Frank the Financially Savvy Atheist - The F.S.A.

[rant and bitch]

Have you ever watched a TV show where one of the characters is having a lot of bad things happen to them and they often quip: "What else can go wrong?" only to have something else happen right after they say it? I feel that's my life right now. It's just one god damn thing after another. Let's recap:

1. We had to get a second au pair once the first one time's was up. It didn't work out with the second one and we've been without childcare for a month now. Another au pair is coming in mid-November. With my wife in grad school and my job picking up because of turmoil in the financial markets, this has really sucked major ass.
2. Then, our minivan had engine sludge. Turns out Toyota's have this problem with engines and Toyota could pay for a replacement...if we had our maintenance receipts showing that we had changed the oil every xxxx miles. Needless to say, we didn't and so we were faced with a choice of $10,000 for a new engine or $20,000 for a new car. So we traded in the old car and now we have a new Honda CRV. No used cars for now needed something more reliable.
3. After that, we got a bill in the mail saying that I owe $1,000 to some appliance store I've never heard of before. So that was someone writing bad checks in my name. Great. There goes three fraud alerts on my credit report and double checking my credit report. So far so good, looks like it was just a bad coincidence.

Now after all this, keep in mind that we have no childcare and my job has been getting more stressful as the financial markets have been increasingly volatile. The stress is driving me and my wife apart. After we got the new car and took care of the identity theft issue, I thought we could start rebuilding our lives because I thought, What else could go wrong?

Well, this weekend, my sister got into an accident, with our SECOND car. We still need to survey the damage, but come on, how many people lose both of their cars in the same month.

So that's where we are now. Down to one car. Our relationship as husband and wife severely affected by the additional stress on top of stress.
The house is a mess, I haven't been able to do much at work (if I even make it in at all), and my wife is behind on her school work. And every time we think, whew, we got through the worst of it...something else happens. I'm waiting for someone to die. I mean, seriously, I'm just waiting to get the phone call. I'm just not sure how we're going to dig ourselves out of this situation.


[/rant and bitch]

Rich is ranting about FICO scores again. I actually agree with him, but wanted to play devil's advocate :P.

He rants about two things:
"1. The proportion of balances to credit limits on your revolving/charge accounts is too high" complaining that he's putting his 0% arbitrage money in safe investments. Well, as well all know, FICO doesn't see that he's putting the money in safe investments or his overall capacity to pay. It's just a regression that says, hey, when people are carrying higher balances on their credit lines relative to their total balance, they are more likely to default. Intuitively, that makes sense. Within a given large sample of people, those with higher balances relative to their total balance are going to be more likely to default because they are probably running up their credit lines as a last means of defense.

On to number two:
"2. The time since your most recent account opening is very recent."
This is most likely an artifact of the regression again. Here, the FICO people have a variable for age of account and noticed a strong correlation between the length of time an account has been open with % of default. Once again, it makes sense. If you've been making payments on time for 24 months straight, then you are more likely to keep making those payments.

So keep that in mind. A FICO score tells you the probability of default and does a fair job of rank ordering people by probability of default. So in a fairly large population of consumers, those with a higher FICO score will be less likely to default than those with a lower FICO score.

With an increase in the number of hours that I'm working in addition to one personal crisis after the other, I've had little time to pay much attention to our finances besides watching the money flow out as we paid bill after bill. There was the payment to fix the car (and the car still isn't working), the payment for my eldest son's tuition (for his WASPY preschool), the increase in my wife's student loans (freaking expensive Harvard), and the balance transfer on the credit card to cover the portion of my wife's tuition covered by expensive unsubsidized student loans. It has been an expensive month, to say the least. Balancing that out has been a strong equity market bolstered by the fed rate cut, which has unfortunately decreased the rate we're receiving from Emigrant Direct.

All told our net worth stands at ($3,813) with assets rising 38 bps and liabilities falling 17 bps. That number should be dramatically lower once some of the items above hit our balance sheet.

This month has been stressed piled on top of stress. Work stress. Family stress. It's just been managing from one crisis to the next. The current crisis du jour is trying to figure out our childcare situation while my wife is in school and I'm trying to work. Hopefully we can figure this out.