourself informed about the general economy. The reason is that if you did accept a lower payrate during the recession you should know when your pay should be adjusted to the market rate. Otherwise, new grads who graduate after you may be paid more than you, and that may seem unfair, but you need to be aware when this happens and ask for a change. Otherwise, companies are happy to pay you less.

5. Do your own thing and forget about looking for a job - There are some people who started their own businesses and never needed to find a job. For example, Ben Chui of Ben’s Bargains was class 2002 or 2003 at my school, and he never needed to find a job amidst the recession because of the success of his website. If you want to start your own company you should go for it while you are young and have nothing to lose. It takes a lot of work to succeed and make a living, but it is definitely possible.

The bottom line is, don’t let what you can’t control discourage you and cut down your future. As long as you are flexible about what you want to do and have a drive to improve your life, you will beat any economic downturn and graduating in a recession would not matter at all.

Have any more advice for new graduates? Feel free to comment!

Share This

I read the news almost every few hours, and here are some of the highlights of the business news that made me spit out my tea this week.

1. Countrywide fatcats get 19 million dollars in “performance incentives” - Bank of America is taking over Countrywide Financial, and they will be disbursing “stock valued at $10 million for chief executive Angelo Mozilo and $9 million for President David Sambol”. Gee, lets see what the performance of the company was. The stock price went from over $40 to around $6. The entire time the stock was in free fall Mozilo was dumping his shares. There are over 14,000 homes owned by Countrywide currently listed on their site valued at nearly 3 billion dollars. My only question is, how can I find a job where I can be a royal screwup and still get rewarded $10 million? Then maybe I could buy this house.

2. Walmart sues brain damaged employee - Apparently Walmart’s health plan states that if an employee gains healthcare money in a legal settlement, they are supposed to pay Walmart back. So a woman who suffered an accident that made her brain damaged and disabled is being sued by Walmart for half a million dollars. All she has is 277k left in her settlement and there is no way she could pay Walmart back. It is pretty sad and the case is inciting a lot of public outrage. Walmart makes billions of dollars a year, and they have a clause in their health plan that says employees have to pay it back if they had the money? That is a ridiculous health plan. The employee in this case paid for her insurance, and isn’t the point of health insurance to cover accidents? I’ve never bought anything from Walmart, and I probably never will.

3. The Fed loans another $100 billion - According to the article, “The Fed has worked some positive magic.” That phrase just invoked an image of Bernanke in a pink tutu flying around spreading wads of cash. I wonder when this fairy dust is going to come back and bite us in the rear.

4. Qwest in Colorado tells employees to pee in plastic bags - Apparently some supervisor didn’t like the long bathroom breaks his reports were taking. So he distributed urinal bags! Wow, that is really one crazy boss.

5. Viagra turns 10 - It is kind of funny that the 10th birthday of this little blue pill made national headlines. I don’t see anyone celebrating the birthday of penicillin or digitalis. Anyway, I don’t have anything against Viagra except for all those annoying spam messages that say “xxVIAXXgra”. Oh crap, now my blog is going to get Viagra ads.

I wonder what next week will bring.  Have a great weekend everyone!

Share This

I don’t write much about politics, because I absolutely loathe it. I am also not an American citizen so my opinion doesn’t count in this country anyway. Nevertheless, I have no idea why anyone would want to be the next president of America right now.  With everything that is happening, it truly is a horrible time to be president.  Here are some of my predictions of what would happen regardless of which candidate gets elected.

1. Taxes will increase - How is it possible that America could wage an extremely expensive war for five years and cut taxes?  I’m not sure how the government does its accounting, but it did borrow a crapload of money from the rest of the world to fund this multi-trillion dollar war.  The war is funded on debt, and Americans have not really started paying for it. The interest on the debt will pile on, and we will be paying for it for years to come.  Taxes will increase either because the Bush tax cuts expire in 2010 or because the next president will just have no choice but to raise taxes and pay down some of that debt.

2. The recession will be felt more acutely - This is really anecdotal, but yesterday I walked around downtown San Mateo and at least three shops and restaurants were out of business.  One restaurant just said, “LOST OUR LEASE” on the door. The recession is really just beginning, and usually in an election year the government does whatever it could to prop up the stock market, but once the next president gets up to serve it will come crashing down.

3. The housing market will fall some more - Of course the NAR is calling a bottom now that housing sales went up a measly 2.9% nationally in February. They are not highlighting the fact that this February was a whole day longer than last year, which means that the month was 3.5% longer.  Prices were down 8.2% and housing sales still declined in the west. I am not sure if the bottom will come in the next presidential term, but the housing market will definitely decline a bit more.

4. The war will go on - It is unfortunate, but I don’t think the war in Iraq will be over as soon as the democrats promise.  The Americans are just too entrenched in that country to suddenly pull out.

Whoever the next president is, God help him/her.  I really think that a major problem with American politics is that power changes hands every four years so that every president tend to do short term fixes and make his/her four years look as glorious as possible and leave the seething crapbag to the next person in line.   The entire system fits with the American culture of “I want it right here right now”, and that results in policies that borrow against the future. For example, billions of dollars have been taken out of Social Security in the last couple decades to pay for operating expenses. Unfortunately, I don’t think this prevailing attitude and policy of sealing mortal wounds with bandages would change with new leadership.

Share This