That frisky critter we call Consumer Confidence has reared its butt once again in greeting the most ferocious shopping season of the year. This is not the glad tidings retailers had on their Christmas wish list.
The bad numbers just in from the Conference Board index look like this;
November 87.3 vs October's 95.2.
As a former stock broker, I always questioned the value of this index. Maybe some retailers base their inventories on this exciting fact. But then again, why would you ask sheep what kind of grass they like as an indicator of what brand of seed to plant. And what will I, as a consumer, do differently knowing this index of administrivia? Am I missing something?
That we are the economic man or woman making rational spending choices is just another hairball. Emotion trumps logic! We are most often impulsive spenders. Sometimes we border on the compulsive. Even when we are up to our eyeballs in debt and know it's risky to buy more, we seem to have an overriding consumption gene that judges the risk as low. Why? Could it be because we simply want what we want and we want it now. Any available information to the contrary is akin to putting your head in the litter box.
Whatever the timid confidence of those other pussies, most consumers will ignore the prudent postponement of gratification in the upcoming fast paced, blow-out, one-of-a-kind, sales season that we will witness this year.
But, come January, after the credit card statements have arrived, ask me about Spending On Purpose. Oh, what the heck. Just be impulsive and buy my book, SAVING Is for Suckers, right now.
Wednesday, November 28, 2007
Thursday, November 22, 2007
Thanks Be to Credit
Who would have guessed that giving thanks and credit are remotely connected?
On Thanksgiving Day we give thanks to others by giving them credit by acknowledging what they have done or contributed to what we enjoy... our health, families, friendships, and work. Our expectation and thanks in advance are also implied for what we still hope to acquire, have, and enjoy. The recognition of our peers, wealth, and the freedom to enjoy a long and happy life come to mind.
Did I forget to mention the giant screen TV? Ah yes, the future opportunity of acquiring this and other electronic gadgets is within striking distance. Black Friday is almost here.
But wait! Times have changed and retailers wanting to get the jump on their competition have already been offering blow-out pricing for weeks before we could even give thanks for what we imagined we wanted but didn't know yet.
Now that's hardly in the spirit of the season but who said you could trust retailers to play fair. What's Thanksgiving day for if not to show gratitude and give credit where credit is due (with the emphasis on the latter). Now the due date for what we bought with plastic comes a little sooner as we receive those credit card statements in time for Christmas.
What next? Will those retail geniuses in Santa hats have us loading up for the SuperBowl game on Christmas Eve?
To say we are indebted to so many is a recognition of the mystery of these many merchandising seasons.
Happy Thanksgiving.
On Thanksgiving Day we give thanks to others by giving them credit by acknowledging what they have done or contributed to what we enjoy... our health, families, friendships, and work. Our expectation and thanks in advance are also implied for what we still hope to acquire, have, and enjoy. The recognition of our peers, wealth, and the freedom to enjoy a long and happy life come to mind.
Did I forget to mention the giant screen TV? Ah yes, the future opportunity of acquiring this and other electronic gadgets is within striking distance. Black Friday is almost here.
But wait! Times have changed and retailers wanting to get the jump on their competition have already been offering blow-out pricing for weeks before we could even give thanks for what we imagined we wanted but didn't know yet.
Now that's hardly in the spirit of the season but who said you could trust retailers to play fair. What's Thanksgiving day for if not to show gratitude and give credit where credit is due (with the emphasis on the latter). Now the due date for what we bought with plastic comes a little sooner as we receive those credit card statements in time for Christmas.
What next? Will those retail geniuses in Santa hats have us loading up for the SuperBowl game on Christmas Eve?
To say we are indebted to so many is a recognition of the mystery of these many merchandising seasons.
Happy Thanksgiving.
Sunday, November 18, 2007
Shopping for A Mortgage? Buyer Beware!
Money troubles are continuing for home buyers even with the better than rotten credit (FICO) scores of the sub prime borrowers that triggered the mortgage crisis. Late payments, delinquencies, defaults, and foreclosures won't go away for many buyers who now appear 'not-so prime'.
There is some good news in this mess. The housing market melt-down and the credit-crunch may have saved you wannabe home buyers from the debt crushing others who might have become your neighbors. Wait long enough and you might even save money with a bargain on Foreclosure.com. But with foreclosures up almost 50% in the 3rd quarter and just 18 months into this downward spiral, my gut instinct says it's still too soon to start bargain hunting.
It's long overdue that banks and mortgage lenders got their heads out of the trough and put a rein on their appetite for profit. Lenders, read my lips. "STOP LOANING MONEY TO PEOPLE WHO NEED A MIRACLE TO PAY IT BACK." We all pay a price for this craziness and deceit. Not surprisingly, the truth is still escaping from the septic system as witness the Citibank revelations last week. Canadian Imperial Bank of Commerce also gave notice of their financial losses. And the forced auction of Northern Rock PLC (Britain's fifth largest mortgage lender) is another of the many global casualties.
Frankly, I'm delighted that the painful indigestion lenders are suffering from their self-inflicted over-indulgence (and a predictable lack of miracles) has them rejecting more mortgage applicants than the norm two years ago. Or even six months ago, I hear. This is prudent.
Sure, it's also disappointing when you are eager to fulfill your dream of home ownership...but the risks often outweigh the rewards. The affordability measures lenders used were at the root of many home buyers problems. To say they were generous is an understatement.
Your salary alone is not the only yardstick you should consider to assess your ability to pay (repay). Of course, the arithmetic can be daunting for your due diligence but don't be fooled by sweet-deal offers (check the fine print) at teaser rates when your underlying ability to pay is compromised by years of debt-fueled consumption habits, periodic or current reductions of income, health care costs or any of the above.
No blame implied here but a reality check is timely. Your freedom and today's lifestyle are at stake if you equate debt with slavery. Those who have "been there, done that" know of what I speak.
Whether you want a new mortgage or are re-financing, first examine your other financial commitments and debt obligations. Then switch gears and ask yourself these two emotionally-driven questions:
1. Can you live without the furnishings (or kitchen reno, etc.) you imagine will make that new home perfect once the deal is done? Or will that become another credit card purchase with a long term debit balance that is revolved over years of minimum payments? Home buyers often take on new debt from other lenders after the fact that makes the total debt load unmanageable.
2. Will you be able to sustain your current lifestyle once the monthly mortgage payments start? (Can you still be happy without the dinners out, another vacation, and the next new thing? You can't be sure without some accounting of your current spending.)
[Check out my test, Estimating Your Future Income Prospects on page 79 of SAVING Is for Suckers. To order the book see www.billmackay.net]
No matter how much you want that house with the white picket fence or that condo with the concierge don't let your optimism nor the lender sucker you into a mortgage that will ultimately be a monkey on your back. The costs are emotional as well as financial. Stress comes along for the ride. That's one of the bargains of capitalism you want to avoid.
There is some good news in this mess. The housing market melt-down and the credit-crunch may have saved you wannabe home buyers from the debt crushing others who might have become your neighbors. Wait long enough and you might even save money with a bargain on Foreclosure.com. But with foreclosures up almost 50% in the 3rd quarter and just 18 months into this downward spiral, my gut instinct says it's still too soon to start bargain hunting.
It's long overdue that banks and mortgage lenders got their heads out of the trough and put a rein on their appetite for profit. Lenders, read my lips. "STOP LOANING MONEY TO PEOPLE WHO NEED A MIRACLE TO PAY IT BACK." We all pay a price for this craziness and deceit. Not surprisingly, the truth is still escaping from the septic system as witness the Citibank revelations last week. Canadian Imperial Bank of Commerce also gave notice of their financial losses. And the forced auction of Northern Rock PLC (Britain's fifth largest mortgage lender) is another of the many global casualties.
Frankly, I'm delighted that the painful indigestion lenders are suffering from their self-inflicted over-indulgence (and a predictable lack of miracles) has them rejecting more mortgage applicants than the norm two years ago. Or even six months ago, I hear. This is prudent.
Sure, it's also disappointing when you are eager to fulfill your dream of home ownership...but the risks often outweigh the rewards. The affordability measures lenders used were at the root of many home buyers problems. To say they were generous is an understatement.
Your salary alone is not the only yardstick you should consider to assess your ability to pay (repay). Of course, the arithmetic can be daunting for your due diligence but don't be fooled by sweet-deal offers (check the fine print) at teaser rates when your underlying ability to pay is compromised by years of debt-fueled consumption habits, periodic or current reductions of income, health care costs or any of the above.
No blame implied here but a reality check is timely. Your freedom and today's lifestyle are at stake if you equate debt with slavery. Those who have "been there, done that" know of what I speak.
Whether you want a new mortgage or are re-financing, first examine your other financial commitments and debt obligations. Then switch gears and ask yourself these two emotionally-driven questions:
1. Can you live without the furnishings (or kitchen reno, etc.) you imagine will make that new home perfect once the deal is done? Or will that become another credit card purchase with a long term debit balance that is revolved over years of minimum payments? Home buyers often take on new debt from other lenders after the fact that makes the total debt load unmanageable.
2. Will you be able to sustain your current lifestyle once the monthly mortgage payments start? (Can you still be happy without the dinners out, another vacation, and the next new thing? You can't be sure without some accounting of your current spending.)
[Check out my test, Estimating Your Future Income Prospects on page 79 of SAVING Is for Suckers. To order the book see www.billmackay.net]
No matter how much you want that house with the white picket fence or that condo with the concierge don't let your optimism nor the lender sucker you into a mortgage that will ultimately be a monkey on your back. The costs are emotional as well as financial. Stress comes along for the ride. That's one of the bargains of capitalism you want to avoid.
Monday, November 12, 2007
Break-Through Budgeting Innovation: Happiness for the Not-So Rich
Tired of get-rich quick schemes that don't work? Frustrated that your instant millionaire status didn't materialize? Wasting money on stuff (or books, courses, seminars, magazines, investments) that boost your credit card debt but have yet to pay off on their promise of fame and fortune?
Welcome to the real world of the not-so rich. Yes, it can be discouraging for many when you're unable to keep up with the Brangelinas, Buffets, and super-rich hedge fund managers. While our world is throwing a huge party, you have yet to get invited. What to do?
I have a new approach and a budget-like system you will find helpful. Using it once may be all you need to change years of old spending habits that get you into debt. It worked for me. I'll share those ideas here as well as comment on current practices in personal financial planning... what works and what doesn't. And what is pure fantasy for more than 50% of us, like saving 10% of your income.
I'll also wade into the debate about how the future will need a different set of rules and timely innovations (lifestyle planning) to meet the real-world of global warming, demographics, globalization, technology, business, social and family structures. That they all will change is a certainty.
My context for all of this; your spending. That's it.
Spending is the one manageable key to most of the problems of the not-so rich. Saving more, paying zero taxes, and improving your returns on investments are NOT the answer when you can't control your spending and habitually waste your income on stuff that fails to provide the realization of your dream and aspirations.
I'll zero in on the news of the day to make my points as well as share practical ideas from my book, SAVING Is for Suckers...Unless You're Spending On Purpose.
Available at http://www.billmackay.net/
I invite your comments.
Welcome to the real world of the not-so rich. Yes, it can be discouraging for many when you're unable to keep up with the Brangelinas, Buffets, and super-rich hedge fund managers. While our world is throwing a huge party, you have yet to get invited. What to do?
I have a new approach and a budget-like system you will find helpful. Using it once may be all you need to change years of old spending habits that get you into debt. It worked for me. I'll share those ideas here as well as comment on current practices in personal financial planning... what works and what doesn't. And what is pure fantasy for more than 50% of us, like saving 10% of your income.
I'll also wade into the debate about how the future will need a different set of rules and timely innovations (lifestyle planning) to meet the real-world of global warming, demographics, globalization, technology, business, social and family structures. That they all will change is a certainty.
My context for all of this; your spending. That's it.
Spending is the one manageable key to most of the problems of the not-so rich. Saving more, paying zero taxes, and improving your returns on investments are NOT the answer when you can't control your spending and habitually waste your income on stuff that fails to provide the realization of your dream and aspirations.
I'll zero in on the news of the day to make my points as well as share practical ideas from my book, SAVING Is for Suckers...Unless You're Spending On Purpose.
Available at http://www.billmackay.net/
I invite your comments.
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