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

This is too funny not to point out. From our good 'ol pals from the 700 Club:

In January of this year, Cindy Jacobs was in a worship service when the Lord spoke to her, “Cindy, the strongman over America doesn’t live in Washington, DC – the strongman lives in New York City! Call My people to pray for the economy.”
...
“This is so severe in the economic area because we are facing judgment from the actions, not only for our stance towards Israel, but our blatant sin against Him in passing laws such as the one allowing homosexual marriages,” Cindy said.
...
For these and other reasons Cindy is calling for a Day of Prayer for the World’s Economies on Wednesday, October 29, 2008. They are calling for prayer for the stock markets, banks, and financial institutions of the world on the date the stock market crashed in 1929. They are meeting at the New York Stock Exchange, the Federal Reserve Bank, and its 12 principal branches around the US that day.

“We are going to intercede at the site of the statue of the bull on Wall Street to ask God to begin a shift from the bull and bear markets to what we feel will be the 'Lion’s Market,' or God’s control over the economic systems,” she said. “While we do not have the full revelation of all this will entail, we do know that without intercession, economies will crumble.”

Once again it's all the gays fault. And the remedy here is to pray in front of a "molten calf". The irony is too rich.

I saw this over at balloon juice and it was there I saw a comment that cracked me up:

"Thou shalt not seek prophecy in past returns, for past returns are no indication of future returns, and are an abomination unto the Lord."

Oh boy, you just cannot make this kind of thing up.
HT:
balloon juice
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If there's one thing I don't like about Obama, it's his tax policy. This CNN article goes through 5 families that are HENRYS, they make a high income, but they are certainly not rich. It also had this handy chart on who pays what in taxes:

Here's why the HENRYS are feeling pinched too:

The reason the HENRYs are strapped for both lifestyle and nest egg is twofold: First, they already face a large and rising burden for federal, state, and property taxes plus the knife of the AMT. Second, they invest heavily in their kids: saving for private colleges, paying for day care - and providing dance, tennis, or gymnastics lessons. They have little left over for either extravagant living or, in many cases, saving for an affluent retirement.

See the rest of the article/slideshow.

I've always disliked Obama's characterization of those who make $250K as rich. For one, it makes no distinctiong between cost of living. $250K is a lot in say Houston, TX, but it certainly does not go as far in NYC. Moreoever, as a family who will be approaching that threshold soon (especially once my wife starts working) I am not looking forward to having to pay more in taxes. Especially since we are also investing heavily in our kids, and trying to save where we can.

Not only that, but early in the campaign when Obama was criticized for not giving that much to charity (on 300K in income), he said that while 300K seems like a lot, they had student loans to pay for, and before you know it, it's all spoken for. Hey guess what, same here! We're going to have student loans, and daycare, and various other things we need to pay for. Sheesh, never liked that about Obama at all.

This is funny in so many ways. Funny and sad really.

Miserly Bastard, self-described as a person who "like[s] things that go BANG...hate[s] liberals, Obama, and vegetarians" has decided to vote for Obama. Or as he puts it:

Oh, I've decided to hold my nose and vote for Barack Obama, something I can barely believe as I'm typing these words. (Because I view him as a potentially awful president for many reasons, not least of which is gun rights, I've also arranged for a friend to purchase two more AR15 rifles and about 40 high-capacity magazines for me, too.)

Always hedging eh MB.

This is not to say that there are no good reasons not to vote for Obama, but McCain has really made voting for him (McCain) difficult with his choice of Palin as a VP pick. I'm not sure if that was MB's reason (he didn't state exactly), but that is my own personal reason I'm not voting for McCain.

But still, I was surprised, but I guess now I can say I've seen it all.

[edit made, because I can't write to save my life]

Here is a really good article on 9 great sites to help you manage your budget online (click here) from SmartMoney. I've heard of some before such as Mint, CreditKarma, and Quicken Online (now free!), but there are others that I'm going to want to try (like BillShrink).

It's a quick read that might save you some money, so have at it.

Here is an insightful post on fatwallet about a person living paycheck to paycheck on $200K a year. The remarkable thing here is that this person appears remarkably well educated on personal finance matters, or as he(?) puts it:

I know all the conventional wisdom. I follow the Boglehead philosophy, know about how to allocate money, know all about the wonders of compound interest, and have read all the books. Tobias' Only Financial Guide You'll Ever Need? Check. Random Walk, check. Millionare Next Door, Your Money or Your Life, and even (sigh) Rich Dad Poor Dad, check check and check

He then recounts with startling detail how they got to their current situation. After buying Quicken and religiously cataloguing each purchase, he now has 12 months of data to share on his expenditures. Some highlights:

• $2400/year to AT&T Wireless - iPhone 3g


• $3000 last year on clothing - from Old Navy to Gap to J Crew


• $5000 on eating out - we work a lot and are too tired to cook


• $4000 on bars


• $9000 on vacation to Europe

He sums up his expenditures this way:

Luxuries get sampled and become necessities. And while the pleasures you get from the finer things in life are nice, the pain that you experience if you ever have to give them up becomes huge. It wasn't any one thing, it was a train of connected "upgrades" to our lifestyle. And if you let the upgrade train get away from you, you all of the sudden realize that you're struggling to pay for the ticket.

This was a somber and eye-opening post for me. I can see myself doing the exact same thing as our income increases and we rationalize purchases in a similar fashion. Moreover, we are fast going to become a two-income family and we could easily fall into the same traps as this person.

It is clearer to me now, that it's not how much you know about these things, but it's more about how you apply them. As someone told me many years ago, it's not about your IQ, and it's more about your I DO (corny I know). Or as the saying goes, knowing is only half the battle.

I feel grateful that f355Spyder shared this word of caution with us. I only hope that I heed his word of caution.

I usually find Chris Rock annoying and there are pieces of this skit that qualify as such, however, I do like his definition of wealth vs. riches. As he states: "Shaq is rich...the white man that signs his check, is wealthy. NSFW with some potty language :P.

I've been tinkering with the site, and I have a brand new look. Please click through from the RSS feed to take a look. I'd appreciate any comments, as I try to work out the kinks. It's passable right now, but I have more work to do.

Thanks

JP Morgan the man, not the bank was asked: "Is not commercial credit based primarily upon money or property?" "No sir," replied Morgan.
"The first thing is character."
"Before money or property?"
"Before money or anything else. Money cannot buy it...Because a man I do not trust could not get money from me on all the bonds in Christendom."

Now that I've been doing some work on my own suite of excel financial calculators, I wanted to double check some of my work. Specifically, I wanted to see if my credit card payoff calculator was accurate. I went over to the dinkytown version of a credit card payoff calculator where they had a simple example: $5,000 balance, 18.9% interest rate, with a $200/month payment. According to dinkytown's calculator, that would take 12 years and 10 months to pay off. I used my calculator and I got more like 32 months!

I was extremely worried that I had done something incorrect, but after double checking with bankrate's calculator and another random calculator I found, it looks like the dinkytown calculator might be wrong.

Indeed, if I put in a monthly payment of $2,500 with a 1% interest rate, dinkytown is telling me that it will take 9 months to pay that off!

Whew, at least I feel better about my methodology. Let this be an example to always check the source of your calculations. There are many tools out there to double check your answer for you. So when in doubt, use more than one of them.

I received the following excel question from Greg: I have a workbook with several sheets all in the same format. I would like to grab one piece of data from each sheet and place that in a separate sheet. How would I do that?

My way of doing it would be to use a macro. I've created an example file that contains a very simple macro to do this. The file contains 21 sheets. A SUMMMARY sheet and 20 "Regression" sheets. The macro goes through each sheet and takes the value in cell B1 and places it in the SUMMARY sheet along with the sheet name. In the end you are left with a Summary Sheet that looks like this:

Sheet Name Value
Regression 1 10
Regression 2 20
etc...

The macro itself is relatively simple and I've copied it below

Sub MakeSummary()
    Dim summSheet As Worksheet
    Set summSheet = ThisWorkbook.Sheets("SUMMARY")
    i = 0
    For Each individual_Sheet In ThisWorkbook.Worksheets
        i = i + 1
        If individual_Sheet.Name <> "SUMMARY" Then
            summSheet.Cells(i + 1, 1).Value = individual_Sheet.Name
            summSheet.Cells(i + 1, 2).Value = individual_Sheet.Range("B1").Value
        End If
    Next
End Sub

Now to walk through it the macro:

    Dim summSheet As Worksheet
    Set summSheet = ThisWorkbook.Sheets("SUMMARY")

I have created a variable that will hold my summary sheet (called summSheet), I then set that variable to the actual sheet in the workbook called SUMMARY.

    i = 0
    For Each individual_Sheet In ThisWorkbook.Worksheets

My variable i will be zero. The next line (For Each...) says that I want to take a look at every worksheet in the current workbook, one by one. Each worksheet is going to be stored in the variable individual_Sheet

        i = i + 1
        If individual_Sheet.Name <> "SUMMARY" Then
            summSheet.Cells(i + 1, 1).Value = individual_Sheet.Name
            summSheet.Cells(i + 1, 2).Value = individual_Sheet.Range("B1").Value
        End If
    Next

Here I increase the variable i by one. I then check to see what the name of my current worksheet is, if it's not equal to "SUMMARY", I then process it. Specifically, I take the name of the current sheet and the value of cell B1 in the current sheet and place that into the cells of my summary sheet. The i variable lets me increment the row number at each pass.

You can download the example file here, which should hopefully make it clearer. The summary sheet has a button you can press to execute the macro. You can press Alt+F11 to view the vba editor.

Please let me know if there are questions in the comments.

At the risk of stating the obvious, none of these coordinated government actions will forestall the coming global economic slowdown/recession. I do think, however, that these actions will take some of the tail risk out of the picture, i.e. instead of a 50% nationwide decline in home prices, we only have a 30% decline, but at the end of the day we will all feel the pain of a financial system and a consumer base that is bloated with too much leverage.

We all forgot that leverage cuts both ways. It enhances things on the way up, and desolates on the way down. For the financial institutions that took on so many mortgage related assets, it’s not so much that they forgot about the effects of leverage, but they were completely unaware how much leverage they had taken on to one factor: rising home prices, or at least, a lack of a nationwide decline in home prices. And this spilled over into so many other parts of the economy.

You fall behind on your bills, all you had to do was refinance your house and take cash out. You could pay off your credit cards, swapping “bad” debt, for “good” cheap debt and still have enough left over for the Escalade (which didn’t really cost you that much more to fill up with at the gas tank). Moreover, as a result, financial institutions had historical performance that said that hardly anyone would fall behind on their mortgage, car loan, or credit card. This allowed them to develop models that enabled them to lever up as much as they wanted.

These types of behaviors went on for far too long and with the aid of derivatives and structured products (Credit Default Swaps (CDS), Collateralized Debt Obligations (CDOs)) the same risk and same exposure to that one factor got recycled over and over again into the financial system. The leverage built up and at the first signs of cracking, it all came crashing down. This leverage has to work its way out of the system and it will be a painful and protracted process as de-leveraging always is. For us as consumers, we are left with ravaged retirement savings, declining yields on what savings we do have, a weaker dollar, and jobs that are looking shakier by the day.

When this is all said and done, we will be left with higher inflation, a weaker dollar, higher unemployment, lower GDP growth, and lower asset prices.

I’ve said before and I will say it again, we, as a people will have to do more with less. We can no longer count on 10% annual returns from the stock market with a reasonable amount of risk. With higher inflation, our purchasing power will be eroded faster than we expected.

We will all have to get use to the idea of doing more with less.

I'm going to be using this post as the link to my excel financial calculators. This will contain any updates going forward.

Right now the excel file contains the following calculators:
1. Comparing a 15 and 30 year mortgage
2. An Amortization Schedule that allows for extra payments (this works for any simple interest loan, i.e. mortgage, auto loan, etc)
3. A Credit Card Debt paydown calculator
4. A How Much House Can you Afford calculator
5. A Static Retirement Calculator
6. Paying off Multiple Debts (requires macros) - new!

Version 2.00 of the calculator can be downloaded here.

I hope that you find this suite of calculators useful. If you did, then I ask that you consider donating, if you can, by pressing the button below. Thanks.

Mike over at Money Musings shows you where you wind up after 10 years of dollar-cost averaging in the SPY.

I hope my 401(k) balance looks better than that after 10 years.

I see that a handful of people have downloaded my financial calculator so far. Thanks! Are they any requests for the next release? If not, I'm just going to add some how much home can I afford type calculators. Please let me know.

Calculator available here.

Subtitle: All our assets are depreciating.

This months was quite painful in our 401(k) and MoM it was down 842 bps. Our Roth IRAs are currently in cash, and this represents about 30% or so of our investable assets. I wish I could say that I had some precient call on the economy/stock market, but we kept the Roth in cash in case we need it for emergencies. Overall, assets were down 378 bps.

Liabilities were up 36 bps as credit card debt increased due to a major purchase. We bought a third car to help balance the need for me to get to work, my wife to get to Cambridge, and for our nanny to pick up our kids from school. Between the additional increase in insurance and maintenance costs, I would have rather not have bought it, but we have found it to be convenient for our busy day to day schedule.

We're still waiting on some reimbursements which will be coming in over the next few weeks, but as it stands, our net worth fell to $12K this month.

Speaking of all assets depreciating, one of our neighbors is attempting to sell their home. This has proven to be extremely difficult for them and I think that they are going to be our neighbors for a while. Moreover, when they do sell the house, it will provide a very good data point for our home value and I would hazard a guess that it would be lower than what I have it valued at. So that means that all of our major assets: real estate, stocks, cars, and bonds are depreciating. The only non-depreciating asset we own right now is our Roth IRAs. I'm just glad we still have 40 or so years to make up for the cruddy markets.