Entries Tagged 'Oddities' ↓

So a couple months ago Get Rich Slowly linked my story about my super cheap ex-boyfriend and thousands of people read it in a matter of hours. After that I received an email from a guy named Alan Corey and it said the following:

Hi Baglady,

I came across your blog today and have to say I loved reading about your ex-boyfriend. He reminds me a lot of myself. I went to extreme measures to achieve my financial goals and finally was rewarded for it. I would love to send him (and you) an advanced copy of my book ” A Million Bucks by 30.” It hopefully will keep you both motivated to also remind you that you two are doing things right.

Cheers,

Alan Corey

www.alancorey.com

So I went to the guy’s website and read a bit about him, and he seemed weird, but kind of funny, and mostly harmless. So I replied to him to send me the book, and a couple weeks later I received a package from the publisher Random House and it contained a shiny advanced copy of the book and on the title page it said, “Here’s to better boyfriends”. (Well, thanks Alan, but I don’t need anymore boyfriends. I got a super cool hubby now.) I read it on the way to Southern California while my hubby drove, and to be honest I rather enjoyed the book because it was quite funny and candid. After reading his story of eating only ramen noodles for three months I understood why he said my super cheap ex reminded him of himself. Though what is funnier to me is that another incident in his book reminded me of myself. The story was that one of his girlfriends was really into movies and spent hundreds of dollars a month on her passion, and he made a spreadsheet showing her how much money she could earn if she invested the money instead of spending it on movies. (A replica of the spreadsheet is in the book). After he presented the spreadsheet he was dumped. I laughed out loud at this because I made a similar spreadsheet for my hubby while we were dating because he spent a lot of money on games and gadgets. Fortunately my hubby didn’t dump me. I do understand where Alan is coming from and the spreadsheet is really his way of saying to the girl that he cares about her, but unfortunately the message was lost somewhere. The book is also sprinkled with sections named “Extreme Cheapskate Strategy”. Some of these tips are good, but some are a bit too extreme or even borderline unethical. I will not list them here, but some of these are pretty hilarious too.

The main vehicle Alan used to become a millionaire is real estate. But unlike the infamous Casey Serin he was very sensible about what he could handle. He almost always offered lower than the asking price and had partners and kept his full time job throughout all of his real estate ventures. I like that Alan acknowledged that he was lucky to catch one of the largest real estate booms in history, but I would like to emphasize that Alan really worked his butt off too. I really don’t know how he is able to have a full time job, handle six or seven crazy tenants, go to a bazillion open houses, renovate houses, host success seminars, and go on a bunch of reality TV shows. My main criticism of the book is that people might read it and think it’s easy to become a house flipper or landlord and suddenly become a young millionaire. Those easy money days are dying down and it really takes a lot of time and patience to be a successful real estate investor. I think Alan should have had a summary of his personality traits and actions that took him where he is, and I think a lot of financially successful people have similar paths to Alan’s. I will try to summarize the things that made Alan successful here for him:

1. Have a clear goal — Alan lists his goals from the beginning of the book to the end. His main goal has always been becoming a millionaire by 30, but he also had many smaller subgoals that brings him closer to the majority goal. Basically, knowing where you want to go is always important to your success.

2. Don’t Care About What Others Think of You and Live Below Your Means — Alan was really cheap and didn’t care to have a beautiful apartment or the best room in the house, and that’s how he saved and earned money. He also earned a lot of money and free goodies by being ridiculed on reality TV shows, but that’s really in another league of not caring what others think.

3. Work Your Butt Off (at least in the beginning) — As I mentioned before, Alan really worked pretty hard when he was young, and as his wealth increased it became easier to accumulate money. The rich do become richer, but sitting on your butt and not working towards your goals will not make you rich in the first place.

4. Take Risks but Also Research Everything Before You Jump In – For the most part I thought the risks Alan took in real estate were realistic and well thought out. He also emphasizes that he took a lot of time researching the investments he was about to make. I think the research part is overlooked by a lot of people who want to become rich quickly. It is usually not that easy to find a good investment and the cliche “it always goes up in the long run” isn’t always true for everything.

5. Don’t Be Too Greedy – One thing I really liked about Alan’s story is that he quit and got out of the rat race. If he kept on flipping houses he might have lost his fortunes, but he did what he wanted to do and decided that he is done. Sometimes people can become wildly successful but never learn to quit and become a slave to earning money once again. I admire the people that value living their life over having the biggest bank account and the fanciest cars. Another example of this is Millionaire Mommy Next Door and I highly recommend her blog.

Anyway, I definitely recommend Alan’s book if you want a light hearted read about a Southern boy making it big in the Big Apple. I was laughing a lot when I read it, but that is because I can really relate to what he went through.  Though I am hoping that his book doesn’t create any new Casey Serins and his readers would realize that it isn’t easy to become a millionaire, but anyone could do it.

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The Baglady has collected over 450 reader comments and there are some comments that are so entertaining and thoughtful that I have to share them in case you missed them. So today I shall highlight some comments from my article about my generation in the workplace.

Some background on these commenters: qmc is my classmate from school and Alex is an ex-coworker and friend. We do know each other in real life and they’re both interesting and intelligent guys.

This thread starts off with a comment from an anonymous guy:

30-something on 11.28.07 at 1:04 pm

This reeks of sense of entitlement. At 24 you can not have as much experience as someone who has been doing a job for 10 or 20 years. You will see, when you are older and 20 year olds come in and think they know more than you, just wait you will see.

Then qmc and Alex chimed in, and I have to say Alex’s comment is absolutely priceless and the incidents he mentioned are hilarious.

qmc on 11.29.07 at 6:31 pm

30-something,Just because someone’s been doing something “longer” doesn’t mean they’re doing it “better.” Some of them have been doing it “longer,” but not “better.” Incidentally, from doing some interviewing for my employer, I’ve met some “Business Intelligence Engineers” with 5+ years of experience that supposedly work with databases all day, don’t necessarily know either (a) how to code or (b) how to write efficient SQL (strange union query with aggregates instead of a simple outer join?)That being said, I realize I don’t know everything, but I expect some learning to go both ways.

Alex on 11.30.07 at 10:35 pm

I agree with qmc. Age may, but does not necessarily, confer experience. There are definitely people who have been in the software industry for a long time and who are very experienced and whom I respect greatly.But then there are those who make be wonder, “How did you ever get this job?” I knew one guy who had been a programmer for years, but didn’t know DeMorgan’s Law. Several times he made changes to someone else’s code by pushing the NOTs into or pulling them out of a boolean expression without changing the ANDs to ORs and vice versa. What motivated him to make those changes I do not know; perhaps, he just didn’t like the way it looked. The first time he made that error, I dismissed it as a momentary lapse; but after seeing him make the same error multiple times, I realized that he didn’t know what he was doing. I tried explaining DeMorgan’s Law to him, but he wouldn’t listen. He tried to determine whether the code after his changes was logically equivalent to the original code by testing different cases in his head in an ad hoc fashion. I stared at him nonplussed; it was like watching an accountant try to add without knowing how to carry. Somehow he managed to survive many years as a programmer without knowing the basic tools of his trade.

Then, there was an incident with another coworker at Oracle OpenWorld; I’m not sure which story is more damning. We were given a free pass to OpenWorld as Oracle employees. For a couple of hours, we were allowed to walk around and tour the booths. At one booth, there was a slightly anthropomorphic robot. It would roll up to people and ask, “What is your name?” If you ignored it, it would ask, “What is your name?” over and over gain. So at first, I thought it was stuck in an infinite loop. But then, it said, “HEY YOU! What’s your name?” After a few minutes’ conversation, it became apparent (at least to me, and I think, to most of the audience) that there was a man behind the machine. It could recognize that a California state driver’s license was upside down and could recognize that a set of car keys had the Honda logo. Someone asked it to compute the square root of 3; it initially could not do it, but later it responded with an answer, after, I assume, the human operator plugged it into a calculator. I asked it what would happen if I put it inside a Faraday cage. It didn’t know what that was at first, but later it responded with a definition that the human operator probably found with Google. In any case, as we walked away from the booth, my coworker said to me, with all sincerity, “Technology these days is really amazing. I had not imagined that they could build a robot like that.” I stared at him incredulously and thought, “How can you be a programmer for so many years and remain ignorant of the state of our art? There is no way that AI is that advanced.”I do not know how some people managed to get by for so many years and remain so ignorant. Perhaps, it is an after-effect of the boom, when many people were hired indiscriminately without having their qualifications rigorously checked.

Alex’s comment is probably more appreciated by a nerd, but it is pretty awesome.

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So there is chatter in the news the government worked out a deal with major banks to freeze the adjustable rates on mortgages of many subprime borrowers. The rules are, the loan has to be originated from the beginning of 2005 to July 30th of 2007 and the rate is set to reset in 2008 to 2010. The subprime borrower also have to have a good payment history and live in the home to qualify. So I thought I would do an non-expert analysis on who benefits the most in this situation.

The Winners

The biggest winner is the banks that made these loans. Some of the teaser rates for these subprime loans are as high as 8%, so I don’t think the banks are hurting much by collecting a rate thats 16 times the average of national banks interest payout on savings accounts. Additionally, by keeping the borrowers in their homes, the banks do not have to deal with an asset that has depreciated in value. Basically, the banks are saving and earning billions by keeping subprime borrowers up to date with their debt.

The next big winner in this situation is the government. Why? One word: taxes. By keeping these stretched homeowners in their homes the government can continue to collect property taxes. Additionally, since the mortgage rates are not rising the homeowners will have less mortgage interest to deduct on their taxes and that means more tax revenue for the government than they would have had otherwise.

The Indentured

I don’t consider the homeowners who keep their homes in this plan to be winners. Sure, they get to keep their home, but many of them are so financially stretched that almost their entire income is going to the banks and that is a very stressful situation. In fact, if they weren’t financially stretched, they wouldn’t qualify for the program. This is Secretary Paulson’s outline of the plan:

Paulson offered a general outline of the plan on Monday. He identified four groups of subprime borrowers facing rate increases on their adjustable-rate loans: Those who cannot afford their payments even at the current rate; those who could afford payments at the higher rate; those can refinance into a “sustainable mortgage while keeping investors whole;” and those who can afford their mortgages today but could not at the higher rate.

Only the fourth group would get help.

These homeowners are just indentured servants to a gargantuan money hungry force. Their rates will be frozen for five years, but they will have to keep on paying the price on an asset that has depreciated greatly with all that they have.

The Angry

I would count myself amongst “The Angry” because I think the plan is unfair to most consumers and Americans in general. I don’t own a home, but I know many people who took out reasonable fixed rate loans at higher rates than these subprime borrowers, only to see irresponsible behavior rewarded. Additionally, as Paulson said, “those who could afford payments at the higher rate” will not get help. How is that fair? I suppose life just isn’t fair. I think this plan, and other mortgage related bailouts are just further discouraging people from saving money, and living a sustainable lifestyle. I also think the subprime borrowers who had absolutely no equity in their homes would do better just to walk away, save some money and buy a home for a much cheaper price. I know it’s not that easy, but we can’t continue to support this manipulated bubble economy.

Quote Source: San Francisco Chronicle 12/6/2007 Kathleen Pender: How mortgage-rate freeze could go wrong. This article is a great read that echos some of my thoughts.

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We’re heading into the winter doldrums of real estate and these two weeks I examined 218 properties that were up for sale in San Mateo County. Of these, 28 qualify as home sellers in trouble. Here are some highlights. Continue reading →

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Recently I read a headline that since congress still isn’t sure about what to do with the alternative minimum tax, millions of potentially incorrect tax forms are going to the government printers. Additionally, tax returns will probably be delayed next year since people who use the incorrect forms will have to file an amended return. I haven’t even heard of the alternative minimum tax until I started working in 2005. Apparently a lot of my peers aren’t aware of this tax either. Even if they do know what it is they’re pretty confused about it. I am actually pretty confused by it, too, but I will list a few things I know that annoys me here. I encourage those who are more knowledgeable about this particular tax system to comment.

1. It’s Another Set of Forms to Fill Out – I think this part annoys me the most. Filing taxes is already complicated enough, but it’s doubly as annoying when you have to fill out forms for a second set of tax rules. This second set of rules makes everything more confusing because you have to keep track which set of rules goes with with tax system. What’s more annoying is that I usually can’t determine whether or not I have to pay the AMT until I complete both forms.

2. You Can’t Deduct State and Local Taxes – In the regular tax system the taxes I already paid to California is a deduction and no federal tax is paid on the money, but in the AMT state and local taxes (including local real estate taxes) are disallowed as deductions. This means that you pay taxes on the money you already paid as taxes. That just doesn’t make sense to me. In high tax states like California it could mean paying hundreds to thousands of dollars more on money you didn’t receive in the first place.

3. It Is No Longer a Tax for the Rich — The legend goes that this second system of taxation was invented in 1969 to prevent 155 extremely rich individuals from paying very little or no taxes. Then it was never indexed for inflation so now almost 40 years later we’re still using 1969’s standard of “extremely rich” to determine who should pay this tax. That makes absolutely no sense to me. Also, the standard of “rich” is very different across the United States. Here in the Bay Area, a family of four making $75,000 to $100,000 a year is by no means fabulously rich because our cost of living is extremely high. Adding to our cost of living is our high state taxes that can’t be deducted. Exemptions on children also can’t be deducted so families with more kids would be more likely to thrown into AMT status. It is estimated that 50% of families making $75,000 to $100000 a year will be subject to the AMT, and it is just an additional financial burden on a lot of middle class families.

4. It Nullifies Most, If Not All Tax Cuts in the Original System — Whenever I try to explain this point I have people saying that I am a conspiracy theorist and that the government didn’t intend for the AMT to hit the middle class. But here are the facts, suppose you paid $3000 originally in federal taxes and your AMT calculation comes out to $2999, then you don’t have to pay the AMT because your tax amount in the original system is higher. However, suppose the Bush Tax Cuts cut your taxes in the original system down to $2400, then you scored $600 right? Nope! You still have to pay $2999 because the rules governing the AMT hasn’t changed and now the AMT is the larger amount. In cases like these the AMT pretty much nullifies the tax cut completely. I have known people who started to pay the AMT because the Bush tax cuts made their federal tax lower than the AMT, and basically these middle class families didn’t benefit very much at all from the “tax relief”. I actually think the Bush tax cuts are fiscally possible because of the AMT. As I mentioned in the previous point, the AMT isn’t indexed for inflation, so they know that more and more people will be thrown into AMT status every year, and that means collecting more revenues from this second system as time goes by.

Anyway, I will conclude my rant here. Here’s a funny thought: if the alternative minimum tax never gets indexed for inflation, eventually everyone will qualify, and it will no longer be “alternative” and nobody can say that it’s a tax for the rich because everyone will be paying it. Then the IRS can just print one form again and completely abolish the original tax system!

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