Uncommon Money News (Vol 49)

By: Roshawn Watson

In preparing to write my posts, I often come across noteworthy and sometimes bizarre financial and business news. Below are links to some of these sites. Enjoy!

I am especially appreciative to stingy student for hosting the twenty-something carnival. I absolutely loved the Oscar theme. Our post Lame Defense for $18.4 Billion in Wall Street Bonuses was an Oscar Nominee :), which is a lot of fun. Thanks for spreading the word and the honor of being on your site!

To my readers: I am so honored by your support. Thank you for reading, subscribing, and for voting for articles from this site on social bookmarketing sites such as stumbleupon, reddit, delicious, digg, propeller, and yahoo buzz. Together, we are telling thousands of the importance of financial literacy. I absolutely could not do it without you. You are vital this this site, and I appreciate your help so much! Thanks.

Posts of Week
If You Spent A Million Dollars A Day

FBI Investigating Subprime fraud since 2004

I bought an expensive house, My bad not yours

Tyler Perry's Madea goes to Jail wins big at the box office




Humorous Money News

Golden Parachutes: How Bankers Went Down

If You Spent A Million Dollars A Day (POW)

Dilbert Critique of Congress' Hypocrisy in Auto Industry Bailout Proceeding

Business News
GM posts $9.6 billion 4Q loss

Group of Rich Americans Sues UBS to Keep Their Names Secrets (also check out UBS agrees to reveal client names... potential tax evaders)

American Express Paying customers to close their accounts

Is a McDonald's Employee Shot On the Job Entitled to Worker's Compensation

Thain says there was no reason to suspend Merill Lynch $4 Billion Bonuses

Socialist Sweden Won't Bail Out GM-owned Saab

Economy
Learn about COBRA insurance

Real Estate Money News
FBI Investigating Subprime fraud since 2004 (POW)

I bought an expensive house, My bad not yours (POW)

Entertainment Money News
Tyler Perry's Madea goes to Jail wins big at the box office (POW)

Octomom gets $1 million offer to pose for playboy

Retired Madoff Victim Returns To Work

By: Roshawn Watson

What can you do if you lose everything? This is a question that unfortunately many Madoff victims are being forced to answer. There is understandably a mixture of outrage, bitterness, self-pity amongst those who have been financially-violated by this scandal. Nonetheless, there is one story that distinguishes itself from the rest because of one man’s extraordinary resolve to succeed in the midst of his financial tragedy.

His name is Ian Thiermann.

He is 90-years old and previously ran a tree preservation and pest control business before retiring 25 years ago. He never thought that he would be forced to go back to work to make ends meet. He took a job at a local grocery store, working 30 hours a week for $10 an hour. He lost his entire life savings in the Maddoff scandal, and his story can be viewed in the video below.

He really is an inspiration
After watching the video, I too echo the sentiments of his boss: he is an inspiration to others going through difficult financial times. He has an undying will to succeed. Undoubtedly, there was a period where he had to come to grips with the reality that his financial foundation had been yanked from underneath him; however, rather than wasting time feeling sorry for himself, he is persevering.

Dangers of Debt
This story highlights the dangers of debt. Sadly, 25 years after retirement he still has home payments and his wife’s medical bills to pay. Like many other retirees, debt represents a major expenditure and can threaten one’s financial well-being and self-sufficiency. Debt is the primary reason that elderly individuals make up the fastest growing group filing for bankruptcy. Of course Thiermann's extenuating circumstances caused the bulk of this mess, yet his story would likely be very different if debt was not in the picture. Remember, debt equals risks.

Diversify Investments
Also, His story also exemplifies why it is important to diversify asset classes and types of investments. Diversification decreases risks and is a great strategy to build long-term wealth because it generally protects your portfolio from huge fluctuations. This is especially important when particular investments go completely awry (i.e. funds invested with Bernard Madoff). Currently, several asset classes are down, but most know they will rise again, eventually. Diversifying your types of investments (i.e. real estate, stocks, bonds) is also a good idea.

My heart goes out to all of the Madoff victims. Although initially the Madoff victims have been painted as elitist, it is now known that there are many Ian Thiermanns (regular people who invested their life’s savings) in the bunch. Perhaps their collective resolve to thrive during adversity can serve as a symbol for us all that we all can rise above difficult financial storms.

Lastly, if you like this post, please subscribe (see upper right-hand corner), Mixx it, Propel it, Stumble it, and tag it on Delicious. Also, click here to get my eBook FREE.

Related Posts

7 Disastrous Debt Habits

New Retirement Threat

Should You Be Investing Or Paying Off Debt

Uncommon Money News (Vol 48)

By: Roshawn Watson

In preparing to write my posts, I often come across noteworthy and sometimes bizarre financial and business news. Below are links to some of these sites. Enjoy!

I am especially appreciative to living almost large for their carnival round up. Our post Is there room for Economic Optimism? was recently included in the Money hacks carival hosted by One Million Bucks. It was also featured on the Skilled Investor and in One Family's blog. I appreciate sites for the links. Thanks for spreading the word!

To my readers: I am so honored by your support. Thank you for reading, subscribing, and for voting for articles from this site on social bookmarketing sites such as stumbleupon, reddit, delicious, digg, propeller, and yahoo buzz. Together, we are telling thousands of the importance of financial literacy. I absolutely could not do it without you. You are vital this this site, and I appreciate your help so much! Thanks.

Posts of Week


Taxpayers may cover Octuplet mom costs

Woman launches $4 billion dollar lawsuit against Miley Cyrus

New Jobless claim drop to 623,000

Nearly nothing to fear except fear itself

GM considering chapter 11 filing and forming new company

Miami banker gives $60 million of his own to employees

Business News
Coca Cola 4th quarter profits fall 18%

Viacom 4 quarter profits falls

GM considering chapter 11 filing and forming new company (POW)

British Investor in Madoff scheme kills himself

Are executives worth their compensation

Miami banker gives $60 million of his own to employees (POW)

Chrysler,GM asks govt for nearly $22 Billion in loans

TD Ameritrade founder sells part of brokerage firm to help purchase Chicago Cubs

Swiss Bank Giant USB Hiding Assets of US tax payers

Sprint Nextel Posts $1.62 billion loss; Subscriber losses continue

US Economy

New Jobless claim drop to 623,000 (POW)


Retail sales up 1% in January

Nearly nothing to fear except fear itself (POW)

California to begin layoff proceeding to layoff 20,000 workers


Obama unveils $75 Billion mortgage relief bill

Goodyear cutting nearly 5000 jobs after 4Q loss

Record 881 US auto dealership closed in 2008



Entertainment Money News

Despite the economy, the Oscars must go on


Woman launches $4 billion dollar lawsuit against Miley Cyrus (POW)


Donald Trump quits Trump Entertainment Resorts as the casino group files bankruptcy


Don Johnson Wants Nash Bridges Riches


Offbeat Money News

Taxpayers may cover Octuplet mom costs (POW)

Gamer rakes in $600K a month from apps

Caring Banker's $60 Million Gift

By: Roshawn Watson

Leonard Abess Jr.'s recent generosity is awe-inspiring.

Last November, he sold a majority stake in City National Bancshares and selflessly gave $60 million of his proceeds to all 399 workers on his payroll (including tellers, bookkeepers, clerks, etc.) and then even tracked down 72 former employees so that they could share in his gift.

The bonus was based on years of service to the bank, and for long-time employees, it amounted to tens of thousands of dollars. For some, it was more than $100,000.

Mr. Abess says that he was motivated by a strong desire to "reward employees.... Those people who joined me and stayed with me at the bank with no promise of equity -- I always thought some day I am going to surprise them."

Interestingly, Abess didn't publicize his generosity, nor did even go to the bank on the day that the bonus checks were distributed to experience the gratitude from the hundreds of employees. Instead, it appears the letters of appreciation and the liberation associated with giving were reward enough. Maya Angelou once remarked "I have found that among its other benefits, giving liberates the soul of the giver."

A remarkable example
Mr. Abess's philanthropy sets a wonderful example of servant leadership and what it means to be a responsible corporate citizen. He stated that "he was concerned that his employees 401(k) plans had taken a beating in the downdraft on Wall Street last year." This was his way of sharing his prosperity with employees who have stuck by him for years.

Many people despise wealth, but few know how to give it away (Francois de La Rochefoucauld).

He didn't start off as the boss
Although his father was a founder of the bank, Abess banking career started in the bank's print shop. Presumably, having to working his way up the ladder gave him a greater understanding of how important the employees are to the overall success of a business. In fact, he didn't even inherit the bank from his father. Ownership of the bank changed hands a couple of times, and the bank ended up in bankruptcy. At this point, Abess borrowed $21 million to purchase majority control of the bank in 1985. Later, he acquired the rest of the bank from 200 investors for $6 million. With his leadership, the banks assets grew from $400 million and 7 offices to $2.75 billion and 18 offices.

Money Is Evil????
I always roll my eyes whenever I hear someone say that money is evil and that all they "need is enough to take care of my family." Although they believe such statements make them sound self-less, they generally have no idea how such statements merely reveal their greed. It means that they have never even considered how great it is to be in a position to meet others' needs. Some people are so "me centered" that they lose site of the fact that others are hurting around them. They would never even consider giving big such as Abess' $60 million dollar gift to his employees or Oprah's $40 million dollar benevolence to start an all girl Leadership Academy in Africa. It's simply not their priority, which is why they can be satisfied only taking care of themselves.

This generosity serves as a great example of how money can be used for good. The employee recipients are still amazed by their good fortune.

We expected a bonus, but the type we received -- our mouths are still open, a 39-year veteran remarked.

By far, one of the greatest purposes and privileges of wealth is giving, and it rewards extend beyond acknowledgment and gratitude. As Abess and countless others have discovered, "the deep rewards of giving go to those who give out of a concern for others, and take pains to see that their giving is wisely done, (and) to meet real needs" (F Emerson Andrews)

Uncommon Money News (Vol 47)

By: Roshawn Watson

In preparing to write my posts, I often come across noteworthy and sometimes bizarre financial and business news. Below are links to some of these sites. Enjoy!

I am especially appreciative to living almost large for their carnival round up. Our post Is there room for Economic Optimism? was recently referenced by their site. I appreciate sites for the link. Thanks for spreading the word!

To my readers: I am so honored by your support. Thank you for reading, subscribing, and for voting for articles from this site on social bookmarketing sites such as stumbleupon, reddit, delicious, digg, propeller, and yahoo buzz. Together, we are telling thousands of the importance of financial literacy. I absolutely could not do it without you. You are vital this this site, and I appreciate your help so much! Thanks.

Posts of Week

Starbucks to start $4 value menu

Some banks want to return return bailout money

Congress, White House agree on $790 B stimulus bill

Job losses during recent recessions (remarkable illustration)

Will Smith tops Forbes.com's bankable stars list

Ruth Madoff pulled out $15.5 Million before Madoff's arrest

Treasury paid $254 billion in 2008 for assets worth just $176 billion now

CEO, bankers use corporate credit card for sex


Business News
GM to cut 10,000 salaried position (14%)

15 companies that might not survive 2009

10 companies with no layoffs... ever!

Starbucks to start $4 value menu(POW)

The case for no CEO salary cap "Try to live on $500,000 in New York city"

Some banks want to return return bailout money (POW)

Ticket Master/Live Nation merger could raise ticket prices

Economy

Why the sting of layoffs may be worse for men

Nissan to slash 20,000 jobs an sees annual loss

9 recession-proof jobs

Congress, White House agree on $790 B stimulus bill (POW)

Job losses during recent recessions (POW)

Entertainment Money News

Will Smith tops Forbes.com's bankable stars list (POW)

He's Just Not That Into You Takes the No. 1 spot

Trump Says Obama is right to impose salary caps for executive compensation

Offbeat Money News
25 people who will affect your finances in 2009

CEO, bankers use corporate credit card for sex (POW)

Ruth Madoff pulled out $15.5 Million before Madoff's arrest (POW)

Pa. Judge accused of jailing kids for money

Starbucks Method to Restructuring YOUR Finances

By: Roshawn Watson

Starbucks has been struggling recently

The Starbucks' brand is based on people willingly paying premium prices for coffee; however, as the economic outlook became grimmer, consumer spending declined, and competition intensified amongst fast-food chains. Consequently, the coffee giant has suffered some big financial blows recently. For example, same store sells decline by 9% for the first fiscal quarter, and they have plans to close 300 stores and to eliminate up to 6,700 jobs in fiscal year 2009.
Image Credit: andrew martin

These cost-cutting maneuvers will only go so far, as their real problem appears to be their pricey image. In fact, their $4 latte is symbolic of the over-indulgences of yesterday, and consumers of all walks of life are reducing unnecessary purchases .

Plans to fix Starbucks "pricey" image problems
The somewhat intuitive solution is for the coffee giant to change its image from being so unnecessarily expensive. Starbucks hopes to achieve this with a new "pairing" program. This allows consumers to get a latte with coffee cake or drip coffee with hot sandwich for $3.95. Functionally, this is Starbucks parlay into the value menu zone although they refuse to call it that presumably because they wish to preserve some of the status associated with their brand. The new program will be marketed as "Hello to a New Day."

You may wonder why Starbucks wont just lower their prices, which is what most industry experts expect to happen soon anyway. A spokesperson for the company response is "Today, no. But never say never."

Credit-land.com

Many premium brands now want to be associated with "value"
Starbucks is the latest example of how premium brands are trying to reposition themselves for a prolonged economic downturn. No matter whether you are looking at advertisements for Target, Quiznos, or even Saks Fifth Avenue, much of advertising now emphasizes the great value the products or services have. This shift in marketing focus is the result of a reset of both economic and social behavior. As the world lost 40% of its wealth, many are eschewing luxury brands in favor of lower-priced items that make more financial sense.

Lessons from Starbucks

Perhaps there are some things to learn from Starbucks repositioning.

1. Take stock of your long-term economic growth (of course this assumes that everyone in your household who desires to work is employed). One thing that was interesting about Starbucks new plan is that they used the numbers (fiscal statements) to dictate the change. They realized that the current economy did not support their existing business model, so they changed their model accordingly. It would behoove many (people and companies) to follow suit. One of the easiest ways to achieve this is to look at YOUR financial statements (i.e. balance sheets, income statements). Are you becoming more profitable? If not, is there something that needs to change (increased income or decreased expenses)? If nothing can be changed at the present, at least you are not ignorant of your financial state, and hopefully the awareness will temper the natural desire to spend when funds are not available.
2. Perform competitive market analysis. Lately, competition from fast food chains (i.e. McDonald's) has been fierce for Starbucks. In a thinly veiled slight (against Starbucks presumably), McDonald's took out an billboard saying $4 coffee is stupid. Starbucks realized that they were losing business while value-oriented fast food chains (i.e. McDonald's) have been thriving. Rather than continuing to lose ground, Starbucks decided to part ways with a bad strategy even though the move is something that CEO Howard Schultz vowed he would never do. We should also consider how we stack up financially to our peers who are managing their finances well. Given our incomes, ages, and family commitments, we should assess whether we are measuring up financially or falling behind. Of course, just because you are doing as well as people around you doesn't mean your analysis is complete. Birds of a feather flock together and go to the same destination. Carefully consider what level you should be reaching given your resources. Know what you can realistically achieve, and begin to make changes to achieve it.
3. Innovate. Although Starbucks didn't really innovate because other food chains have been using the value-menu strategy for years, Starbucks did make changes that were new to their company and radically different from their existing model. It may be necessary to shake things up financially for you to achieve your long-term financial goals. It may be reconsidering your investment goals, tinkering with your budget, temporarily delivering pizza, etc. It important to stay fresh with respect to your wealth journey. It is quite possible that a very small change can yield big rewards. I will never forget one book that I read that has made me thousands over the years. The book was only $10 dollars and is still one of the best investments I ever made by far. Never underestimate small innovative steps, for it is a small rudder that can change the direction for a large ship.

Lastly, if you like this post, please subscribe (see upper right-hand corner), Mixx it, Propel it, Stumble it, and tag it on Delicious. Also, click here to get my eBook FREE.

Related Posts

Meet The Boring Young Millionaire

For the first time, American Debt Shrinks

Thrift Paradox - Is Frugality Hurting The Economy

Uncommon Money News (Vol 46)

By: Roshawn Watson

In preparing to write my posts, I often come across noteworthy and sometimes bizarre financial and business news. Below are links to some of these sites. Enjoy!

I am especially appreciative to the Skilled Investor and the festival of frugality. Our post "Luxury Goods Are the New Porn" was included in the carnival of financial planning, and Is there room for Economic Optimism? was included in the festival of frugality and the carnival of financial planning. I appreciate both sites for the links. Thanks for spreading the word!

To my readers: I am so honored by your support. Thank you for reading, subscribing, and for voting for articles from this site on social bookmarketing sites such as stumbleupon, reddit, delicious, digg, propeller, and yahoo buzz. Together, we are telling thousands of the importance of financial literacy. I absolutely could not do it without you. You are vital this this site, and I appreciate your help so much! Thanks.

Posts of Week

House approved delay of DTV conversion

Disgorge, Wall street Fat Cats

Wall Street bonus-fest 2008: 6th largest haul on record

Record 19 Million homes stood vacant in 2008

Quantify Everything: How Bad is the Economy... Really?

80 percent of wall street workers get bonuses, some still unhappy


Financial crisis has destroyed 40 percent of world wealth

Humorous Money News
55,000 laid off on Monday

Do countries count money differently

Business News

Glaxo is slashing costs and jobs further

GM, Chrysler offering to buyout tons of blue-collar employees

100 companies that will survive 100 years

Starbucks to layoff 6700, close 300 stores

Post office (USPS) may switch to 5-day delivery schedule amid economic concerns

Some credit card companies financially profiling customers

JP Morgan exited Madoff-Linked funds early

Exxon-Mobil set record with with $45.2 billion in profit

Macy's to cut 7000 jobs, slash dividend

The worlds 10 wealthiest CEOs

Economy

Consumer incomes and spending falls; savings rises

Record 19 Million homes stood vacant in 2008 (POW)

Quantify Everything: How Bad is the Economy... Really? (POW)

80 percent of wall street workers get bonuses, some still unhappy (POW)

Disgorge, Wall street Fat Cats (POW)

Wall Street defends bonuses

Financial crisis has destroyed 40 percent of world wealth (POW)

Entertainment Money News

Moviegoers Taken at the Box Office (top 3 movies of weekend)

Media firms keep pink slips coming

House approved delay of DTV conversion (POW)

Springsteen debuts at Number 1 in US

Wall Street bonus-fest 2008: 6th largest haul on record (POW)

Offbeat Money News

Clinton begins the year in $5.9 million in debt

Lame Defense for $18.4 Billion in Wall Street Bonuses

By: Roshawn Watson

It is tremendously disappointing to hear of companies taking bailout funds and then using our money to pay for bonuses. After all, where is the bailout for the typical American worker whose tax dollars are being used to support these bonuses? Even without a bonus, the average Wall Street worker still makes 3-4 times what the average American makes, yet in the midst of a deep recession, Wall Street employees are taking home a whopping $18.4 billion in bonuses. In fact, according to MSN money bonusfest 2008 was the 6th largest payout on record even though Wall Street was a disaster by almost any estimate. President Obama called it the "height of irresponsibility" and "shameful," and I agree. What I find even more nauseating is the lame defense put forth by the recipients (see video below) and the fact that
46% of Wall Street workers were dissatified with their bonuses.

Don't Cut My Salary
One argument put forth is that since the majority of wall street employees' pay comes from bonuses, slashing bonuses is like forcing them to take a huge pay cut.

One Wall Street worker quipped, "My bonus is ‘shameful’ — but I worked hard to get it"

Although I can appreciate that few people celebrate a decrease in salary, in some cases it may be warranted. For example, in cases where the institution where you work for is struggling so badly that they need government aid to stay afloat, sacrifices including loss bonuses are perfectly reasonable. Additionally, millions across the country have had to taste the effects of a down economy including a decrease in salary. With unemployment at 7.6 percent and underemployment also on the rise, there are an abundance of families who have suffered a decline in income. These guys would survive.

Hurt the Economy

Another argument was that without the bonuses, the economy would be hurt. The decline in bonuses this year will likely cost New York state $1 billion in income tax revenue and New York city $275 million. However, for some reason, I suspect that the fate of the overall US economy is not decided by whether Wall Street employees stop spending ridiculous sums of money on luxuries because they did not receive their bonuses. Even though they have a concentration of wealth, there are so many more direct and relevant factors impacting our overall economy than bonus income, this argument is somewhat laughable.

Must pay for talent

Some argue that bonuses are required to keep good talent. Sure you must pay to secure and maintain talent. Presumably that is one of the reasons the average Wall Street worker makes 3-4 times what the average American worker (perhaps greed is another reason). Note even with a 36.7% decrease in pay, the average Wall Street worker makes $112,000. Regardless, I don't have a problem with highly skilled professionals who consistently perform well being rewarded for their success. However, being rewarded during failure is a different issue altogether. I love the old quote that one reason they call these guys "brokers" is because they make you broker. In many cases, it is sadly very true. If you compared the long-term performance of actively managed funds versus passively managed funds, many times these professionals are just not worth the money. Nonetheless, they still are getting huge bonuses.

Unfair to penalize them - Economic crunch is not their fault
Perhaps the most insulting argument is that Wall Street employees are being used as scapegoats for the world's financial problems. Now, I would never argue that some American consumers did not over-extend themselves into a big financial pickle. About 40 percent of American homeowners are financially over-extended, and it took us a very long time to finally save. We have a culture of debt, and the current financial mess is the result of overly optimistic or uninformed borrowers and dishonorable or uninformed lenders, amongst other culprits. However, placing blame does not negate the fact that hemorrhaging companies are spending billions of bailout money on bonuses. Perhaps no amount of moral posturing and rationalizing will justify that. There is no good defense when it is just plain wrong.

Lastly, if you like this post, please subscribe (see upper right-hand corner), Mixx it, Propel it, Stumble it, and tag it on Delicious. Also, click here to get my eBook FREE.

Related Posts

40 percent of American homeowners, financial over-extended

For the first time, American debt shrinks