Sunday, May 31, 2009

The Richest Kids in America

Just watched an interesting video on cnbc about a new book coming out June 5th. It's titled, "The Richest Kids in America" and is written by Mark Victor Hansen. Looks very promising as a "must read" motivational type book for kids and parents alike. If you'd like to view the video, you can find it at:

Since I grew up with very little training in financial matters, I've always been a big proponent of educating your children in personal business and finance. I believe it's one of the most important jobs we have as adults, to teach our young people how to make it on their own. There are many books and tools at our disposal, like the one mentioned above. Just be sure to make your lessons age appropriate and entertaining to hold their interest.

An Easy Extra $39,000 For Retirement!!!

A few days ago I wrote about the credit card companies who seem to be on a spree to fleece Americans out of even more of their hard earned money. To give myself and some of my readers a little more incentive to pay off the charge card balances, I figured up how much extra money I would have for retirement if I pay off my cards and divert all the money I currently spend on credit card payments to a simple, no interest account.

For the past several months, I have paid an average of $250 per month in credit card payments. Depending on your current credit card debt, this may sound like a great deal, or not much. At any rate, when I finally have my balances paid in full, I plan to divert this money to my investment account. I also plan on working for at least another 13 years. So $250 per month times 12 months comes to $3,000 per year. Multiply $3,000 per year times 13 years and it comes out to a whopping $39,000. Since I'm currently paying this money out every month, I won't miss it if I continue paying it to myself after I pay off my credit cards. The $39,000 total is the amount I would have in 13 years if I simply put the money in a non-interest bearing account. How much will it be in an interest bearing account or if I invest it in stocks? I'm thinking it could add substantially to my retirement.

Now let's add in the money I'm saving by not smoking. (I quit 5 weeks ago) On average I spent $80 per month on cigarettes, was never really a heavy smoker. $80 times 12 months equals $960 per year. $960 times 13 years comes to $12,480. Add the $12, 480 to the $39,000 from above and it comes to an astounding $51,480!!!

Just a little thought and a few minor changes to our lifestyles now, can make a BIG BIG difference when it comes to retirement.

Saturday, May 30, 2009

Changes To My Stock Investments

In the previous article, I mentioned I was selling my stake in Altria Group (MO) since I'm pretty much convinced they are in a declining business. I've decided to re-invest the money in three stocks:

Advance America Cash Advance (AEA)

I previously invested in Advance America for a quick trade profit and made over a 97% gain. I've come back for a second, longer term investment for the dividend.

Windstream Corp. (WIN)

A rural telecom with promising numbers and a great dividend payout.

Merck & Company Inc. (MRK)

I'm adding to my long term investment in Merck. I've made quite a bit of money trading their shares in the past. Now I'm holding on for some dividend cash.

By dividing the money up between the above stocks I should lower my risks and increase my dividend income per dollars invested.

My Thoughts on the New Tobacco Tax

The Obama administration, in their infinite wisdom, decided to help out the poor by providing additional funds for health care through a massive tax increase on tobacco products. While helping improve health care for the poor is an admirable goal, I think it is doomed to fail.

Until 5 weeks ago, I was a cigarette smoker. I never really smoked more than a pack a day, so I guess I was never really a heavy smoker. At any rate, the increase in price on cigarettes, due to the new tobacco tax, was just the incentive I needed to quit smoking. I went on the patch and have had a pretty easy time of it. A friend on mine, who chain smoked for years, decided to try Chantix and has also stopped smoking. Not only that, but I've noticed when I go to the store to buy nicotine patches, there have been several times that they were sold out. So I'm sure a lot of other people have decided to quit smoking. You might say, good for us! It is a good thing to quit smoking. I've always known it, I just didn't want to quit. But now, like millions of fellow Americans I'm sure, I can no longer justify the expense.

So, I've concluded that the government has probably made a serious mistake in passing this new tax. While their intentions were good, their thinking was flawed. When the market can no longer bear the price, demand drops and therefor tax revenue from tobacco products decrease. So not only do they fail to raise money to finance health care for the poor, but they will also lose the tremendous tax revenues that they were already taking in from smokers. This program will no doubt cause a tremendous decrease in the sale of tobacco products in the U.S., which will cause those companies to cut back on employees and reduce business operations, leading to even further losses in tax revenues. Add to this, all of the people who will live longer by not smoking, thereby increasing their exposure to age related illnesses when they are likely to be on Medicare and Medicaid and not only will the government fail to help the poor, they will be exposing taxpayers to even more costs related to care of the elderly.

I have been a long term investor in Altria Group (MO), but have decided it's time to sell and re-invest the money in something with a more promising future. Perhaps Phillip Morris International. Don't get me wrong, I think smoking is a bad habit, but there are a lot worse things. At any rate, I think the tobacco industry is on the way out in the U.S., having been taxed and sued out of business.

Thursday, May 28, 2009

Stock Portfolio Update

With such a crazy market since the first of the year, it's easy to just sit on the sidelines and wait for more stability. Always the bull, when it comes to the stock market, I can't help but see opportunity everywhere! My IRA account, which I opened in December, is up 14.5% for the year. AFLAC (AFL) was my best purchase for this account, up an astonishing 67% since my original purchase. I think it will go even higher. Advance America Cash Advance (AEA) earned me a whopping 97% gain for my regular investment account.

So even though it's been a rough ride for the first five months of the year, as far as I'm concerned, it has presented us with a very rare opportunity to make some marvelous short term trades and fantastic long term investments.

I don't want anyone to get the idea that my life has been smooth sailing through this economy. My job shut down on January 10th and I'm still looking for work. I've had to cut back on the amount of money set aside for investing and I've practically stopped buying anything aside from the basic necessities. But I've been through much worse and this too will pass.

Get Rid of All Your Credit Cards NOW!!!

I'm sure with all the pressure on Washington to make changes in the way credit card companies do business, they had to come up with something. All of the politicians seemed so pleased with themselves that they got legislation passed to help reign in credit issuers. Well I got news for them, it's practically worthless.

I've never worried about paying off my credit cards, since I rarely carry large balances and the interest rates were manageable. Now it's a whole different ballgame. In order to make up for restrictions under the new laws and massive losses caused by their own poor business practices, credit card companies are jacking interest rates through the roof. I have never been late on a payment with any of my cards, have always paid more than minimum payments and have had a good credit score for some time now. Recently two of my credit cards sent notices that my rates were going up (one to 29.99% and the other to 19.99%). If I chose not to accept the changes, they will cancel my cards. What's most shocking about this is these are my longest held cards. So far the other 3 cards I carry have not sent any bad news.

I understand why they are doing this. However, I also understand how good businesses operate. If they mistreat customers, (and believe me I am shocked by the response I got from customer service from the above mentioned credit card company) they will not have customers. Without customers, they will go out of business! What they're doing reminds me of a recent commercial making fun of the cable TV companies and their ever increasing rates. The execs are sitting around a table trying to decide how to make more money, but instead of figuring out how to improve their businesses, they just charge customers more. The flaw in this type of business model is that the market will only bear so much. Frankly, I think they are making way too much already. The notices I got with my interest rate increases had the audacity to say something along line, "Rate increases reflect a desire on our part to earn more profit on your account." What is especially annoying about this particular company is the fact that they received billions in bail out money from the taxpayers and now they are trying to make the taxpayers who hold their cards pay the money back!

This is exactly why I'm urging everyone I know to do whatever it takes to pay off their credit cards and stop using them until the issuers come to their senses. I've decided to cancel any and all of my cards who try to charge me for their mistakes. We'd all be much better off without them anyway.