Wednesday, December 31, 2008

The Prince's Top 10 Financial Stories of 2008

10. Bye-Bye Washington Mutual
Five years ago, WaMu was at the top of it's game gobbling up other banks, even last year at this time, they had just completed their purchase of Providian Bank. 2008 however, was a much different picture then the Chief Executive of Washington Mutual had imagined five years earlier.
“We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe’s-Home Depot did to their industry. And I think if we’ve done our job, five years from now you’re not going to call us a bank.”

2008 marked the beginning of the end as they were seized by Federal Regulators, and had their assets sold/turned over to JP Morgan Chase. Look for those banks to take on the Chase name in 2009, once Chase begins it's re-branding process. Eventually, even the WaMu credit/Debit cards will be replaced by Chase cards.

9. Bear Stearns Falls

It took only a few days, a rising sense of panic - and a critical e-mail - to spell the end of the 85-year-old investment bank.
- CNN Money

8. Ethanol problems

Iowa's ethanol industry was generally seen as a temporary solution for long-standing rural problems, but few Iowans expected the profitability of ethanol to evaporate as quickly as it has in recent months.

The collapse of worldwide oil demand and prices effectively sucked the energy out of Iowa's growing ethanol industry. New plant construction had slowed in 2007, but this year the industry went in reverse with three of Iowa's 32 ethanol plants closing.

This fall, two ethanol producers with Iowa operations sought bankruptcy court protection: VeraSun Energy Corp. of Sioux Falls, S.D., and Pine Lake Corn Processors of Steamboat Rock. VeraSun reported a third-quarter loss of $464 million and asked the bankruptcy court to allow it to cancel futures contracts to buy corn from farmers after corn prices tanked.

Average profits on a gallon of ethanol fell from 31 cents last summer to 3 cents in November, according to Iowa State University.

Aditionally, with the number of starving people around the world, I have to wonder why we are putting food of any kind in our gas tank anyway.
7. Subprime Collapse
“Innovation has brought about a multitude of new products, such as sub-prime loans… Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in sub-prime mortgage lending… fostering constructive innovation that is both responsive to market demand and beneficial to consumers.”

So said Alan Greenspan, then chairman of the US Federal Reserve, on 8 April 2005.

6. Energy price whiplash
From the perspective of energy prices, 2008 was a tale of two cities. For the first six months of the year, the headlines were about rising oil prices, potential shortages, and record gasoline prices. The second half the year featured a complete 180 degree turn with the entire move from January 2007 through July 2008 being erased and then some. As I pen this article, prices are threatening the $35/bbl level for crude oil and $5.50 for natural gas. In typical fashion, the financial media once again missed the real story here. The post-election revelation that the US has been in a recession since at least late 2007 was no real surprise to many of us, but underscored one of the points we have tried to establish all along in these weekly commentaries. Inflation is a monetary event, not an economic one. The fact that the largest run-up of oil prices in history came at a time when the US was in a recession throws water all over the idea that increasing prices are caused by economic growth alone. As has now been proven rather nicely this past year, that assertion could not be more wrong.

However, the real story behind the violent gyrations in oil prices and the markets in general is two-fold. First, the gyrations are indicative of a dying monetary system and rampant misinformation as ‘investors', under the influence of mainstream media race first in one direction, then in another in a frantic attempt to predict the next bubble. These are the dynamics that have caused massive dislocations in bonds, stocks, currencies, and commodities over the past year. The fiat foundation is shaking beneath us. Secondly, the dynamics of petroleum supply are fragile, and such violent price swings and false market signals will have dire consequences moving forward. This issue will be discussed in greater detail next week, but in simple terms, we will see petroleum shortages because of this mess – likely in the next year to 18 months.

5. Banks stay silent on bailout and Fed money
Revealing the true nature of the economic crisis, banks who received a bailout of taxpayer money, refused to identify how they were spending OUR money.

"We have not disclosed that to the public. We're declining to." Thomas Kelly – JP Morgan Chase – rec'd $25 Billion from the TARP

"We're not providing dollar-in, dollar-out tracking." Barry Koling – SunTrust – rec'd $3.5 Billion from the TARP

"We manage our capital in its aggregate." Tim Deighton – Regions Financial – rec'd $3.5 Billion from the TARP

This is the attitude that the big banks have towards you, the taxpayer, who saved their jobs, their billion dollar bonuses, and their companies. The frightening thing about this situation is that the hubris of the financial industry as a whole has continued to mount despite the fact that they are constantly having to beg Congress for more of your money. Where has this money gone? At this point, the only valid assumption, in the absence of disclosure by the banks, is that the money is being stolen. The increasing likelihood that we are witnessing the biggest bank robbery of all time makes this story a dead wringer for #1.

4. Congressional Bailout
It will be years before anyone fully understands what was, or was not, accomplished when Congress in October approved a $700 billion bailout of the financial system. There's already been much criticism about how that money is being spent, and there will be more.

San Francisco-based Wells Fargo, one of the largest banks in the country, received $25 billion from the government's Troubled Assets Relief Program without even asking for it. Wells Fargo, which is Iowa's largest bank and which has mortgage and consumer finance operations in the Des Moines area, has not said how it will spend the money.

Several other Iowa finance institutions also could benefit. Principal Financial Group has applied for $2 billion. Heartland Financial Group of Dubuque will receive $81.7 million, West Des Moines' West Bank will get $36 million, MidWestOne of Iowa City will receive $34.9 million, and North Central Bancshares Inc., $10.2 million.

3. Obama Wins
So you may be wondering what a political story is doing in a list of my picks for top financial/economic stories of the year. Simply because, many Americans voted for him based on the economic conditions and his promise of change. What ever his change is, he now has 4 and possibly 8 years to show us what those changes will be. The American public has given him a chance. In so doing, he has become the first African-American to be elected President of the United States of America.
2. Economic crash has consumers paying cash
If there's a silver lining to the dark economic clouds hanging overhead, it's that people are going back to paying for their purchases with cash instead of credit.

"I think there is a movement; I think part of it has been forced on people (by the tightening credit market)," said financial planner Rick Bloom, author of the column Money Matters in the Observer & Eccentric Newspapers.

But that's not a bad thing, Bloom said.

"I think Americans got addicted to easy credit," he said. "If you can only pay the minimum payment, you can't afford the item."

Living within your means - spending less than you earn - is an old-fashioned lifestyle that provides peace of mind, said bankruptcy attorney Michael D. Lieberman of Southfield.

"The ability to sleep at night is the way I look at it," Lieberman said, adding that overspending adds a lot of needless stress to households and marriages.
I couldn't have said it any better myself. In fact, I have said it several times in this blog and was criticized for it. I agree, it is a good thing. As I said in some previous posts, we will have a economic hiccup, but as we get back into the "old fashioned" pay as you go mode of life, everything will balance out.

1. 2008 Economic Misery

2008 has been a historic year for the economy and the country. We look back at the financial crisis—from the housing collapse and the credit crisis that changed the economic landscape.

Video: 2008: Economic Misery

go ahead share your thoughts with me now.

Tuesday, December 30, 2008

Resolutions For 2009

Last year, I made three financial resolutions. 1. To get my home improvement loan is paid off. I was successful in this area, and moved on towards debt freedom. 2. Get everything except the car paid off. Didn't quite make that goal, but I am close. and 3. was love. Well, I am happy to indicate that love is in the air.
OK, so now re have recapped last years resolutions, what about this years?
1. Pay off the WaMu balance transfer I made in 2008.
With less then $1000, I should have this done in no time. I just need to stop adding to it.

2. Pay off the Car loan.

Once I get the balance transfer paid off, I all I will have left is my biggest loan. The car. I am hopeful, that I will be able to have this car paid off in July. Now that would be a great birthday gift to myself.

3. The KGB IRS
I am hopeful that by the time I get my taxes done in April that this will be eliminated as well. Even though, they have worked with me and put me on deferment, I would love to see this debt gone once and for all.

4. Love continues to blossom
My desire for 2009, is that love will continue to blossom.

go ahead share your thoughts with me now.

Thursday, December 25, 2008

Merry Christmas / Happy Hanukkah 2008

Hello to my Family, Friends and readers of my financial blog (DebtFree4ever.NET) -

Here we are at Christmas for another year. 2008 is almost over and has been a blessed year in many ways. In others not so much. But, no matter how bad we think we have it, we a very blessed especially here in America. Please watch the video below (for those reading the email, please visit the website).

So as is tradition, lets take a look back at the past year. It has been an interesting and bumpy ride. However, thanks to the some good fortune (and perhaps God's rich blessing) I have made great strides in my financial life.

In May I was promoted to Assistant Store Manager at the grocery store. I went from an hourly employee to salaried. Then on July 13 (yes, my birthday) the store was sold and took on new ownership. The new ownership took me back to hourly. I still kept the position but now I get paid for each of the 55 hours, I put in each week. Thus making my new paycheck slightly larger then it had been when I was salaried.

My debts have fallen. Now I only owe very a small amount on my unsecured debt and my car is almost paid off. I expect to be able to shout "I am debt free," on Dave Ramsey's program in July or Aug 2009.

As for my personal life, I expect to make an announcement in that regards come spring. So, with that, as I make my holiday travels, I want to wish you a very Merry Christmas and to those of you who are Jewish a Happy Hanukkah.

go ahead share your thoughts with me now.

Friday, December 19, 2008

New Chances To Watch Dave

I am excited about something I heard on the Dave Ramsey Show the other day. For those of us who don't get FOX business Network (for whatever reason), we can now see Dave's TV program. Yep! You read that right, even though FOX Business Network isn't available in your or my market area (or you can't afford cable/satellite), you can see Dave's Television show.
The only downside, is the latest program is a few days old. But, that's OK, because we still can see the program. If you didn't hear him talking about it, this is possible through a website called To make it easy, I searched the site and found a direct link to all his programs for you.

go ahead share your thoughts with me now.

Wednesday, December 17, 2008

Not A Good Candidate

I just arrived back home from the doctor, It did not go well. According to the tests before they relaxed my eyes (with drops) and the tests after the drops were used, my eyes are not stable. They got two completely different prescriptions. In fact right now I cannot read what I am typing or anything written on the screen, because it is just to blurry. I even took my glasses off to make it a little better, but then that makes everything else blurry.

They have scheduled another appointment for Jan 7 to reexamine my eyes at that time. However, I am guessing that they will find the same thing and I will end up with a prescription for a new pair of glasses. Oh well, it was nice thought, but for quite sometime, I have looked under my glasses to read the small print, like certain UPC numbers, that won't scan.

go ahead share your thoughts with me now.

Tuesday, December 16, 2008

Pre-Surgery Check Tomorrow

So tomorrow, I am going to start the process of something that I have wanted to do for a long time. You are probably asking, what's that? Well, ever since I first heard about it, I have wanted to get Lasik surgery. Even when American's were heading to Canada, to get the surgery, it has been a desire of mine to get rid of my glasses.

The downside, is that it would be financed (if I am even approved). I know that is something that I have preached against, but the financing is 0% for the first year. My hope would be to pay off that surgery within the first year, so I don't have to pay any interest.

go ahead share your thoughts with me now.

Monday, December 15, 2008

CNN has a must see video on Debt

I just seen this CNN video on debt consolidation. While, I wish they went more in depth, they did do a good job of presenting a complete picture. I highly recommend you watch it below.

go ahead share your thoughts with me now.

Wednesday, December 10, 2008

help sought

I have watched youtube videos from TheFamousStacie and others and seen how they have a short 15-30 second introduction clip in the front of their videos. I would like to find someone that can help make such a clip for my Prince of Thrift videos.

go ahead share your thoughts with me now.

Seven Pounds

I have been hearing about a new movie, staring Will Smith, due out this month. I must say it looks real interesting. I almost get the idea, it is along the lines of the FOX program Secret Millionaire. Any case, after seeing previews, I diffidently want to see it. The movie is called Seven Pounds. Below are four versions of the movie trailer.

go ahead share your thoughts with me now.

Thursday, December 4, 2008

Readers Ask, the Prince Answers

Enough Wealth recently asked,
I've been reading your blog for a while and am just wondering what your savings/investment plans are for the money you'll have free once you pay off the last of your CC debts in a couple of months?

  • Once the last of my debts is paid off, I will begin building each of my savings.
    $50/month will go into the retirement account that I opened, to roll my former employers 401(k) into. This will help build that retirement account and help supplement my current employers retirement plan. Thankfully, the current employer matches up to 3% of my income, so that helps.
  • I also plan to start making my car payment to savings so that I can pay cash for my next car. It will be July (or so I plan) before the car will be completely paid off. However, I plan to never pay for a car 2 times, because I borrow the money.
  • In addition, I plan to start a Christmas club account with $50/month to purchase Christmas presents each year.
  • I will also fund a savings account that will be used to purchase clothing as I need them.
  • Not only that, but I also plan to finish the remodeling around the house, and then start a fund (besides my emergency fund) to cover such future expenses for home repairs.

    he also asked the following, follow-up question.
    Also, have you thought about doing a certificate/degree course by external study/distance education so you can eventually change jobs? A basic qualification in IT should enable you to get a job in data operations, which would be a better career in the long term than working in a supermarket...
    This one, I am a little more hesitant answering. That's because, the question can easily be construed as insulting. Especially when he says, "a better career in the long term than working in a supermarket." I really doubt that is the way he meant it, so I will turn my focus to the rest of the question.

    In that regards, yes, I have thought about going back to school. The last post, was here. Basically, I didn't go through with it, because they wanted my to borrow everything to pay for the "business" course. I have thought about IT training to, but after starting this blog, I felt business and finance was a better fit, with my interests. Since, then my career in the grocery business has sky rocketed.
    go ahead share your thoughts with me now.