Forbes 100, Yakezie Round Up, and Uncommon Money News (Vol. 100)

By: Roshawn Watson

The Forbes Celebrity 100 came out this week, and it highlights the world's most powerful and wealthy celebrities. Keep in mind that earnings estimates are for June 1, 2009 to June 1, 2010 and includes dollars earned solely from entertainment income. Management, agent and attorney fees have not been deducted. There are some interesting facts. For example, Tween Queen Miley Cyrus brought in an impressive $48 million over the last year. Oprah earned an impressive (but typical for her) $315 million and was the most powerful celeb. This is Oprah's fourth time at number 1. Newcomers to the list, James Cameron and Lady Gaga, were the third and fourth most powerful celebs with $210 million and $62 million, respectively. The beloved Sandra Bullock was the highest paid actress at $56 million (rank 8) while Beyonce was the highest ranking musician at $87 million (rank #2)

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!

Recently, I participated in two carnivals: Carnival of Financial Planning – Edition #147 hosted by the The Skilled Investor and the Economic, Business, Credit, & Debit Round Up hosted by One Family's Blog.

The included posts are Savings Down, Spending Up, But What Does it Mean? and Will the Economy Collapse In 2011?

Millionaires Make a Return To Boom Levels was included in Brip Blap's Round Up entitled Once More Into The Breach And Links! Thanks so much for the support and the innovation.

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, twitter, 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! Thanks.

Posts of the Week

Forbes Celebrity 100

Walmart Defeats Chicago, Plans To Open Up To 21 Stores

Business

Apple iPad Sales Hit Three Million 80 Days After Launch

FTC Says Scammers Stole Millions, Using Virtual Companies

Why Are Wedding So Expensive

As businesses collapse, claimants still waiting for checks from BP

Walmart Defeats Chicago, Plans To Open Up To 21 Stores

Will BP Declare Bankruptcy To Avoid Gulf Coast Liabilities?

New home sales plunge 33 pct with tax credits gone

Cigarette Tax Increased to Keep State Running

Economy
$75M mansion near Orlando selling 'as is'

Existing Home Sales Drop

Democrats mulling stand-alone jobless aid

Entertainment Money News
Michael Douglas' Ex Wants Cut of Wall Street Cash

Hollywood faces new piracy threat

Method Man pleads guilty to NYC tax-evasion charge

Toy Story 3,' Sandler are hot, Tom Cruise not

Michael Jackson's Mom in the Poorhouse? (Yeah, Right)

Khloe Kardashian's Extravagant Victory Gift to Lamar Odom

Mariah Carey: I Want That God-Awful MJ Sofa for $150K!

Nas Feels the Pain of Home Ownership with $8,000 per month Home Payment

David Boreanaz Moves On from $2.6 Million Home

Jay-Z sued over $137,000 Private Jet Bill

Mariah Carey Sued for $38,000 Over Vet Bill

Joan Rivers -- Under Attack in Nasty Lawsuit

Career

Top 10 Jobs You Can Do from Home

Yakezie Round Up
Employee Referral: The Double Edged Bonus (Engineer Your Finances)

Should You Time The Market? (RW Investing)

The Mortgage Dance Of Money (Financial Samurai)

Take A Bite Out of Your Food Expenses (Squirrelers)

Inflation or Deflation: Which Is it? (Balance Junkie)

Will To Evil (Joe Taxpayer)

Once More Into The Breach And Links! (Brip Blap)

Millionaires Make a Return To Boom Levels

By: Roshawn Watson

Last year, we discussed how The Rich Got Poorer because there was approximately a 19.5% decline in the world millionaire population in 2008 . Well, 2009 was a bullish year for millionaires overall. In fact, the 2010 Global Wealth Report says the number of millionaires returned to their pre-crisis peak.

The number of millionaires rose by 16-16.5% in the U.S. and increased by 14% worldwide in 2009, depending on which report you use; this level of millionaire households was last seen in 2007. Interestingly, this increase occurred despite contraction of the world gross domestic product (GDP). The primary reason for the increase is due to stock market rallies. Consider that the global stock market capitalization surged from $32 trillion to $47 trillion in 2009, so shareholders benefited enormously.

Concentrated Wealth
The wealth was still highly concentrated. By far, the U.S. has the greatest number of millionaire household ranging between 3.1 million households (14th Annual World Wealth Report) and 4.7 million households (2010 Global Wealth Report). Americans account for 31% of the millionaire households. Over 50% of the world's millionaires came from the U.S., Japan, and Germany. Singapore had the highest millionaire density, with 11% of all households having over $1 million in net worth. For the first time, the high net worth individual (HNWI, investible assets over $1 million excluding primary residences, luxury goods, and private businesses) population in Asia-Pacific was as large as that of Europe. Despite sizable gains in Europe, these gains were far less than growth in the economic and market drivers of wealth in Asia-Pacific. The ultra-high net worth individuals (investible assets over $30 million excluding primary residences) had a 21.5% rebound in wealth in 2009. Note that ultra-high net worth individuals account for 35.5% of global wealth HNWI wealth and makes up only 0.9% of the HNWI population.

Good News
With the plethora of bad economic news, such as Will the Economy Collapse in 2011?, bad housing and unemployment news, and the market correction of May, it is easy to forget or at least discount the fact that if you were an investor throughout in 2009, you likely had a good year overall. This is especially true if you increased your exposure to emerging markets in Latin America and Asia. Also, keep in mind that the more money you have, the more difficult it is to determine your true net worth in many cases. For example, valuation of private companies can be very complex, and the opinions often disagree depending on which method you are using. Thus, after a particular point, net worth becomes somewhat arbitrary anyway.

If you can actually count your money, then you're not a rich man. (J. Paul Getty)

Additionally, don't forget who the average millionaire is. Remember that the typical millionaire is not a Wall Street titan, a corporate fat cat or a celebrity but rather a hard-working entrepreneur (32%) or professional (19%). Moreover, even though both the 14th Annual World Wealth Report and the 2010 Global Wealth report rightfully exclude primary residences in determining HNWIs, keep in mind that approximately 97% of millionaires are also home owners. Typically, millionaires have small outstanding mortgage balances and only approximately 25% paid $1 million or more for their current homes. Millionaires typically save and invest 15% of their earned income, which only represents 7% of their total net worth. In other words, frugality is a common tenet amongst millionaires. With good money management, investing skills, a long enough time frame, and a reasonable income, several of us will likely enter the millionaire ranks as well. Thus, this recovery in wealth reflects a rebound in wealth for many more hard-working, tax-paying Americans than it does jet-setters. That's simply because millionaire jet-setters are in the minority of the millionaire population.

In aggregate, some of us had our acts together, didn't lose a job, and prospered in 2009. That's good news that we can all celebrate!

Lastly, if you like this post, please subscribe (upper right-hand corner); You will RECEIVE My eBOOK; also, support this post and Propel it, Stumble it, and tag it on Delicious.

Related Posts
The Rich Get Poorer

Will the Economy Collapse in 2011?

Creating Phenomenal Wealth Over Time

Millionaires Increased Both in Number and in Wealth

Get Health Insurance Without A Medical Exam

By: Roshawn Watson

Hopefully, you wouldn't drive your car without automobile insurance, so why would you continue to go through life without life insurance? If you live long enough, you are going to die. It is just a fact, yet so many people treat getting life insurance like it is a chore. This is really an act of love and essentially allows for you to be replaced financially should something happen. Functionally, life insurance transfers risk: the risk of you dying and not having built enough wealth to provide for your family is transferred to the insurance company all for the cost of a couple pizzas every month if you go with term. That's the real benefit of insurance.

A common mistake when selecting life insurance is picking policies that invest or save money in addition to providing the face value of the plan.Remember, the purpose of insurance is to provide for your family should something happen to you. I would do my investing and savings in index funds, exchange traded funds, real estate, and even a money market account. However, I would not try to combine my investments and insurance into the same vehicle. This often leads to overpayment and very rarely gives you a great return on investment.

Lastly, there are some who feel that they are "uninsurable" and fear going through an intrusive physical exam
and then being rejected by the insurance agency. Even if they have some serious health problems, they likely can afford at least some life insurance, even if it is just a burial policy. Also, consider that a medical exam is not always required before obtaining insurance (you can find a whole page devoted to just this problem).According to Market Wire,

Prime Rate now features an in depth, engaging and exceptionally robust webpage dedicated to no medical exam life insurance.

Investigate your options thoroughly. Deliberately foregoing life insurance is akin to gambling or using online payday loans with your family's financial future. The well-being of your family is just too important to leave for chance.

Jamaican Yakezie Round Up, James Patterson, and Uncommon Money News (Vol. 99)

By: Roshawn Watson

Greetings from Jamaica! If you have never been to a 3rd world country, the experience can be quite enlightening. My most recent experience is going to Jamaica. I went because I was a groomsman in a friend's wedding; however, I did have some down time. For example, I actually climbed the Dunn River Falls, a 600-foot waterfall. To say this experience was an adventure would be a gross understatement; indeed, had I known how rigorous it was, I might not have done it. It was a lot of fun though. I also got a chance to read a few books that you may be interested in. Not all of the books were personal finance or business related either. One book that I enjoyed was "I, Alex Cross" by James Patterson. Although this is definitely a murder mystery, it did cause me to ponder two issues related to personal finance. First, if a close relative was sick in the hospital, I would want to be in a financial position so that I could simply stay with them to care for them well without worry of the financial implications of such a decision. Second, I wondered if I had to "disappear" within 3 days, how much could I take with me and where would I go? Both questions speak to financial security and liquidity; don't discount them merely because they arise from a fictional murder mystery :) I will discuss the other books in subsequent posts. Lastly, I'm always on the look out for personal finance nuggets, and what I found out about the Jamaican economy was quite interesting.

• Interest rates on mortgages are REALLY high (19-31%), which is why almost no one gets a mortgage.
• Beach front properties can range between $100K to $450K range; of course some are way more expensive.
• Average income is approximately $30 USD a week (unverified)
• I also used a Jamaican ATM to get $2300 Jamaican dollars, which equates to about to about $27 USD since the exchange rate was $85 Jamaican dollars to $1 USD.

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!

Recently, I participated in two carnivals: Carnival of Financial Planning – Edition #146 hosted by the Money Smart Blog and the Yakezie Challenge Carnival hosted by Young and Thrifty.

The included posts are Savings Down, Spending Up, But What Does it Mean? and Will the Economy Collapse In 2011?

Will the Economy Collapse in 2011? was included in The Millionaire's Nurse's Father's Day Themed weekly round up entitled Happy Father’s Day, From One Proud Dad To You! Thanks so much for the support and the innovation.

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, twitter, 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! Thanks.

Posts Of The Week

Behind the Green Curtain: An Insider's View of the Millionaire Mind

Apple, AT&T get record number of iPhone orders

Obama: BP agrees to $20B fund; chairman apologizes

Canada's economy is suddenly the envy of the world

Renting a White Guy in China

Celebrity Net Worth Round Up

Business News
Apple, AT&T get record number of iPhone orders (POW)

Obama: BP agrees to $20B fund; chairman apologizes (POW)

Swipe' Fees Cost US Taxpayers Millions Of Dollars

Abusive Customers, the Customer isn't always right

Gothamist Founder May Have Tweeted His Way Out Of $5 Million

10 Brands That Will Disappear In 2011

Should we be boycotting BP gas stations?

Economy
Where America's Money Is Moving

How to Plan For a Double-Dip Recession

Canada's economy is suddenly the envy of the world (POW)

Countries with the Most Millionaires

Authorities reveal mortgage fraud crackdown, 485 arrests

Renting a White Guy in China (POW)

Entertainment Money News
Celebrity Net Worth Round Up (POW)

Christina Aguilera Raises $50,000 for Charity

Is Taylor Lautner The Highest Paid Teen Actor?

The Cost of Divorce: Charlie Sheen/Brooke Mueller Alleged Divorce Documents

Christina Aguilera struggles with album sales

Toy Story Glory; Megan Fox Hexed

Jackson Estate & AEG Agree to Pay a Million for Michael's Memorial

Val Kilmer's $33 Million Dollar Problem

Top 10 Movie Trilogies

Career
Employees Quit for Reasons Other Than Money

Top 10 Careers for Ultimate Job Security

Salaries for Careers at Many Levels

More College Grads Are Turning To Trades

Personal Finance
When Fights Over Money Ruin Marriages

Little Dog, Large Inherited Estate

The Financial Burden of the Penny

The average American spends $59 a day

Yakezie Round Up

MBA Course: Investing & Portfolio Management-Class 3-The Lazy Investor’s Guide to Asset Allocation (Another Great Post from Barbara Friedberg)

Target Date Funds-Should You Do It Yourself? (DIY Investing - Great question)

Behind the Green Curtain: An Insider's View of the Millionaire Mind (Fabulous read at Len Penzo... It's like millionaire next door, inside a millionaire's mind, and Rich dad poor dad all wrapped up into one)

Which is The Best Way To Save Money (Balance Junkie - Very interesting!)

Carnival of Financial Planning – Edition #146 at Money Smart Blog

Happy Father’s Day, From One Proud Dad To You! hosted by The Millionaire Nurse

Yakezie Challenge Carnival at Young and Thrifty

Don’t Let Your Dream Become a Nightmare

By: Samantha Lewis

If you are in the market to purchase a house by getting a mortgage or planning to refinance your existing mortgage, you should strongly consider running the numbers with a mortgage calculator to accurately determine what your financial liabilities will be. Traditionally, you want your principal, taxes, insurance, and interest to be less than 28% of your gross income on a 30-year fixed mortgage. Personally, I prefer a more conservative benchmark of your mortgage being no more than 25% of your net income on a 15-year traditional mortgage. Using mortgage calculators can help prevent you from becoming house poor, so your income is free to pay off the home and build wealth.

The following article is a guest post by Samantha Lewis from Mortgage Fit. If you find this article useful, please consider subscribing to her site and reading her other mortgage-related articles.

Best Mortgage Calculators refer to those mortgage calculators which not only help in estimating the payment on a new mortgage loan, but also offer alternative uses. Best Mortgage Calculators can serve various purposes and can help you to solve different mortgage related issues.

The Various Purposes for which you can use Best Mortgage Calculators

• If you are going to take a home loan, then the Best Mortgage Calculators can calculate the overall costs along with the monthly payment amount. So, in advance you can judge whether you will be able afford a particular home mortgage loan. This, in turn reduces your risk of taking the loan.
  
• In case of late payment, using Best Mortgage Calculators you can calculate the increase in the amount of interest payment.

• If you are considering mortgage refinance in order to get the advantage of low interest rate, the Best Mortgage Calculators can help you in determining the net savings that you are going to incur.
• If you have taken a 30-year fixed rate mortgage loan, but want to pay it off much earlier, then you can do that by making extra payments towards your loan. The Best Mortgage Calculators can help you to find out how you can reduce the loan term and for that how much extra amount you will be required to pay each month. Using the Best Mortgage Calculators you can also determine how much you are actually going to save if you make extra payments towards your loan on a monthly or yearly or one-time basis.
• When you took the home mortgage loan, may be you were compelled to buy a private mortgage insurance policy. If you are still paying the insurance premiums, then you can give a second thought to the matter. If you have gained 20% equity in your home, then you can request for the cancellation of the private mortgage insurance policy. The Best Mortgage Calculator can here effectively help you in deciding whether 20% equity has been accumulated in your home.
• If you are thinking of taking a mortgage loan and weighing the various mortgage loan options, then Best Mortgage Calculators can help you in taking a solid decision. If you are confused between a 20 year fixed rate mortgage loan and a 30 year fixed rate mortgage loan, then you can enter respective interest rates with respective loan term in the Best Mortgage Calculator and can get a competitive picture. The Best Mortgage Calculators shows the required amount of monthly payments and the amount of overall interest payment in case of both the loans. After considering the values you can thoughtfully decide on the loan type.
  

Related Posts

Should You Buy A House Outright?

Is Home Ownership A Good Investment?

Forty Percent Of Homeowners Are Financially Overextended

The American Dream: Asset or Liability?

Yakezie Round Up & Uncommon Money News (Vol. 98)

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!

Recently, I participated in one carnival: Carnival of Financial Planning - Edition #145 - June 11, 2010 hosted by the Skilled Investor.

The included posts are Savings Down, Spending Up, But What Does it Mean? and Is it wrong to strive for job security?

Will the Economy Collapse in 2011? was included in AI Investing's weekly round up entitled Weekly Wisdom: Ultimate Money Secrets. 5 Steps to Protect Your Cash Flow Like the Rich was included in Deliver Away Debt's superb The Mega Money Tip List – 600 Money Saving Tips. Thanks so much for the support and the innovation.

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, twitter, 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! Thanks.

Posts of the Week

BP Spills Coffee (Video) !

The Mega Money Tip List – 600 Money Saving Tips

Business

Warren Buffett lunch price: $2.6 million on eBay

U.S. Retail Sales Decline in May

Employer Health Care Costs To Increase 7-8% in 2011

In prison, Bernie Madoff is free to be himself: remorseless

How Warehouse Clubs Trick You Into Overspending

Economy

The new food stamp user might look a lot like you

Fed Says Economy Grew in 12 Regions, Though 'Modest'

Entertainment Money News

Karate Kid Chops The A-Team

Samuel Eto’o spends $1.3m on designer watches for teammates

Dennis Rodman: I am not as rich as she thinks

Rap Chick Nicki Minaj Sued over Lambo

Jesse James -- Web Company Ripped My Image, so I'm suing for $150,000

Rodman's Wife: Worm Owes $300K in Child Support

Brian McKnight ... You're the Daddy! : Pay Over $11,000 per month & $340,000

Offbeat Money News

Frugal Millionaire Leaves Fortune to Hometown

Texas billionaire's legacy: Death, but no taxes

Yakezie Mini Round Up

Does Money Reduce Stress? at Balance Junkie (Food for thought)

Being Overly Content Can be Detrimental To Your Career at Financial Samurai (very interesting)

How To Prevent Fraud in Under Five Minutes at Engineer Your Finances

Leveraged ETFs, An Accident waiting to Happen at RWInvesting

The Secret To Cutting Your Debt Immediately at Barbara Friedberg Personal Finance

Mega Money Tip List – 600 Money Saving Tips at Deliver Away Debt

Will the Economy Collapse In 2011?

By: Roshawn Watson
People can change the volume, timing, and the location of their income in response to changes in tax policy. Next year, the highest federal personal income tax rate will go from 35% to 39.6% , the highest federal dividend tax rate increases from 15% to 39.6%, the capital gains tax rate increases from 15% to 20%, and the estate tax rate increases from 45% (in 2009) to 55%. With the steep increases in federal, state, and local taxes scheduled for next year, will economic activity be stifled to the point of economic collapse in 2011?
The Laffer Curve
Economist Art Laffer, creator of the Laffer Curve certainly thinks so, and he has provided some compelling arguments.

When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

His basic premise is that there is a point where increased taxation no longer results in a corresponding increased revenue for the government: there is a sweet spot with respect to taxation. Maryland certainly felt the impact of over-taxing its residents when lawmakers enacted a special millionaire tax to cover budgetary deficits. The profound result was millionaires paid over a $100 million less in taxes compared to year prior to the enacting the tax, even though the tax rate was higher. Maryland literally lost one-third of its millionaires in a single year, and most believe it is partly attributed to enacting the millionaire tax. From those missing millionaires, Maryland collected nothing. Simply put, you just cannot tax people beyond their willingness to pay. The classic example is if you were taxed at a rate of 120% of your income, how long would you work?
Impact of Anticipating Higher Taxes on Economic Activity
Anticipation of higher taxes will motivate people to shift income and production from next year to this year. Consider billionaire Eddie Lampert. According to Bloomberg & Business week, his hedge fund distributed him $829 million in stock this year, so far. The fund is scheduled to transfer more shares to Lampert by the end of July. Because he is taking the stock now, he will be taxed at the current capital gains rate of 15% when he decides to sell. However, if he were to wait until next year, under proposed legislation in Senate, he would pay the higher ordinary-income tax rate of 39.6%. Robert Willens owns a New York firm that specializes in reducing tax burden of its Wall Street clients. Willens commented that Lampert's decision to take a stock distribution is totally astute and "(i)t doesn’t take a fortune teller to predict that we are going to see a lot of this activity between now and the end of the year.” In addition to retaining the capital gains treatment of the stock, Lampert still controls the timing of the sell, so he can determine to sell during a year that minimizes his taxes. Frank McCourt, owner of the LA Dodgers, illustrates how timing such a transaction can dramatically reduce one's tax burden. He recently received $108 million in income and paid no federal and state taxes because of loss-carry forwards.
Laffer further argues that this pattern of shifting economic activity based on tax policy occurs repeatedly and can have a profound impact on the economy. A poignant example occurred in the early 1980s. The majority of Reagan's tax cuts didn't go into effect until 1983, and people consequently delayed economic activity in 1981 and 1982 to the point where the real GDP was flat (no growth) while the unemployment rate rose to 10%. However, the pent-up economic activity took off in 1983 , as growth increased to 7.5% and further increased by 5.5% the following year. Accordingly, the impact of the deferred tax increases for next year may be in reverse, and Laffer predicts the economy will collapse in 2011.
This is the product of removing incentives for production through increased taxation.
The fact that corporate profits as a share of GDP are already too high given the state of the U.S. economy reflects the shift in income into 2010 from 2011. "These profits will tumble in 2011, preceded most likely by the stock market" according to Laffer.
Regardless of your views about a potential double dip recession, some feel all of this complaining about taxes is going too far. After all, aren't we just raising income taxes back to pre-Bush levels? Consider that a chief justice once said that a citizen has not only the right but a duty to pay only the minimum tax applicable to him. It sounds like even chief justices aren't so keen on paying taxes either. The point is taxes are not a trivial thing. Taxes typically represent our single largest lifetime expense: we're taxed when we earn, spend, save, invest, and die. It's naive to think that changing tax policy doesn't affect consumer and business behavior. Indeed, the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. This is simply a fact.

Laffer Is Not Infallible

Art Laffer is certainly not infallible (after all, who is?). Recall four years ago, he argued with Peter Schiff about the the probability of whether we would enter a recession in 2007 or 2008. His words were "the economy has never been in better shape (watch it for yourself)." Of course, this prediction was inaccurate, and he subsequently admitted so.


Of course, Laffer isn't the only prominent economist fearing a double dip recession. Nouriel Roubini argues that the U.S. recovery is far from a sure thing yet. He believes the recovery has a 60% chance of being slow and anemic with little growth for the next two years; however, his modeling also suggests that there is a 20% chance that we will have a double-dip recession. Side note, Dr. Roubini did correctly predict that the US would enter a recession in 2006, just as Schiff.
It's Your Economy That Matters

With $13 trillion in debt, our economy certainly has seen better days. Better unemployment news helps, but there are some tangible challenges we face. Regardless of whether we are heading towards a double-dip recession next year, as I said in May 2008, what's most important to you is your economy. "Will your finances be screwed up next year?" is a much more relevant question to you than whether or not we will have another recession. If you have a stable income there is no time like the present to get your finances in order. Consider discussing with your accountant the implications these changes to the tax laws will have on you. Perhaps, this may be the time to take a capital gain, or convert a traditional IRA or a 401K to a Roth IRA for tax free growth if you can afford to pay the taxes this year. For 2010, the prepayment penalties are waived. My wife's first response to Laffer's predictions was "how can we prepare?" What's your first response?

Lastly, if you like this article, please subscribe to my FREE email updates or RSS feed (reader), Retweet it, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

 
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Yakezie Round Up & Uncommon Money News (Vol. 97)

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!

Recently, I participated in three carnivals: Carnival of Financial Planning Vol. 144 hosted at the Free Money Finance, the Money Hackers Carnival – The BBQ Edition hosted at Saving Money Today, and the Yakezie Carnival hosted at Beating Broke.

The included posts are Through the Looking Glass, Savings Down, Spending Up, But What Does it Mean?, and Is it wrong to strive for job security?

Savings Down, Spending Up but what does it mean? was included in Lazy Man and Money's round up entitled Gambling Addiction Confession (and Personal Finance Links) and was included in Personal Finance By The Book's round up entitled House Flip Update Weekly Round Up.

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, twitter, 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! Thanks.

Posts Of The Week

Vulgar voice mails force debt collector to pay $1.5 million (Shocking!!!)

Woman: Citibank Fired Me for Being "Too Hot" (For real???)

Nouriel Roubini: A Crash Course in the Future of Finance watch! (Not surprising from Dr. Doom)

Retailers post 9th straight month of gains (Hooray!!!)

Lottery winner blows $14 million prize in only 8 years (Stupid is as stupid does)

Business

No joke: Goldman Sachs shorted Gulf of Mexico

Bank of America to pay borrowers $108 million

$621 Million Fine May Keep Goldman Sachs Away From The Court

Vulgar voice mails force debt collector to pay $1.5 million (POW)

Woman: Citibank Fired Me for Being "Too Hot" (POW)

A Banker Reveals How Banks Try to Take Your Money

White House sends BP a $69 million bill

BP shares drop, costs approach $1 billion

4 Big Businesses Built With Small Cash

Economy

Job hopes rise on flurry of economic reports

4.7 million Americans out of work for a year or more

Owners Stop Paying Mortgages, and Stop Fretting

America's 7 junkiest cities

Nouriel Roubini: A Crash Course in the Future of Finance watch! (POW)

Why U.S. debt matters to you

McMansion welfare: Why does government subsidize home ownership?

Retailers post 9th straight month of gains (POW)

Jobless claims decline

Private sector adds 55,000 jobs in May

Entertainment Money News

Idol struggles to sell singles

How Much Americans Spend on Entertainment (Graphic) view!

American investors: Predictably stupid losers

Greek’ rocks but ‘Shrek’ reigns at No. 1

Career and Personal Finance

5 high-paying, low-stress jobs

Loyalty takes butler from poor Nepal village to NY

Lottery winner blows $14 million prize in only 8 years (POW)

Yakezie Mini-Carnival

How Learning To Say No Will Help Your Life And Your Finances at Personal Finance By The Book

Make More Money, Have More Time, Feel Amazing Part 2 at Barbara Friedberg Personal Finance

Only The Poor and The Super Rich Say Money Can't Buy Happiness at Financial Samurai

Dave Ramsey Was Wrong at Eliminate The Muda

Yakezie Carnival at Beating Broke

Wrapping Up John Bogle's Enough at Engineer Your Finances

Is It Wrong To Strive For Job Security?

By: Roshawn Watson

Suppose you have a job that you like but is grossly underpaying you. What is the correct response? You certainly have a lot to think about because working is not all about the money, right? For example, this job could help you reach your potential and be the spring board into a brilliant new career. Having a low paying job that expands your skill set, knowledge base, or network certainly could have a role in your career plan. However, you also have a responsibility to your family and your own financial well-being. Many of us are striving for job security while simultaneously diminishing our likelihood of becoming financially independent and paradoxically becoming less secure as a result.

Where's My Safe, Secure Job?

Often when money is involved, people want to "feel safe and secure." A solid job seems to be new graduates main goal. However, some companies hire and fire employees with the bat of an eye. Although this is scary, it is the world in which we live. Becoming a valuable asset to an institution may not be a choice if we want to keep our jobs or advance. If fear of losing your job is driving you to become indispensable, then you have a good outcome even if you have the wrong motivator.

Here's why. As I already iterated, job security has changed. Staying with the same company for forty years is unfortunately a thing of the past for many. Job security in today's volatile market often means something entirely different: the only true job security is our abilities to get other jobs. This isn't to say that we shouldn't be loyal to our employers but to emphasize that we have to mind our investment portfolios and stay marketable. Financially speaking, putting all of our eggs in one basket is extremely risky. We can't fall into the trap of thinking that everything will miraculously work out just because we do a good job and have a livable salary. A financial plan that only works if everything goes perfectly is not much of a plan at all (more like wishful thinking). A good plan must make allowances for undesirable events, including a job loss.

It's Only an Illusion

Even if a job loss isn't in your future, what keeps people at lower paying jobs? Typically, this is where people spew out a lot of reasons, such as passion, favorable working hours, a stimulating job environment, all of which are completely valid reasons in my mind. Surprisingly, I don't see money as a main motivator for choosing a job, as long as the job provides a reasonable wage. The reason is that income from a job can only take you so far with respect to achieving financial security and more importantly financial independence. Thus, you'll be a lot happier and more productive if you choose something that you enjoy. Just yesterday, my boss commented on how excited I was regarding the recent data I collected. If your job doesn't bring you any contentment and pays poorly, that is a real problem. One reason people don't choose jobs from which they derive pleasure, have advancement opportunities, and earn a reasonable wage is because of fear over loss of security.

The first problem with this fear over loss of security is that is that such security is hardly even worth it if you are miserable, stuck, and broke. Secondly, you are sacrificing your family's financial-security for your illusion of job-security. In doing so, you likely missed several opportunities that could have dramatically changed your financial life. You played it "safe" while your financial solvency is at the whim of an employer. That's not too wise in many cases. I know what it is like to suddenly lose over 80% of my earned income in one month and not have to worry about meeting financial obligations. That's the power of not basing your financial well-being on a job. Believe me, you will be a lot more secure once this concept becomes your reality.

Win the Battle But Lose the War

Even if you get the higher salary, that in itself won't automatically change your financial destiny. This is the sad truth. Whether you make $40,000 per year or $400,000, you can still be broke. I can point you to stories of thrifty engineer's making no more than $50,000 per given year dying with millions in the bank and point you towards people who make hundreds of thousands per year and still feel financially stretched. A low income doesn't doom you to financial obscurity just as a high income doesn't give you financial intelligence nor guarantee financial security. In fact, few people who have high incomes become financially independent, at least before retirement age. Additionally, fewer than ten percent of people ever reach an affluent level of income during retirement. Getting a hefty income is great, but don't assume that the income alone will guarantee you financial success.

Information Make Your More Secure

Your true financial leverage typically lies not in what you can convince a banker to lend you but in what you know. Never underestimate the value of intellectual capital. For example, one of my mentors runs a small business and got very sick a few years ago, so his doctors told him to stay home. During this time, the gross annual revenue of his business was $4 million. He got very scared because he is a very hand's on operator and is the key proponent to his business's success. He kept his involvement in his company to an absolute minimum and didn't even leave his house for the next three months. This is remarkable because he doesn't have the kind of business that lends itself to being run from home. However, through the sickness, he learned a completely different way to operate his business. That same year, his small company increased its revenue to $20 million and hasn't looked back since.

Another example illustrates this point even better. I have been impressed with John Paulson for the last 18 months. He is a hedge fund manager who built his own fortune and then taught himself the complex world of mortgage-backed securities. He read the writing on the wall and decided that there was a real estate bubble that wouldn't continue. He created a package of distressed and overpriced assets and distributed it through Goldman Sachs to sophisticated investors who failed to do due diligence in evaluating the deal. Paulson's financial interests ran contrary to the investment deal he set up, and his "gamble" paid off handsomely to the tune of billions for him personally and tens of billions for his hedge fund. That's the power of intellectual capital. It sets you apart even from the very wealthy who refuse to gain this type of leverage.

Remember that there is certainly nothing wrong with job security, but financial security is a much more pragmatic goal. Financial independence will give you freedom to pursue your passions like never before. Finally, the more you increase your content and the paradigm with which you view your finances, the safer you will ultimately be.

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