Job Security vs. Independence, Yakezie Round Up, Uncommon Money News

By: Roshawn Watson

Study hard, get good grades, and get a nice secure job is the mantra that's continually reiterated as the "right path." This is what we are taught to aspire to from our youth. There is certainly nothing inherently wrong with job security in that we should all strive to be indispensable regardless of employment status. However, I believe our emphasis is misplaced. All to often, we will focus more on job security than financial independence.

It is so easy to become trapped by the need of job security because most people are one of two paychecks away from financial ruin. Indeed, a whopping 61% of Americans live paycheck to paycheck. People are so conditioned to being trapped that they no longer understand what freedom even tastes like. Felix Dennis, one of the richest men in the U.K., referred to to this conditioning. He wrote receiving a regular paycheck is similar to using crack cocaine. Are you addicted to your paycheck? Of course, the primary reason so many people are at the financial brink is debt: student loans, car loans, and credit cards. Sure there will always be ways to rationalize how they got into the mess, but we can concern ourselves with that at another time.What is important is that their debt restricts their choices, hence they are trapped and financially needy. Personally, I feel debt is the ultimately form of arrogance. In taking on debt, one makes arrogant assumptions about his future financial solvency. However, life happens. Sickness, a missed bonus, or a job loss could quickly push a whopping 61% of American over the proverbial financial cliff. With globalization, one's job loss could easily not be his fault...just business.

Consider some key points about debt-freedom.

• Debt-freedom gives you choices. I believe this liberation enriches your soul in ways that are indescribable.
• Debt-freedom is hardly a panacea. There are problems no matter whether you have debt or not.
• Debt-freedom is vastly different from financial independence. A homeless person can be legally debt-free but does not have an enviable financial position. However, there is a clear and significant inverse relationship with your consumer debt load and your level wealth that is worth your consideration.
• Debt-freedom takes work to achieve. Those who expect to reap the blessings of freedom, must, like men, undergo the fatigue of supporting it. ~Thomas Paine

If debt is the reason you are in fear of losing your job, don't cling to job security without addressing the underlying financial problems. Take the plunge. Decide today to eliminate your debt. Begin to see the purpose of work as more than meeting a financial need because its meaning can go infinitely beyond financial provision. Visualize a world where you no longer need a paycheck. That will likely mark the contextual change in your thinking that will lead you to financial independence.

Thought Question: What is the biggest threat to financial independence in your mind?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up

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!


This week I participated in 4 carnivals:

• Carnival of Financial Planning at Intelligent Speculator
• Yakezie Carnival: The Next Challenge Edition atCool to Be Frugal
• Festival of Frugality at Canadian Finance Blog
• Carnival of Personal Finance at Budgeting The Fun Stuff

Included posts: The Rich Don’t Need The Rest of America, My Big, Fat Trashy Home: The Fall of the McMansion, Is extreme frugality for you?, Economists Blame ME for the Slow Recovery, Why Is Debt Really Decreasing?

Round Ups
Thank you Time Magazine for including me amongst your money blog recommendations!

Also, I am honored that Is extreme frugality for you? was included in Wisebread'sBest Money Tips Ways To Teach Kids About Music, Family Balance Sheet's Odd and End, and Move to Portugal's Link Love; Blog Carnival Edition round ups.

Joe and I also did much discussing about My Big, Fat Trashy Home: The Fall of the McMansion and he was kind enough to include it in his Retirement Lane Roundup round up at Joe Taxpayer.

In Barbara Friedberg's No brainer money management for college students, she did a mini Yakezie Round Up and included Watson Inc. Thanks!!!

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! Thank you sincerely

Posts Of The Week

Did the Infamous Bank Bailouts Just Work?

Graduating From IOU: Student Loans in America


Business News


Is Facebook Now 'Worth $33 Billion

Blockbuster tells Hollywood studios it's preparing for mid-September bankruptcy

Economy

Housing news continues to dominate the economic headlines
Low prices and rates can't slow fall in home sales and Home Sales Plunge 27 pct. To Lowest in 15 Years

Did the Infamous Bank Bailouts Just Work?


Ten Signs of a Still-Troubled Economy at Time



Entertainment Money News

Been bombarded with images of Vampires lately? Me too, from the Rolling Stone cover to the small screen and movie theaters, these undead creatures are everywhere!
Vampires Suck Us Dry: Why the Sexy Beasts Are Making Billions


Recently release actress and sometimes singer, Lindsay Lohan, on the hook for $40K a Week for UCLA

Did Avatar Just Flop? Movie critic Joel Ryan thinks so


Personal Finance (Yakezie and other PF blogger friends)
Graduating From IOU: Student Loans in America at Mint

Free Ways To Teach Your Kids About Music at Wisebread

New Bias Uncovered in Standardized Tests at Biz of Life (Funny)


How to Pick a Mutual Fund: Return at Hope to Prosper

Do Dividends Matter? at Joe Taxpayer

Small Business Owners Fire Employees Before Tax Hikes at Financial Samurai (Bury your politics before you read)


Young children can have lots of un with inexpensive activities at Squirrelers

Lawn Care to Treat or Not To Treat at Family Balance Sheet

My Big, Fat Trashy Home: The Fall of the McMansion

By: Roshawn Watson

Your house is about 6,000 square feet, almost triple the size of the national average. It has five bedrooms and bathrooms, two-story entryway, three-car garages, master suites with sitting areas and whirlpool tubs. With a crib like this, how could anyone not be impressed? Well, many aren't. There is a growing backlash for homes that fit the aforementioned description, commonly called McMansions.

What is the Problem

Detractors have called these homes "garage mahals," "faux chateaux", "tract castles," "hummer houses," and "starter castles." Although these homes boast of many nice features, many of these homes and their features look and feel out of place because they are characterized by sprawling layouts on small lots and poor craftmanship and materials..

According to Wikipedia: They're tacky, they lack a definitive style and they have a "displeasingly jumbled appearance."

Amongst the biggest critics are longtime residents of the neighborhoods populated by McMansions. Often they fear that the McMansions are out of character with their neighborhoods. Additionally, these homes also quickly raise property values and tax rates. During a time of budget shortfalls, more tax money to a small town that doesn't have much of a commercial tax base and higher property values may appear good, but many longtime residents simply cannot afford the changes. Some of these longtime residents have formally mobilized, raising complaints to their local government. As a result, many "light and view blocking" ordinances have been passed including: moratoriums on McMansions (Atlanta, GA), home and footprint size limits (Arlington County, VA and Wood-Ridge, N.J.), big-and-tall ordinances for homes greater than 4,000 square feet or over 30 feet high (Marin County, CA), and several other special procedures and requirements for larger homes.

Another challenge these McMansions have faced is luring in buyers. "McMansions just look and feel out of place today, given the more cautious environment everyone is living in," said Paul Bishop, vice president of research for the National Association of Realtors (per CNBC). For example, consider that the  heating and cooling costs could easily raise your energy bill to $5,000 a year or more for a 5,000-square-foot house. Some homes will set you back $1,000-a-month for utility bills and $25,000 in annual taxes. Consequently, some owners of McMansions have questioned their initial logic in making such purchases for numerous reasons including: poor quality of materials and craftsmanship and high expenses. Some are down-sizing the space while upgrading for higher-quality construction and better features. Having less space often means having less of a cleaning, maintenance, and financial burden. The rationale is "why keep a room that is never in use?" Other couples have are selling simply because their families or budgets are smaller. Of course, McMansions hefty price tags certainly deter potential buyers as well.

How Did We Get Here

The primary cause of the McMansion glut is: speculation. We have discussed it before. Many people erroneously thought of their homes as assets. Thus, if homes are assets, it only makes sense to get as much of that asset as possible. Hence, several people were using their homes to speculate in the real estate market. After all, people thought home prices would only go up. Consider it this way, if you ask a banker to give you a loan to purchase stock, they will kick you out on your butt. However, this is certainly not the case if you ask for a mortgage, provided that you meet the lender standards. Thus, some people were thinking of their homes as part of their retirement portfolios.

Another cause of the McMansion glut is the overall trend of the American home size increasing. Back in 1950, the average home in America was 983 square feet. However, in 2004, the average home size had swelled to 2349 square feet (140% increase).  Specifically, the modern mega-house trend has been about a 20-year trend according to  Robert Lang, director of the Metropolitan Institute (per MSN). However, after years of growth, it appears that this trend has officially changed. A recent survey of builders in 2009 indicated that nine out of 10 said they planned to build smaller or lower-priced homes (per CNBC). Additionally, the Census Bureau reported that the median new home size fell to 2,135 square feet in 2009 after peaking at more than 2300 earlier in the 2000s. (per CNN money). Moreover, many real-estate experts say they think this trend of downsizing, or "right-sizing," is here to stay. The rationale is if families had to downside or "right-size" because they were financially over-extended, such as due to foreclosure or bankruptcy, they will be generational imprinted with this negative experience and will not repeat this mistake. However, this principle seems to be more theory than actuality because history tends to repeat itself continually.

Only, time will tell whether the death blow has truly been dealt to the  "garage mahals" after all.

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
The American Dream: Asset or Liability?

House Prices Dropping Faster Than During The Great Depression


Here's a question for you: Why would or wouldn't you purchase a McMansion? Do you feel they are gone forever or are they just in a cyclical trend?

Teresa Giudice's Financial Woes Continue, Yakezie Round Up, Uncommon Money News

By: Roshawn Watson

In The Phony Rich, we discussed how it is almost impossible to build significant wealth while maintaining a high consumption lifestyle. The relatively few that can typically have a net worth of at least $20,000,000 million and an annual income of $2,000,000. Of course, this leaves the vast majority of people out. However, there are plenty of us who want to "appear rich" well before we get to this level. I used Teresa Giudice as a case study in The Phony Rich. She is of Real Housewives of New Jersey fame and recently filed bankruptcy for being in over $11,000,000 debt and having only an income of $79,000. Well, a number of things have transpired since I last wrote that makes her story, the gift that keeps on giving.

Teresa Giudice Blames Fame for Her Current Financial Woes


Auction for Teresa Giudice belongings has been moved until Oct 3 (previously Aug 22)


Teresa Giudice Claims She "Lives Within Her Means," and Blames her Husband for her Ignorance of their Financial Status


Bankruptcy doesn't stop Teresa Giudice from going on a $60,000 shopping spree for luxury goods just days after filing

Fellow castmate, Kim G, deals a Teresa a fatal wound by planning to buy up all of Teresa's toys at the auction and reselling it.
 Kim tells RadarOnline: “I’m going to buy everything and re-sell it on eBay.”  The proceeds shall be donated to the Emmanuel Cancer charity.

To be honest, I have never watched the show, but Teresa and her husband certainly seem to exercise tremendously bad judgment. For example, just because money that you earn after a bankruptcy is technically yours to spend as you deem fit doesn't mean that you should go on a $60,000 shopping spree days after filing bankruptcy. Additionally, it is sad that she admits to no accountability. It would be significantly more palatable for her to issue a no comment than for her to blame fame for her humiliation over her financial woes. She chose to go on a reality show and to spend like she had money despite evidence to the contrary. It is so completely disingenuous to expect privacy afterwards.

Unlike her onscreen nemesis, I don't mention her troubles out of schadenfreude. I derive no pleasure from her failure. However, if she is the face of "fabulosity," then you deserve to read the whole story. Don't be a financial nimrod and expect for things to magically work out for you. The odds are infinitesimally small that such a highly leveraged plan would ever lead to anything but pain and embarrassment.

Thought Question: Have you ever watched a train wreck (financial or otherwise) that you just couldn't look away from?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up

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!

This week I participated in 1 carnival: Carnival of Financial Planning – Edition #154 hosted by My Traders Journal.

Included posts: Economists Blame ME for the Slow Economic Recovery and Why Is Debt Really Decreasing?

Also, brand new post Is Extreme Frugality For You? was included in Len Penzo's hilarious Black Coffee weekly roundup. 

Thanks so much for including my posts!

Lastly, I also did a guest post over at Len Penzo's as well entitled: Five Priceless Nuggets of Financial Wisdom From the Thomas Crown Affair

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
Did Leo Really Make $50 Million-Plus for Inception?

Five Priceless Nuggets of Financial Wisdom From the Thomas Crown Affair

Business News
Clearance Sale: Barnes and Noble Didn't Evolve Enough


American Airlines Adds Ridiculous "Special Coach Seats" Fee

Facebook Partnership Is Proven by $3,000 Check, Lawyer Says


Credit card interest rates climb, hitting a nine-year high, amid new rules and high delinquencies



Economy
The Layoff Kings: The 25 Companies Responsible for 700,000 Lost Jobs

The Great Disconnect (The Bullish Case for Stocks Part 2)   


Entertainment Money News
Did Leo Really Make $50 Million-Plus for Inception? (POW)


Vampires Suck Jennifer Aniston's Movie Dry…Er, Right?

Offbeat Money News

I think I will sleep better knowing that I am no longer contributing to an academic job market that bears an uncomfortable resemblance to a Ponzi scheme on the verge of falling apart.

Personal Finance (Yakezie and other PF blogger friends)
Five Priceless Nuggets of Financial Wisdom From the Thomas Crown Affair (Len Penzo) Check out my guest post

How Much Should You Tip For Bad Service

Why the Economy Most Certainly IS Relevant to Investing (Balance Junkie)

Chelsea’s Wedding Good for Economy? (Joe Taxpayer)


Two Quotes to Remember as Investors (DIY Investor)



Why I Invest In Mutual Funds (Hope To Prosper)

6 Steps to a Satisfied Retirement (Money Funk)

Is Extreme Frugality For You?

By: Roshawn Watson

We all know the story. So many of us do a job we hate to pay for a consumption-focused lifestyle that we can barely afford.We trade our precious hours for a steady paycheck. Regardless of the size of that paycheck, for most people it is never quite enough. This is commonly referred to as the rat race. Recently, I read that nothing could be more insulting to the rat. Even rats know better than to stay in this ridiculous model.

From Conspicuous Consumption to Calculated Consumption
The New York Times recently reported on Tammy Strobel and her husband Logan Smith, who both made radical changes in their lifestyles because they were so fed up with the work-spend treadmill (rat race). After selling their two cars, moving from a two-bedroom apartment to a 400-square foot studio, and giving away countless clothes, dishes, books, and their TV, they now enjoy very minimalist lives with a total of just 100 personal items.

This three-year journey has profoundly changed more than just their lifestyles. Now, they are debt-free, have money to travel and give, all on a salary of just $24,000 (decreased from $40,000). Moreover, Strobel reduced her hours to allow her more time to engage in her other interests. Their core messages are:  acquisition of stuff does not bring happiness and bigger is not better. In fact, new research suggests just the opposite: people are happiest when their spending is on meaningful experiences rather than stuff, when they desire something long before they purchase it, and when they stop trying to keep up with Barbie and Ken. (Remember, Barbie and Ken are broke anyway). This fascinating premise is the subject of an upcoming article by Dr. Elizabeth Dunn:  "If Money Doesn't Make You Happy Then You Probably Aren't Spending It Right." Moreover, research by Professor Thomas DeLeire indicates that out of the nine major categories of consumption, only spending on leisure correlated with happiness.

Researchers also recommended substituting big purchases for many little ones.The argument is that the initial enjoyment from a new purchase wears off over time, as we become acclimated to a new norm.Thus, we stop deriving pleasure from a new purchase, even if it is a phenomenal one, such as that dream mansion in the exclusive neighborhood or that Maserati that you coveted on Cribs. This acclimation is known as hedonic adaptation. However, if we instead make several little purchases for meaningful experiences and for things that we truly value, then it takes much longer to adapt. Note that researchers have determined that anticipation of purchases also increases our happiness.

Even retailers are capitalizing on marketing the experience. Last June, I went to an after-hours shopping experience at Best Buy. One reason it was so memorable was because I won a flat-screen TV. With as many people as I have told and as many subsequent purchases that I have made, Best Buy got off way cheap! Perhaps the company that has mastered this concept is Apple. Their interactive retail experience creates tremendous consumer loyalty, which was recently spoofed in the popular (but very explicit) Iphone4 vs HTC Evo youtube video. With such powerful brand equity, it is no wonder Apple just reported its highest quarterly revenue ever as net income jumps 78%.

Being Practical With Frugality
The anti-materialism premise resonates with me, yet I feel conflicted because there are so many conveniences that I enjoy and make my life easier. I certainly am a conscientious consumer, so is there a happy medium?

Absolutely. I remember when getting out of debt a few years ago, I tried the whole minimalist lifestyle, and I was completely miserable. Perhaps, I didn't execute the minimalist lifestyle correctly, but I quickly discovered that the aforementioned research findings rung true in my life. For example, my then girlfriend and I began to do things, such as going to plays and eating out with friends, that emphasized social experiences rather than just buying stuff. Additionally, I planned my purchases so that I was primarily buying things that had tremendous value to me. By not making myself completely miserable, I was able to stick with the process of aggressively paying down my debt until I became debt-free. For more ways to stay motivated while paying debt, click here.

Although it would certainly be somewhat disingenuous for me to promote extreme austerity, I can say structuring my life so that I am no longer controlled by materialism has been extremely helpful in eliminating-debt, building wealth, and being an overall happier person. Most of us may never forego our cars and televisions; however, that does not mean that we cannot embrace the principles of "calculated consumption." Afterall, "if money doesn't make you happy, then you probably aren't spending it right."

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.

Related Posts
Too Frugal For Your Own Good


ls Recession-Induced Frugality Sustainable?

Thrift Paradox - Is Frugality Hurting Economy?

Back To School Millionaire, Yakezie Round Up, and Uncommon Money News

By: Roshawn Watson

It is time to go back to school, which made wonder what impact does school have on overall economic success? Researcher David C. McClelland wrote:

"So what about grades? How valid are they as predictors (of success)? Researchers have in fact had great difficulty demonstrating that grades in school are related to any other behaviors of importance - other than doing well on aptitude tests...It seems so self-evident to educators that those who do well in their classes must go on to do better in life that they systematically have disregarded evidence to the contrary that has been accumulating for some time"

Robert J. Sternberg further argued:

"Nevertheless, between 75 percent and 96 percent of the variance in real world criteria such as job performance cannot be accounted for by individual differences in intelligence test scores."

Of course, this is not to say that school is not important. Most millionaires do go to college and say that they benefited from college. The average high school GPA is 2.92 on a 4.00 scale (N=715). However, the next time you or a student you know is struggling with school, remember that 93% of millionaires stated that the most important lesson they learned from school was: "hard work was more important than genetic high intellect in achieving." Notice, that speaks to tenacity not intelligence. Tenacity is one of the top two characteristics most millionaires learn during their school days.


Thought Question: What is the most Important Lesson You Learned From School?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up

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!

This week I participated in 3 carnivals: Carnival of Financial Planning hosted by the Skilled Investor, Best Money Tips: How to Order from a Taco Truck Hosted at Wisebread, and the Festival of Frugality #243 Hosted at SimplyForties.

Included posts: Economists Blame ME for the Slow Economic Recovery , Why Is Debt Really Decreasing?, Hey Broke People, Stop Overpaying For College!

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
Who Are TV's Top Earners?


To Splurge Or Not To Splurge (Barbara Friedberg Personal Finance)

Business
New CEO for Revived GM 

GM CEO Whitacre says will step down Sept. 1


Judge orders Wells Fargo to pay back $203M in fees

How Credit Card Companies Make Their Money

Economy
Economists See Increased Chance Of Double-Dip Recession

Where's the relief for homeowners who played by rules?

Entertainment Money News
Who Are TV's Top Earners?(POW)


Johnny Carson Gives $156 Million to Charity From Beyond the Grave


Personal Finance (Yakezie, PF blogger Friends, and others)

10 Things You Can't Be Asked at a Job Interview

The Upside of Irrationality  (Joe Taxpayer) - The Study Outcome Is Exactly Opposite What You Expect

Why We Say No to Cosigning (Joe Plemon)

 Myths About Millionaires (Squirrelers) - A Million Is Just Not What It Use to Be


To Splurge Or Not To Splurge POW* (Barbara Friedberg) - This Portfolio Manager is Quoting Zac Efron


Is The Limb Getting Ready To Break? (DIY Investor) - Investors Prepare Yourselves!


How I Almost Got Scammed (Invest It Wisely) - Don't Get Scammed on Your Next Trip

The Rich Don't Need The Rest of America

Frustrated American Worker

By: Roshawn Watson

Fortunes of many American companies and investors use to be closely tied to American workers and consumers. However, this is no longer the case. Many of the financial elite have become increasingly less financially dependent on America. This decreased dependence has widened the schism between the have and have-nots and pushed some of the non-wealthy to the brink of obsolescence.

Who Moved My Cheese?

In the runaway bestseller Who Moved My Cheese, Spencer Johnson, M.D argues that change is inevitable. Cheese is a metaphor for anything that we want in life. For instance, cheese could be jobs or money. Spencer advocates that even if we do "obtain some cheese," it is imperative to prepare for change rather than get caught by surprise when it occurs.

There has clearly been a shift, and Americans are struggling to navigate the dramatic changes. With the economy in its current state, the job market has been quite challenging. Companies and investors are increasingly looking for ways to increase bottom lines. Workers are sometimes the casualties. As we know all too well, all it takes is the stroke of an administrator's pen to eliminate thousands of jobs nationally while simultaneously improving profits. Sometimes such layoffs are coupled with establishing offshore facilities that costs much less. Many of the American wealthy have decentralized their fortunes in this manner, making them increasingly disconnected to the fates of Americans. Consider that the economic viability of the wealthy is more tied to their assets rather than income from a job. Thus, it is conceivable that if those assets are not based in the U.S., then there is decreased financial incentive to improve the U.S. economy.

Does money flows towards where it is treated best?

In Will the Economy Collapse in 2011?, we discussed how money flows to where it is treated most kindly. For instance, nationally we have the most growth and prosperity in states with no income taxes. Often the wealthy determine the composition, magnitude, and of the location of their income based on economic incentives. The globalization of the workforce is probably one of the best known examples. One product of having a global labor force is that Americans sometimes competing against better skilled foreign workers available for cheaper prices. Similarly, Wall Street investors can make tremendous wealth through investments that are unconnected to the American economy. Thus, an American workforce is NOT required for American investors and corporations to prosper.

Additionally, since economists believe Americans are too frugal now, many American businesses have systematically embraced other markets. Perhaps you would be surprised to know just how much of Aflac's insurance business is done in Japan (about 75%). Recently, its second quarter profits were up 85% compared to last year, mostly attributable to a strong yen (they actually loss money in the US). The point is even with the world's largest economy, U.S. dollars may not be good enough incentive to keep American businesses catering predominantly to the U.S. market. Note, by putting those dollars to work in places like India and emerging markets, there is much more immediate and substantial growth potential.

As the largest consumer market globally, the U.S. will surely not be abandoned. However, the economic landscape is constantly changing. Those of us unable to "find the cheese" are being left behind financially, which is very frightening. Simultaneously, the rich have returned to boom levels and many have deliberately insulated themselves from our temperamental markets and may no longer have financial motivation to assist the American economy.

This quote summarizes the situation perfectly, “(a) member of the elite can make money from factories in China that sell to consumers in India, while relying entirely or almost entirely on immigrant servants at one of several homes around the country.”

With the financial decoupling of the rich from the rest of the country, many American works are just replaceable.

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

Will the Economy Collapse In 2011?

Economists Blame ME for the Slow Recovery

Millionaires Make a Return To Boom Levels

China: Economic Threat?, Yakezie Round Up, Uncommon Money News

By: Roshawn Watson

Housing is VERY expensive in China. In fact, it is so expensive that several analysts are calling it a housing bubble. Perhaps you are asking why should I care? Well, consider that any problem in the housing sector, because it is so subsidized with loans, ultimately shows up in the banking sector. The banking sectors affects A LOT of other economic areas. Remember, this recently happened in the U.S. & Europe.

In Beijing, homes are selling for 27 times income. Thus, if you earn $50,000/year, you are trying to purchase $1.35 million home.Of course, you can see the problem.

Banks are owned by the government, so there are some controls. However, things are getting REAL dicey. Chinese regulators have recently asked banks to conduct a stress tests to gauge to effect of a 50-60% drop in home prices. That's about double what the worse market in the US suffered during the worse of our housing crunch. Additionally, there are believed to be many speculators in the Chinese housing market. For example, a couple hundred thousand apartments that are own registered no electricity usage, suggesting that the homes are just not occupied.

Perhaps the overall economy may continue to outperform analysts estimates, but we will have to see. It is time to rethink the global exposure of your portfolio.

Question:What do you think the greatest threat to our economy is?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up

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!

Festival of Frugality #241: A Midsummer's Night Dream Edition hosted at Yes, I am Cheap, Ditch The Boss's Financial Independence Compilation.
Both carnival linked to Hey Broke People, Stop Overpaying For College!

I was also extremely grateful that a few articles were picked up in round ups.

• WiseBread's Best Money Tips: Escaping The Mundane linked to Are the Rich Walking Away from Million Dollar Mortgages? 
• Barbara Friedberg's More Summer Reading Guide included Hey Broke People, Stop Overpaying For College! 
• Squirrelers'  Updates and Favorites linked to Economists Blame ME for the Slow Recovery
• Nasdaq's Comminty cited Will The Dow Really Drop By 90%?  in a post entitled Could Be Facing Deflation; How to Cope
• Joe Plemon's (Personal Finance By The Book) Back to School Roundup linked to Hey Broke People, Stop Overpaying For College!
• Kevin at Invest It Wisely linked to  Economists Blame ME for the Slow Recovery in his Weekend Reading: Me and My Money

 Surprisingly, I inspired one fabulous post and a round up title at some awesome PF sites!


Robert's (DIY Investor) Coping with Emotions While Investing was inspired by a comment I made about keeping your emotions in check during the roller coaster us investors have been riding

The title of Joe Taxpayer's Watson Round Up was inspired by yours truly (LOL) for last week's Economists Blame ME for the Slow Recovery

Posts of the Week
Coping with Emotions While Investing

How Mutual Funds Rip You Off



Business
Health Inspectors Shut Down Little Girl's Lemonade Stand

Warren Buffett's Billionaire Donors Club: By the Numbers

Bank customers soon will see higher fees and no free checking

Economy

Greenspan: End Bush tax cuts

Degreed And Jobless, For-Profit College Graduate Turns To Stripping

Entertainment Money News
The Other Guys Beats Inception

Athletes turned entrepreneurs take business world by storm 

Personal Finance (Yakezie and PF blogger Friends)
40 ways to save on almost anything

3 Amazing Career Tips (Barbara Friedberg) Can quitting make you a winner?

You Can Afford That Baby (Joe Plemon) 10 Money Saving Tips


Small Cap Stocks: High Return and Violatility (Squirrelers) Do you need small cap exposure?

How Mutual Funds Rip You Off* (Invest It Wisely) Fees and Charges Decimate Returns

Blogher 10 (Bucksome Boomer) Read about her adventures at Blog Her

Coping with Emotions While Investing* (DIY Investor) - Absolute must read for investors

Watson Round Up ( Joe Taxpayer) - Lists some absolutely fabulous reads plus mine!

Economists Blame ME for the Slow Recovery

crizlai

By: Roshawn Watson

You are responsible with your money. You plan your purchases to be within your family's means. You don't deprive yourself of fun nor manipulate others to obtain good deals. You are simply looking for value. This is my strategy along with millions of other Americans. It is a solid path towards prosperity and will contribute to overall economic growth, but that doesn't get the press. Instead of admiration (or even understanding), these efforts garner contempt as the frugal once again get the blame for dismal economic activity.

Economic recovery falls to thrifty consumers


In his article entitled Economic Recovery Falls to Thrifty Consumers, Martin Crutsinger recently wrote:

"For the economic recovery to gain strength -- and the unemployment rate to come down in any meaningful way -- consumers will need to become less frugal."

This statement caused me to ponder whether we even understand frugality.

Frugality concerns itself with value not cheapness. Thus, in some cases, your purchases may technically be more expensive than someone else shopping for the same types of products. The difference is that you have done due diligence and know that you are not being wasteful with your money. You are focused on obtaining quality for your dollars. In the Thrift Paradox - Is Frugality Hurting Economy?, I argue that "frugality...allows families to put aside money for investments and for purchases, which both help fuel economic growth." In no way does frugality halt spending. To be clear, frugality is not our culprit for a dismal economy.

Moreover, families have recently increased purchases on several items including: cars, electronics, and consumer staples like razors and shampoo. Crutsinger points out that General Motors, Chrysler, and Procter and Gamble have all increased revenues recently. These gains were achieved by catering to more savvy shoppers. General Motors and Chrysler posted higher U.S. sales in July through summer promotions and easier credit plans. P and G also cut its prices, offered discounts and created lower-priced versions of some brands to hold onto customers. Interestingly, Crutsinger failed to discuss our increased spending on technology perhaps because it doesn't support his point.

Regardless, our spending is up, even for big ticket items like cars, but that's not good enough. Economists want consumers to become more wasteful by increasing our spending on items with lesser value just so retailers can increase their profit margins all in the name of patriotism. That's just ignorant unwise. Pardon the expression, but what are they smoking?

Fix Your Business Model Instead Of Criticizing Mine

It's the retailers' economic models that are broken not mine. The real problem is that some businesses and financial institutions want to continue to fund economic growth on the backs of ill-informed and overstretched consumers. It is a bit naive to believe that consumers will indefinitely be able or willing to fund the economic prosperity by staying ridiculously financially over-extended long-term.

It is beholden to businesses that want to survive in this climate to innovate instead of trying to coerce consumers into wasting money on purchases that are out of their means. As I mentioned, businesses aggressively deleveraged (dumped debt and removed financial risk) all in the name of remaining financially viable, but consumers are criticized for the same behavior. That is totally unbalanced.

The aforementioned companies achieved higher revenues through adaptation to consumer purchasing preferences. Sure, it can be rough chasing those consumer dollars, but fixing the business models so that they are not so dependent on consumers spending money that they don't have for products and purchases they don't need is key for long-term economic growth.

We Are Not That Thrifty Anyway

Lastly, it is completely disputable that we are frugal anyway.

During the first quarter of this year, the US savings rate had a steep decline to 3.1% from last year's 12-year high of 5.4% during the same quarter. If our annualized savings now stands at 6.4 percent, as Crutsinger suggests, the change is to be lauded not criticized. We still have a way to go.

Additionally, in The Real Reason Why that Debt is Decreasing, I wrote about a surprisingly sad analysis performed by the WSJ on our decreasing debt burden. The average household debt to income decreased from a staggering 131 to 122% in May. Thus, on the surface, it appeared as if frugality and austerity had finally repenetrated our societal fabric. However, what the insightful analysis ultimately revealed was that debt to income ratios were decreasing because debts were going into defaults. Instead of paying down our debts, we elected to default. In fact, the defaulters accounted for the whole decline, while the rest of consumers had actually been building up more debt straight through the worst financial crisis and recession in decades.

Some may counter saying that debt increased because families had less money due to high unemployment. In some cases, that is true. However, this explanation ignores the fact that overall spending has also increased. The GDP still increased. Apple just reported its highest quarterly revenue ever as net income jumps 78%. Don't tell me that consumers are unwilling to make discretionary purchases if you come up with a good value and a clever marketing strategy.

In aggregate, we have increased debt, increased our spending, and decreased our savings rate.That's a far cry from the generational imprinting of frugality so many pundits claim the recession to have induced. The point is that innovative and adaptive companies can still get consumers to spend big bucks. Don't blame frugality for faulty business models. Frugality is the cure not the problem.

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

Related Posts

Why Is Debt Really Decreasing?

Thrift Paradox - Is Frugality Hurting Economy?

Savings Down, Spending Up but What Does it Mean?

Frugality Is Not Deprivation

Inception, Yakezie Round Up, Uncommon Money News

By: Roshawn Watson

What if you can go any place your mind could conceive, but only in your dreams? If that question is somewhat reminiscent of the Outer Limits and Twilight Zone, then you are right. The concept certainly isn't novel. However, I am really referring to Christopher Nolan's Inception starring Leonardo DiCaprio.

I just got a chance to watch it on Saturday and was really blown away. When seeing anything that brilliant, I'm always impressed by the creativity some writers and directors possess. Not every movie causes you to suspend your disbelief; however Inception certainly takes the viewer on a compelling journey. For the third straight week, Inception has been the number one move domestically. It cost $160 million to make and has already taken in $193,313,741 domestically. Of course, the world wide box office brings its total to about $365 million (in 17 days).


If you like creative action thrillers, you should certainly see it.

Question:What is your favorite movie so far this year?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up

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!

This week I participated in 3 carnivals:Festival Of Frugality Edition 240, mentioned on Festival of Frugality Home Page for Editor Pick*, The Carnival of Financial Planning Vol. 152 hosted at The Financial Blogger, Yakezie Carnival hosted at Not Made of Money.

Included posts: Will The Dow Really Drop By 90%? , Will the Economy Collapse In 2011?, and Why Is Debt Really Decreasing?


Invest It Wisely linked to Hey Broke People, Stop Overpaying For College! in post entitled the Weekend Reading Camping Edition.. ETF Trends also linked to Will The Dow Really Drop By 90%? in post entitled ETFs Could Be Facing Deflation; How to Cope. Thanks for the link love!


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
25 People and Industries That Profit From Fear

Inception’ Tops Box Office, ‘Dinner for Schmucks’ Second

Business
Goldman Sachs finds a big loophole In Financial Reform Bill

Do Not Call List Tops 200 Million, Some Scammers Still Ignore It

Disney sells Miramax for over $660 million to Filmyard

25 People and Industries That Profit From Fear

Economy
Should the Bush Tax Cuts Be Extended for America's Wealthy?


Entertainment Money News
Chris Tucker's Taxing Situation

Inception’ Tops Box Office, ‘Dinner for Schmucks’ Second

Offbeat Money News
Homeowner wins right to park truck in own driveway but victory costs $200,000

College Grads, Here’s How to Become Millionaires

Yakezie & Friends Round Up
Couple Living In Small A Space (Invest It Wisely)


Google Insight - Useful Tool For Do It Yourself Investors (DIY Investor)

Back to School Sales Aren’t Just for Kids (Bucksome Boomer)

Get Rich While You Sleep With The Magic of Compounding (Barbara Friedberg)

Frugality Is Not Deprivation (Early Retirement Extreme)