The Big Short by Michael Lewis Book Review

Who would have guessed that a book about the financial collapse of the last half decade would be as compelling as this? This could have easily turned into a dry and boring, but deep, look into what cause the financial catastrophe that has us where we are right now, but since Michael Lewis focused his efforts equally between providing pertinent information and illustrating the characters involved, you not only become engaged by the despicable actions and utter stupidity of so many of the big financial institutions, but you latch onto the unique and interestingly described characters that see what was actually going on.

By now most people who have any interest in politics, finance, or economics understand the gist of what happened in the last half decade and the ramifications it has for so many people. What was so interesting to read was the perspective of people on what was happening as it was happening. You truly got a sense of what gears were turning, how misinformation fed more misinformation which led to such a false sense of security around various, nearly magical, money making tools.

As you slowly feel the pressure building, where our protagonists (that's how I like to view them) know things have to explode, you start to feel the lunacy of it all, the mind-boggling amounts of money being created out of seemingly thin air, and the mindsets of so many people that nothing could possibly go wrong.

Once you finally reach the conclusion of this particular recounting of the financial collapse, you feel simultaneously happy that at least a few souls noticed what was going on and infuriated that such a thing was able to happen in the first place. Then, as you think about it and remember where we're at today, the fury overwhelms any amount of "huh, that was interesting" feelings you may have. The big financial institutions are as big as ever, if not bigger, and there seems to have been no change at any of them, especially since they proved that there IS a safety net that will catch them when they screw up, regardless of how bad.

It's rare that I find myself this glued to a non-fiction book, let alone one whose topics are rarely uplifting. It makes me wish so much more that things would change and makes me even more irate that they haven't.

View all my reviews

Pandora: Busted IPO... or Long Term Opportunity?

Pandora didn't quite have the legs that LinkedIn did after their IPO, did it? Within a day of its IPO Pandora is now trading under its public offering price. Most analysts have been skeptical of Pandora (and of most tech IPOs) because they're not yet profitable, they don't have a solid moat, the barrier to entry in their industry is small, and they're a tech company struggling to make it in this Web 2.0 environment.

A lot of people see this company tanking in the future, and I can respect most of the reasoning presented, but part of me sees Pandora leading a shift in the music consumption patterns of people. We all know that the CD business is on its way out. Record labels have been slow to adapt to a digital world and have lost a lot of power and the ability to control what people are exposed to. Yes, we still have the mega-stars like Lady Gaga and U2, but there's now a seeming infinite amount of options for music to fit your very specific personal tastes.

No longer are you relegated to picking a radio station that plays music that sort of fits into the realm of music you listen to. No longer are you forced to pay for the ability to have a more tightly curated set of stations to listen to (a la satellite radio).  Instead you simply have to head to Pandora or Last.fm to get personalized radio stations based upon an artist you're interested in or a specific genre of music. And if your mood changes, you just flip to a new genre station.

I think that this ability to quickly get to a type of music will be appealing to casual listeners, especially if Pandora can get more penetration into mobile devices, cars, and stereo components.  If they can emulate the Netflix approach and get their service on every device imaginable, they can turn themselves into THE source for customizable internet radio.

Yes, there are competitors from some big players like Apple with their iCloud and Amazon with their digital locker for music, but I don't see either of them as true competitors. Those services are for people that still buy specific music, listen to specific artists, and want a pre-defined music selection to choose from at any time. iCloud and Amazon's services will fill that niche. Pandora, however, will appeal to more casual music listeners that still crave some amount of choice.

To make a further comparison between Pandora and Netflix, look at Netflix's "competitors" -- Amazon and iTunes. Again, I don't see them as real competitors. Amazon and iTunes are great for purchasing or renting specific titles while Netflix simply provides you access to a load of content for various tastes and you can take what is given you to fill that craving at a specific time. Pandora presents you with something to fill your craving for a certain genre, but might not give you specifically what you want. To get specific items, you use iTunes or Amazon. If anything, they are complementing services.

I think Pandora is a risky short term play for sure, but as a long term play, I think they have quite an advantage that they can use to truly capitalize on the shifting consumption patterns of music listeners. I might be throwing money into the flames, but even after their busted IPO, I've put a small position in Pandora in the hopes that, as a longer term play, the company can become the Netflix of music.

I've Given Up On Mint.com

If I were writing about Mint.com a year or so ago, I would be singing its praises and evangelizing to all of you that you should be getting signed up with the service, post-haste!  It was (and I stress the verb tense was) an amazing tool that allowed you to consolidate all of your financials into one place so that you could get an accurate overview of your complete financial picture. I had it pulling in information about my mortgages, college loans, credit card transactions, checking accounts, brokerage accounts, retirement accounts, 401(k), business accounts, and more. At any time I had an accurate picture of my net worth, debt to asset ratio, trends, and more statistics that I could use to budget, forecast, and evaluate how I was managing my money. For a finances and numbers nerd, it was a hell of a tool.

Then Intuit bought them. Not much changed initially other than the occasional advertisement or plug here and there, but as I had to make changes to accounts and have Mint pull in new account information, it became more and more of a pain than a tool. Certain accounts wouldn't load correctly. My brokerage accounts weren't having their historical data populated correctly. Some accounts I had to continually re-enter my passwords even though they were supposed to be stored.  And some of the rules I had set up for classifying certain transactions (such as every payment to Xcel being tagged as utilities) refused to work. I ended up having to put in so much time manually maintaining my Mint account that it has no longer made sense to use it.

I'm apparently not the only one with frustrations, as I noticed in a recent Consumerist article. The back end change that they mention (going from Mint.com's back end to Intuit's), I'm assuming, caused a good deal of the issues that everyone is experiencing. The GUI of the website hasn't changed. The reporting hasn't changed. The account management hasn't really changed. From the looks of the site, it would appear nothing has changed, but it definitely has.

At the current time, I've actually stopped using Mint.com and have gone back to spreadsheets and looking at my individual financial components at their own websites. It's disheartening, to say the least, to see such an amazing tool completely fall apart, but it provides yet another example that justifies the complaining, bitching, and moaning that arises when a small company or service gets bought out by a big corporation--the tools or services never end up improved and, if you're extremely lucky, they simply continue to exist as they are. In most cases, Mint.com being a perfect example, the buyout destroys the product or service being bought.

So here's to looking for the next Mint.com. I'm keeping my eyes open...

It's Not Just the Big Banks...

It's not really news that everyone hates banks right now. They were at least partially responsible for the economic malaise we're in right now, they needed a bailout with our tax dollars to keep afloat, and they have used some decidedly shady practices in the mortgage industry. And to top things off they continue to nickel and dime their customers in any way they can while they continue to lobby the government to relax regulations on their industry while they pay ridiculous salaries and bonuses to their upper management. It's pretty easy to hate on the big banks right now.  With the big banks dealing with so much negativity, I would assume that smaller banks, credit unions, and financial institutions would be doing all they could to keep their current customers, make them glad they're not stuck with one of the huge evil banks, and attempt to lure in new customers. What's amazing is it doesn't seem like they're willing to do this, or even care in the least to make an effort to help customers.

In the last 6 months I've had 3 different experiences with 3 different small-ish banks that were all extremely frustrating, headache-inducing, and forehead slappingly stupid.  This has only reinforced in me that we don't just have problems with the big banks, but that the banking and financial industries are systemically flawed right now and it just doesn't look like it will be getting better any time soon.

The first involved TCF Bank. They're not a "tiny" bank by any means, but they're also not as huge as the big 4 banks. Anyhow, we had a second mortgage with them on our previous house. Before buying our new house, we wanted to pay off that second mortgage as we'd been planning on doing so before moving. We were trying to be responsible home buyers unlike, seemingly, every other home owner on the friggin' planet.  So we requested a payoff amount, but I made the mistake of doing so over the phone. I tried 3 different branches and their general customer service number and none of them would or could give me a payoff amount. I didn't think getting a payoff amount was that difficult, but they said they could only do it in a branch with a mortgage unit with me there in person, which is hard to do when they're only open during the hours that I, and most people, are at work.

So what I did is basically beg the final person I was talking to about what to do if I couldn't make it in because of the aforementioned work schedule (I wasn't going to sacrifice a vacation day because of a bank's incompetence). His advice: "Just overpay. We'll cut you a check back for the balance when it's processed." Fine, I gave up and simply calculated the payoff amount for the date my check would arrive and overpaid by $25 just to be safe (since this is a bank that usually processed my checks weeks after they received them). I have yet, to this day, received a final notice that our loan was paid off or a check for the overage I paid. When I called to check they simply had my mortgage noted as being paid. So, essentially, I ended up paying a $25 "you're an idiot for trusting a bank" fee.

The second experience was with Endura Financial. For our current home, we used the same strategy to buy it as we did our first house (80/10/10). Our second mortgage was with Endura and the terms of it were such that we needed to open a checking account and savings account with them in order for them to provide us with a loan. We did so, but they didn't disclose to use that they would start charging monthly non-use fees if we didn't use the accounts. All we were told when securing our mortgage, and all that was in our closing packet, was an account opening page that we had to sign. We were not told of these fees.

When calling and talking to the bank, they continually dodged the question about why I wasn't told about this at closing and would not provide any information about their standard process or how to alleviate these fees for accounts we weren't using. "Well, use the accounts to keep the fees from occurring." That was their solution. What I ended up setting up with them to avoid the situation was making a monthly transfer from my Wells Fargo checking account to my Endura checking account and then paying their mortgage from my Endura account. The whole fee situation and how they set up our accounts seems quite fishy to me... but at least I have it set up to avoid any of their fees going forward.

The final experience was with Home Federal, a quite local Minnesota bank. We have a loan through them for an investment property we own and over the last year or so, I've had quite a few interactions with them that have left me in fits of frustration. First, they were completely incapable, until the 3rd try, of changing the address on the account that statements and documents should be sent to. Second, they are incapable, or I should say they state their systems are incapable, of providing me with actual monthly or automated statements for our payment history. It has to be manually requested.  Third, and this is what is really dumb, they did an escrow rebalance on our loan and changed the monthly payment amount. They told us of this in the middle of the last week of May... and our first payment at the next rate was due June 1. For just about anyone, including us, that wants to have payments in on time will be mailing it before or during the last week of May. If I wouldn't have caught this and sent a quick differential payment we would have been assessed a fee for that billing. When I called and asked about this and how they expected people to have sufficient time to make their payments when modified, their response was, "Yes, we can see that might be difficult, but we'll work on it in the future. Thanks!"

At the end of these minor, but frustrating, ordeals I'm left with wasted time, a sense that no bank really gives half a thought to their customers as anything more than revenue sources, and numerous wishes that I didn't need the services of banks. The reality is, though, that in order to have a house, make investments, and participate in today's society I have to have bank accounts and mortgages and use bank's services. It's just unfortunate that they all seem to be equally incompetent, uncaring, and difficult to deal with. If I could find a financial institution that somehow seemed competent, I would put every last dollar of business I could through them, but I've yet to find that institution. The closest I've found, crazily enough, has been Wells Fargo. Go figure.

Economy Seems Fine to Me

Shopping this past weekend sure felt like pre-Christmas shopping of last year... and the year before... and the year before. The mall was packed. I had to drive around for a few minutes just to find a spot to park, which was in a parking lot across the road from the mall (I refused to keep circling and circling). People were clogging up parking lanes as they sat with their blinkers on while the car parked a few spaces up was being filled by a family packing all their wares in. It's a beautiful thing when one car, while waiting for a somewhat mediocre parking spot, blocks the 15 vehicles behind it, about a third who are honking their horns to get by.

Inside the mall itself, people were everywhere. And of course, everyone felt the need to walk at least 3 abreast and at the pace of an out of shape snail. Then they give you the stink eye when you blow past them any time there's even the narrowest opening. Sorry people, I have better things to do than mosey along behind you listening to you talk about nonsensical crap.

Individual stores were also pretty tightly packed with people. Checkout lanes were fully manned and had lines snaking away for yards. People were browsing and getting in other people's ways as they were so caught up in their own little world that they forget there's anyone else around. From everything I'd seen, the economy is as far from a recession as possible...

...but then I realized why the checkout lines were so long. The stinginess of the season was on full display as people brought their armloads of goods up to the cash register. I wasn't in many stores, mostly just in JC Penny getting some new dress clothes, but my experiences there I'm sure were seen throughout many stores.

In front of me a few people up was a middle aged couple that looked to be buying gifts for relatives or children. They had a bunch of clothes, trinkets, and jewlery. Once the clerk rung up everything and gave them the total, they had the poor woman show them each item on the receipt to make sure they weren't accidentally charged twice, and when that activity was completed, they asked for price checks on half of the items they had there. As expected, everything rung up correctly and was the right price. So then they started asking the clerk how much they would save if they didn't get this item, then what about if they didn't get that item, or how about if they did get that item, but didn't get those two... way to be in your own world and not realize there are other people waiting. Dumbasses.

Next to the register was an old lady who had not been in line. No, she'd been standing off to the side mumbling to herself about God knows what. She just rushes up to the cashier throws a sweatshirt at her, tosses a crumpled receipt on the counter and says she wants money. The sweatshirt has no tags on it. The receipt, the clerk tells her, shows a sweatshirt had already been returned. The crazy lady proceeds to start ranting about her cousin Kim and how she's no longer a part of the family and she doesn't want her dirty clothes, but wants her damned money because she's a dirty old bitch that should stay in Texas and never see her children again and that's the receipt that the dumbass clerk gave her and it's all she has and she wants her money now...

This lasts for a few minutes until they call in a manager to take her aside and hopefully explain to her how crazy she is. Now at the register was a guy who wanted price checks on everything he had in his hands. He wasn't going to buy them, he just wanted price checks. Does he not know how to read the price stickers on them? Or potentially the price signs by the displays where he picked up the items?

Finally, there's only one person in front of me. Thankfully, she was normal. She had her stuff rung up, swiped her card, tossed her clothes into a reusable shopping bag she had with, and was on her way. Thank goodness. I did the same and got the hell out of the store.

So apparently everyone is still shopping this season, but the main difference is everyone is more of a jerkass about price and gives even less of a crap about anyone else trying to shop. If anything, it won't be the recession driving me away from the malls, it'll be the even more self-absorbed people the places are populated with.

That Bailout Bill...

...was supposed to help the broader market, right? But as I sit and watch the DOW, it's down 300-ish points and is about 15 points away from dipping below 10,000 points. I fear what would happen then, especially considering how much of the market movement is psychological right now. Everyone has jitters, everyone is on edge, and there's a fear that the bottom is ready to fall out at any moment.

It's painful to look at my brokerage account and retirement accounts. I don't mind the huge losses in the retirement accounts right now as I am confident they'll have increased plenty by the time I actually need to get to the funds, but my current investments in my brokerage account are hard to look at.

I wish I had the extra money to invest in more companies that are on the cheap because of the broad market kick to the pants that has been happening. It's a great time to get stuff on the cheap, but I'm not really willing, right now, to sell off some of my stakes in what I believe to be strong companies at a loss to move to others. There are a couple of stocks that I hold that I think have weaken since I bought them, but I think their share prices have been overly punished so I'm waiting for a little bit of a bump back before dumping. Any way you look at it, though, it's a rough market.

So anyone think we'll close below 10,000 today? I think it's very possible...

My Thoughts on the Current Financial Markets

Yeah, not such a good day on Wall Street today... or on any street for that matter. Failed US bailout plan, global market pullback, international bank bailouts, and financial failures left and right. Gotta love watching my brokerage accounts dive further and further into the red each day.

Where's My Money Going?

Everyone knows right now that we're in the middle of a financial crisis here in the US. And truthfully, it's not just a US issue, it's affecting the entire global economy, but the US seems to be at the center of it. I find myself more and more fascinated by the financial news each day, but not because the topics are necessarily interesting or because I have lots of vested interest (I do hold a relatively moderate number of stocks and funds so I would like them to turn around), but more so because of the "car crash" effect of it all. Just like when everyone slows down on the highway to gawk at a really bad car wreck, I find myself doing just that with the financial news.

I don't really have anything to add that many people haven't already said. I found Ryan's digging up of an old article from 1999 interesting in how, looking back, you can really see how this all went wrong. I'm also a big fan of Obama's speech on the bailout plans. Then there's the analysis left and right about Paulson's and Bernanke's plans, the ups, the downs, the big questions marks, and everything in between. Regardless of what eventually does happen, this is a monumental time and I hope everyone is paying attention to the situation that's around them. This isn't going to affect just the fat cats on Wall Street, the oil barons, rich people, and the politicians. If everything goes according to the proposed plans, the everyday taxpayer is going to be on the hook for a lot of government spent money on failed investments and companies. I can't say I'm a fan of it, but I also can't say that if we let everything fail we'd be in a better position.

All I do know is that I'm tired of seeing red in my portfolio and I'm tired of sitting on the sidelines of the investing game because of all the uncertainty, corruption, greed, and toxicity that has invaded the markets. It would be nice to see some regulation, some stability, and a little less dumbass investments made available, but as we all know greed is too big of a motivator to keep things simple. What's the next crazy derivative that's going to be designed that'll make a chunk of people rich while others get ripped off? I wish I knew, so I could get in on some of that action at the ground level and then let taxpayers worry about the aftermath.

Our Friends, Fannie and Freddie

First, I just want to express how swamped I've been lately. I've been at work at least 9 hours a day the last couple of weeks and had every minute pretty much filled with various projects that are all coming together at the same time, with some being intensely schedule driven. My nights have also felt busy since I usually have activities going on at every turn and when I don't, I try to catch up on cleaning and chores. Adulthood... sucks sometimes.

But anyhow, something that has really been on my mind the last week or so has been the fiasco of what is Freddie Mac and Fannie Mae, the two largest mortgage lenders in the US. If you've been reading the news, they're lost about 75% of their value this year and are in serious trouble. Thankfully, in order to prop up our ailing economy because of the buttload of terrible fiscal decisions by banks, the government, and the US population in the last 5 years, the government is stepping in to aid Freddie and Fannie.

I should be happy by this since it's getting my stocks turned back around in the right direction and should be a step in getting this economy to at least level out, but I'm really not. As I've said before, these types of bail-outs are helping those institutions and people who have made terrible decisions and allowing them to "get away" with these egregiously bad choices while the responsible people and institutions are penalized by receiving no benefit.

I don't want to see my tax dollars getting spent on other people's sub-prime mortgage woes. Why should I be punished and have a chunk of my money go towards someone else's mortgage, one that they no doubt can't afford when I was rational, reasonable, and sane when I bought the house I did and stayed within my means? We're implicitly rewarding this bad behavior by saying if those bad decisions are widespread enough, we'll help you out. If the value of my house and the economy wasn't so dependant upon this whole mortgage mess, I'd say let every bank and institution that made these crazy sub-prime mortgages and participated in bad lending practices go belly up. And let every person who can't pay their mortgage to hit the street with a permanent blemish on their financial records and credit reports.

Yeah, I'm a little bitter about the whole thing, but it's because responsible people always get screwed by these types of situations and scenarios. Where's the reward for being smart? If anything, it just reinforces the belief that you don't need to be too responsible because someone will bail you out or pick up your slack. It's sick and if this nation is ever going to be more than a second rate world power in the course of this century, there needs to be some serious overhauling of institutional and personal fiscal policies. Our nation is getting to be too stupid when it comes to managing money.

Love the Broken Engrish

You will be unusual successful in business.

This was the fortune inside of my fortune cookie from lunch. I wonder if "unusual successful" is some sort of street slang for being really, really successful. Y'know, kind of like when kids are "mad good" at something or got some "wicked huge" air skateboarding. I think I'm going to start referring to people who do really well as being "unusual successful".

Man, that Warren Buffet is unusual successful, dog!

My Stimulus Check

The stimulus checks will start being sent our way starting in May. I'm one of the first batch to receive my $600 and it should be direct deposited the week of May 2nd. I haven't really thought about what I was going to do with it since $600 doesn't seem like that much money. Now don't go and rail on me for thinking that it isn't a lot of money. Comparatively speaking, it isn't a whole lot. I received my tax refund last month and it dwarfed the stimulus check that'll be heading my way so I was more concerned with how to use that.

What I did do with my tax refund was invest in a couple of stocks and pad some of my mutual funds. I don't need to spend it right now, so why should I? I know that the government would love for me to take my $600 and go blow it on a new TV or a video camera or a nice dinner or a vacation or some other materialistic thing so that the money is pumped back into the economy. I just don't have a desire for any of those things, though, so I'll probably just use it to pad my mutual funds a little further.

I have considered using it to buy a bike since I don't have one and would like to have one so that I'm not reliant on my car to get me to places that aren't too far away, but I wouldn't spend the whole sum on a bike anyways. I can't imagine spending over $300 on a bike. I'm not a person who is going to do bike races or anything like that. I just want something decent that will hold up and get me from point A to point B, and that can also be used for a biking workout every now and again when I'm not running.

Anyhow, what I was trying to get at is that it seems odd to have a sum of cash getting sent my way and not wanting to immediately spend it on something frivolous. I know if I were 5 years younger I'd totally have it blown before it arrived, but now I don't feel that strong materialistic urge to spend, spend, spend on crap I don't need. The few things that come to mind that I want outside of a bike is a water softener for the house (which is increasing the value of the home so it isn't really money that is leaving my possession), saving it for some new cabinets in the kitchen, or putting it away for when my car eventually dies and I need to get a new one.

It's a nice "gift" from the government, but I'm not going to spend it how they want it, unfortunately, and I'm assuming most other people aren't going to either. Maybe not because they don't want to, but because they can't with mounting bills and a rising cost of living. So anyone have any big plans for their stimulus checks?

The Housing Problem

It's pretty apparent we're in a recession and that we're facing the biggest housing and mortgage problem in a very long time. The collapse of the sub-prime market and the subsequent ripples that have made their way through all of the mortgage markets and credit areas have led to many thoughts and actions about what to do to stem the housing foreclosure and defaulting problems now faced. Banks are already trying to work with problem accounts to keep houses from being foreclosed upon, but now Mr. Bernanke thinks they need to do more--like forgive portions of mortgages.

I've been unhappy about the whole housing situation in general, mostly because lots and lots of people made horrible choices in picking mortgages or the size of home they could purchase and banks, of course, let them since it meant more money in their pockets. Now it's come back to bite both the lenders and lendees in the ass with both sides looking for help.

I say screw 'em. Let the lenders take the hit for making stupid loans and for putting money in investments that lacked any type of real transparency. Let the borrowers have their houses foreclosed upon. They were morons that borrowed way too much or did so in a mortgage not fitting their long term lifestyle.

Why are the people who screwed up and spent more than they could afford being rewarded? They should not have portions of their mortgages forgiven when responsible people, such as myself and many other people who make their mortgage payments on time every month, are not rewarded in any way for being good, responsible customers. If you're going to forgive portions of mortgages, then do it across the freakin' board. Knock off 1.5% of the remaining balance on all existing mortgages. Lower the interest rate by an equal percentage to EVERYONE. Don't give gifts to people that don't know how to handle their money in the first place.

It's actually gotten to the point where I'm angry about the way this is all playing out with both banks and borrowers getting let off the hook. Yeah, they've both paid a price (plummeting stock prices and a marring of credit ratings), but not enough of a price. So if you're getting foreclosed on, don't look to me for any type of sympathy. Just go talk to your bank or whine to the Fed and you'll probably get more than enough of a break for your bad decisions.

This all just goes to show that being responsible and trying to keep yourself out of debt doesn't get rewarded like it should, and until it does people will continue to try and live way beyond their means and we'll continue to have economic problems such as this.

I Heart Taxes! ...WTF?

I know that I have a month and a half before taxes are due, but I like to have mine in early, which means I spent last weekend figuring them out for the year. In years past I've usually had just about as much tax withheld as I needed so that I didn't have to pay much and didn't get that big of a refund. I'm really opposed to letting the government have an interest free loan from my back pocket. This year, however, I'll be getting a rather decent sized refund. How decent sized? Well, I don't want to give out any specific numbers, but speaking in thousands would be an appropriate way of measuring the size.

Why is this year so different? Two reasons. First, I purchased a house. It's lovely being able to deduct all of that interest that I have to shell out, especially since my brain has such a hard time comprehending how about 3/4 or more of each month's mortgage payment right now is going simply to interest. Second, most of my stock & mutual fund income was in the form of long-term gains, which is taxed at a lower rate than my short-term gains.

It's really weird having such a huge refund coming. Of course the first thought to cross my mind is, "What the heck can I buy with all that dough?" Then I realize that I really don't have anything I need or even want all that bad. More than likely it'll get reinvested in the stock market or, depending upon the continuing housing market, put towards purchasing another property. I think it's quite possible to get a few good steals in the housing market in the next year and having a rental property would help to diversify my investments and would also, hopefully, provide another small tax shelter.

I'm always curious as to what people do with their refunds, and I'm sure it all depends upon the size of the refund, but when you have a large pile of money drop into your lap, are you more likely to spend it on frivolous stuff or put it to use frugally? It's tempting to think about buying a new car or new furniture or taking an expensive vacation, but I think I'm just too much of a penny pincher to really go out and indulge myself on extravagant and expensive excesses.

My Portfolio Woes

Hey you. Yeah you. I'm talking to you, Dow Jones Industrial Average. How about you stop sucking and bleeding away massive chunks every day? I'd love to be able to look at my brokerage account one of these days and not be bombarded by the color red. Are you allergic to green, Dow? What's your problem lately? You need to stop your complaining about the credit crunch, housing problems, the crashing dollar, skyrocketing oil prices, and all of your other supposed issues and get back to making me money. Suck it up!

Continuing Housing Woes

It's pretty apparent that the housing market is far from turning around. In reading some analysis over at The Motley Fool, existing home sales are down over 25% from last year. That's nuts. When you couple that with the fact that there are more and more houses coming onto the market because of foreclosures, the glut of available houses is just amazing. I thought I had a lot of choices when I was looking during the winter. And I also thought I had lots of bargaining power then. In thinking about it, the people that are going to benefit from this housing hurt are first time homeowners (who can actually acquire mortgages) who know how to negotiate.

Thinking back to when I was looking, there were many houses I was looking at and I put in an offer on a few. I was willing, at times, to pay up to 94% of the list price for a house. One house I even came very close to closing on at about 95% of the list, but didn't pull the trigger because I felt I could do better. I did. I ended up getting a house for a little more than 80% of original list, which was great. Sure, my house is losing value every day as the market plummets, but I don't plan on moving and I did get a good deal as it was.

Part of the reason I was so fussy with buying a house is the enormity of the purchase. A home is the single largest purchase an average person can make. You're signing up for hundreds of thousands of dollars of debt. That's pretty daunting. Because of this, I took a very cautious, get educated approach to purchasing my home, especially when it came time to decide on a mortgage, especially since there are a lot of choices out there for what type you can take.

What gets me is that some people hardly pay attention to what they're doing when they sign up for a mortgage. It's evident by the sub-prime fallout we're currently experiencing, but it's also evident in how many people Ameriquest had tricked. They are now no more, but the fact remains that tons of people got themselves in a lot of trouble financially through them.

I'm hoping that one of the positives to come out of the housing problems that seemingly everyone is experiencing is that you need to pay attention and be smart when it comes to buying a home. You can't overextend yourself, get a free lunch, or hope you'll be better off in the future because, more than likely, things won't turn out how you expected and then you're screwed.