11 Temmuz 2012 Çarşamba
10 Temmuz 2012 Salı
9 Temmuz 2012 Pazartesi
Aspen Dental and Poor Choices
To contact us Click HERE
Finding a good Dentist is important.
On MSNBC today, this story about how poor people are overcharged by Aspen Dental. People are outraged by this, but the problem is, there is no problem. Aspen Dental has done nothing illegal. They just charge high prices for their services, and in America, that is not against the law. If it were, well, half of America would be in jail, starting with all the Lawyers.
It is incumbent on you, the consumer, today more than ever, to shop around on price. And the variation in prices can be dramatic, particularly if you are unsophisticated. And by dramatic, I mean a factor of 10 or more, in many cases.
People pay thousands of dollars over list price for a car by leasing it - and pay enormous interest rates as well. And often, they don't even realize they did it - as they concentrated only on monthly payment, and not the actual sales price. And yes, a lease is a sale. And even when they buy a car, they often overpay, not realizing that the actual price was hidden in some document that the salesman glossed over during the closing. Monthly payment is all they know. They go to a dealer and foolishly say, "I want to pay this much per month for my car" and the salesmen then tries to sell them the least amount of car for that money.
In one blog on Edmunds, a fellow went to work for a car dealer selling cars, and confronted this situation. He and another salesman had a problem. No matter how they padded the price of the car, they could not make it expensive enough to meet the lady's stated monthly price. No problem - they told her that the manager was willing to throw in the "Platinum Service Plan" for free! No such plan existed, but it added another $1000 to the price.
And no doubt, she went home and told her friends that she told the salesman how much she was going to pay! and moreover, got the "Platinum Service Plan" for FREE! Which of course made her happy, as like most Americans, she is deathly afraid of car repairs.
I wrote before about Dentists, and how it is indeed possible to find an honest one who doesn't charge much. He is not the guy with the fancy office, the ads on the radio and the "free examinations!"
It is not hard to do, really. You just have to move beyond the consumerist mindset that anything "good" has to be a chain with a slick sign and a clever ad campaign. Usually that sort of stuff sucks - whether it is a chain restaurant, or a chain or oil change places, or a chain of dentists.
Should we feel sorry for the people in the MSNBC story? Maybe. No one put a gun to their head and said "borrow all this money so we can fix your teeth". No one made them do it. They could have done some research online first. Hint: Type in the name of the business and the words "sucks, scam, rip-off" or whatever and see what you get. Ignore the mindless cheer-leading posts - those are trolls. Look for patterns.
Part of the problem with professionals and creeping expertism ("Leave it to the Experts!) is that people just shed all responsibility and throw judgement out the door. And it is not hard to do, when you are laid back in that dental chair, and the man in the white coat with the diplomas on the walls tells you that you need tons of dental work. After all, he knows and you don't know squat, right?
Well, you can get a second opinion.
It is like when you sit in the Doctor's office and the doc says "bad news, you have prostate cancer" and that you will have to have expensive surgery, radiation, or chemotherapy. All you hear is the word "cancer" and assume your life is ending - and will do anything to avoid that, even let them cut your balls off. But some doctors are now saying that maybe this PSA test thing is overblown - and that a lot of men are having unnecessary surgery.
The same is true for colonoscopies. Many are wondering whether they need to be so frequent. They are profitable for the doctors, who often own the imaging centers that do them. But in some cases, perhaps they are overkill. I have a friend whose 85-year-old grandmother, who was very frail, was told she needed to have one - even though she was otherwise in normal health for a woman her age. The problem is, ramming a thing up someone's ass at that age, risks tearing the colon and causing all sorts of problems - peritonitis and death, for example. Better off to leave well enough alone.
Or take my vet. He wants my dog to have a heartworm blood test. The risk of heartworm among dogs on the medication is essentially zero, so what is the point of the test? And here's the kicker: Even if the dog had heartworms, there is not much than can be done to treat a 10-year-old dog, other than to give it a baby asprin and make it comfortable. The treatment is so toxic, it risks killing even younger dogs, and damaging internal organs (they basically pump poison into the dog). And older dog? it would kill them.
So what is the point of the test again?
It is OK to ask questions like this and to consider alternatives - including no treatment at all. And it is OK to shop around on price - you may find that prices, far from being "consistent" are all over the map and may vary by a factor of 10 or more.
For example, until recently, I used MAXEMAIL for receiving and sending faxes via computer. I could send them online and receive them as PDF files. Total cost? $14 a year. A competing service, eFax, advertises heavily (or did) online, and charged about $14 a month. That is a price difference of 12X and a lot of money! Of course, faxing is pretty dead now, but this illustrates the point - people charge what the market will bear, and it is up to the consumer to research prices before buying - even on dental work.
As I noted in Knowing When To Walk Away there are a host of service and product providers out there who charge what they think they can get away with - not what their actual costs are, plus a "reasonable profit margin". And it is not hard to spot them, as they usually ask about how much money you have, first (by asking where you work and other oblique questions) and then set their price accordingly.
And I saw this at the "fancy dentist" we went to briefly - she listed about $10,000 in dental work I could have had done, including breaking my jaw, on the premise that my insurance would pay for it. When I told her I had no dental insurance, the "need" for these treatments evaporated.
So you can pick on Aspen Dental all you want - they are just doing what a lot of people do, and it ain't illegal.
And the poor often succumb to these poor bargains, which is why they are poor! They get payday loans, rent-to-own furniture, title pawn loans, buy-here-pay-here used cars, and whatever other shitty bargains that are presented to them. They pay twice as much for groceries in convenience stores and bodegas. They pay twice as much for liquor at their bars-on-the-windows liquor stores.
Yea it is a shitty deal for the poor. But they don't have to take it, do they?
That is the upside here. You have choices. And you can choose to make better choices.
Even middle-class people are making poor choices these days - which is why the middle-class is evaporating. Falling down the economic ladder, one leased car and one smartphone at a time. And rather than trying to make better choices, most of them spend all their time justifying, using tortured logic, why their poor choices were, in fact, good ones. "I need a new car!" they cry, "My old one is so unreliable!"
So, no, I guess I don't feel sorry for people who do dumb things. Why? Because no one feels sorry for me, when I make poor choices, do they?
So choose wisely. And often the best and easiest choice is to leave your money in the bank. Or at the very least, research the snot out of anything, before you plunk down hundreds or thousands of dollars on something.
Finding a good Dentist is important.On MSNBC today, this story about how poor people are overcharged by Aspen Dental. People are outraged by this, but the problem is, there is no problem. Aspen Dental has done nothing illegal. They just charge high prices for their services, and in America, that is not against the law. If it were, well, half of America would be in jail, starting with all the Lawyers.
It is incumbent on you, the consumer, today more than ever, to shop around on price. And the variation in prices can be dramatic, particularly if you are unsophisticated. And by dramatic, I mean a factor of 10 or more, in many cases.
People pay thousands of dollars over list price for a car by leasing it - and pay enormous interest rates as well. And often, they don't even realize they did it - as they concentrated only on monthly payment, and not the actual sales price. And yes, a lease is a sale. And even when they buy a car, they often overpay, not realizing that the actual price was hidden in some document that the salesman glossed over during the closing. Monthly payment is all they know. They go to a dealer and foolishly say, "I want to pay this much per month for my car" and the salesmen then tries to sell them the least amount of car for that money.
In one blog on Edmunds, a fellow went to work for a car dealer selling cars, and confronted this situation. He and another salesman had a problem. No matter how they padded the price of the car, they could not make it expensive enough to meet the lady's stated monthly price. No problem - they told her that the manager was willing to throw in the "Platinum Service Plan" for free! No such plan existed, but it added another $1000 to the price.
And no doubt, she went home and told her friends that she told the salesman how much she was going to pay! and moreover, got the "Platinum Service Plan" for FREE! Which of course made her happy, as like most Americans, she is deathly afraid of car repairs.
I wrote before about Dentists, and how it is indeed possible to find an honest one who doesn't charge much. He is not the guy with the fancy office, the ads on the radio and the "free examinations!"
It is not hard to do, really. You just have to move beyond the consumerist mindset that anything "good" has to be a chain with a slick sign and a clever ad campaign. Usually that sort of stuff sucks - whether it is a chain restaurant, or a chain or oil change places, or a chain of dentists.
Should we feel sorry for the people in the MSNBC story? Maybe. No one put a gun to their head and said "borrow all this money so we can fix your teeth". No one made them do it. They could have done some research online first. Hint: Type in the name of the business and the words "sucks, scam, rip-off" or whatever and see what you get. Ignore the mindless cheer-leading posts - those are trolls. Look for patterns.
Part of the problem with professionals and creeping expertism ("Leave it to the Experts!) is that people just shed all responsibility and throw judgement out the door. And it is not hard to do, when you are laid back in that dental chair, and the man in the white coat with the diplomas on the walls tells you that you need tons of dental work. After all, he knows and you don't know squat, right?
Well, you can get a second opinion.
It is like when you sit in the Doctor's office and the doc says "bad news, you have prostate cancer" and that you will have to have expensive surgery, radiation, or chemotherapy. All you hear is the word "cancer" and assume your life is ending - and will do anything to avoid that, even let them cut your balls off. But some doctors are now saying that maybe this PSA test thing is overblown - and that a lot of men are having unnecessary surgery.
The same is true for colonoscopies. Many are wondering whether they need to be so frequent. They are profitable for the doctors, who often own the imaging centers that do them. But in some cases, perhaps they are overkill. I have a friend whose 85-year-old grandmother, who was very frail, was told she needed to have one - even though she was otherwise in normal health for a woman her age. The problem is, ramming a thing up someone's ass at that age, risks tearing the colon and causing all sorts of problems - peritonitis and death, for example. Better off to leave well enough alone.
Or take my vet. He wants my dog to have a heartworm blood test. The risk of heartworm among dogs on the medication is essentially zero, so what is the point of the test? And here's the kicker: Even if the dog had heartworms, there is not much than can be done to treat a 10-year-old dog, other than to give it a baby asprin and make it comfortable. The treatment is so toxic, it risks killing even younger dogs, and damaging internal organs (they basically pump poison into the dog). And older dog? it would kill them.
So what is the point of the test again?
It is OK to ask questions like this and to consider alternatives - including no treatment at all. And it is OK to shop around on price - you may find that prices, far from being "consistent" are all over the map and may vary by a factor of 10 or more.
For example, until recently, I used MAXEMAIL for receiving and sending faxes via computer. I could send them online and receive them as PDF files. Total cost? $14 a year. A competing service, eFax, advertises heavily (or did) online, and charged about $14 a month. That is a price difference of 12X and a lot of money! Of course, faxing is pretty dead now, but this illustrates the point - people charge what the market will bear, and it is up to the consumer to research prices before buying - even on dental work.
As I noted in Knowing When To Walk Away there are a host of service and product providers out there who charge what they think they can get away with - not what their actual costs are, plus a "reasonable profit margin". And it is not hard to spot them, as they usually ask about how much money you have, first (by asking where you work and other oblique questions) and then set their price accordingly.
And I saw this at the "fancy dentist" we went to briefly - she listed about $10,000 in dental work I could have had done, including breaking my jaw, on the premise that my insurance would pay for it. When I told her I had no dental insurance, the "need" for these treatments evaporated.
So you can pick on Aspen Dental all you want - they are just doing what a lot of people do, and it ain't illegal.
And the poor often succumb to these poor bargains, which is why they are poor! They get payday loans, rent-to-own furniture, title pawn loans, buy-here-pay-here used cars, and whatever other shitty bargains that are presented to them. They pay twice as much for groceries in convenience stores and bodegas. They pay twice as much for liquor at their bars-on-the-windows liquor stores.
Yea it is a shitty deal for the poor. But they don't have to take it, do they?
That is the upside here. You have choices. And you can choose to make better choices.
Even middle-class people are making poor choices these days - which is why the middle-class is evaporating. Falling down the economic ladder, one leased car and one smartphone at a time. And rather than trying to make better choices, most of them spend all their time justifying, using tortured logic, why their poor choices were, in fact, good ones. "I need a new car!" they cry, "My old one is so unreliable!"
So, no, I guess I don't feel sorry for people who do dumb things. Why? Because no one feels sorry for me, when I make poor choices, do they?
So choose wisely. And often the best and easiest choice is to leave your money in the bank. Or at the very least, research the snot out of anything, before you plunk down hundreds or thousands of dollars on something.
But Can You Really Afford It?
To contact us Click HERE
A shiny new car! You can afford the monthly payments, right? Or can you?
One thing the "Affordable Health Care Act" is forcing us to do, is consider health care as part of our budget. For many of us, this is already the case - we fulfill our part of the Unwritten Social Contract by buying health insurance, because we are not idiots and not white trash.
Others prefer to go without health care, claiming they cannot afford it, while at the same time buying a motorcycle and cable television.
But beyond health care, there are other things that you should be funding as well - such as your Estate.
Many a young person forgoes contributing to their 401(k) program on the premise that they will "do that later" and the $300 a month they are not spending on their own retirement is money that can buy beer or a new car.
They don't realize how hard it is to try to play "catch up" later on in life, and how advantageous compound interest is to them - when they have nothing but time.
So they would rather have a shiny new econobox car and no money in the bank, than a real net worth and an old clunker. That is, in a nutshell, their choice. And it is a choice a staggering number of Americans have made these days - and this is going to come home to roost, in a big way, as the bulk of the baby boomers retire in the coming decade.
One popular search that finds this blog is, "How can I retire on $1500 a month?" and that is sad indeed. These are folks trying to live single on Social Security. You do the math on that - how can you live on $1500 a month. You'd probably be better off without a car at all.
How did those folks get there? It didn't happen suddenly at age 60. It started at age 23, when they bought that new Camaro - which has long since rusted out and gone to the junkyard. They wanted to have a hot car at that age. But hot cars last maybe a few years, at best. The hot car of 1985 is a bad joke, today.
Trashing your future for a car is nonsense. But people do it all the time.
Why? Well, Joe Salary Slave takes home $3000 a month, after taxes, which might be about $50,000 a year, gross. He pays $1200 on rent or a mortgage payments, leaving him $1800 to spend on utilities, food, and other expenses. To him, $500 a month on a car payment doesn't seem like a lot of money, compared to $1800 he has to spend!
But of course, if he is a young person, his insurance is another $200 to $300 a month, particularly after a couple of speeding tickets. Pretty soon, his disposable income is down to bubkis - and we can't figure out why he is broke. After all, it can't be the car - that only costs $500 a month!
But it gets worse - a lot worse. In order to have more "stuff" now, our young salaryman decided not to participate in his company's 401(k). Or maybe, after facing a tighter budget, he cuts his contributions severely. This is a dumb move.
And maybe, if his company doesn't offer health insurance, he doesn't bother to fund his own plan - thinking that as a young person, he is healthy enough, and spending $99 a month on health insurance is a "waste" anyway. It is short-sighted thinking.
The problem is, you have to fund these things over time. And if you don't, well, you will be in a bad place later on.
Here are some simple rules of thumb to apply before you take out a loan or buy some big-ticket item - or even a small item with a recurring monthly fee (like cable TV or a cell phone):
1. What is Your Net Worth? If you can't answer this question, borrowing and spending are bad ideas. I know I was in that situation when I was 25 - not having a clue as to whether I even had a net worth. And probably the reason why, was, it was negative. Yes, what little savings I had and equity in my home were dwarfed by car payments, credit card debt, and student loan debt. My net worth would not go positive until I was about 30. And that is just sad, let me tell you. And unnecessary.
2. How large is the purchase relative to your net worth? I wrote before about the fellow I saw who had a $70,000 BMW parked in front of a $120,000 modular home. A pretty stupid way to live, frankly. But many people do this. I was at another neighborhood recently, where the homes sell for under $200,000. The neighbor had a new Mercedes, BMW, a Luxury SUV, an expensive boat, and a Jet Ski parked out front. His depreciating assets cost more than his home.
Yes, you can kid yourself that you can "afford" to lease a brand-new BMW or a Mercedes, or even buy one. But it is pretend wealth not real wealth. And spending $70,000 on a car when your net worth is barely $50,000 makes no sense at all. In ten years, that car will be worth $15,000 - I know this, because that's when I would buy it. And the damage to your net worth is staggering.
If you are looking at a car that costs more than your home or your net worth, think about this carefully. In the few years it takes to pay off a car loan, you could more than double your net worth. Or have a cool car for a few years. Which is dumb and which is smart?
3. What are the hidden costs? As I noted in the real cost of owning a car even a $20,000 car can cost $8000 a year, in terms of depreciation, gas, oil, tires, insurance, etc. When I tallied all this up, I realized that even a "paid for" car costs you, in terms of depreciation - even if you don't drive it much. Every day it sits there, it is worth less. And yes, some day you will sell it and realize that loss.
The monthly payment is only part of the deal.
4. What is the overall transaction cost? Most people think in terms of monthly payment. If you learn nothing else here, get out of that mindset - it is the road to poverty. When you say "my car costs $500 a month" you are talking only about car payments, not the overall transaction cost over time. When you add that up, it can be staggering - and make putting a new set of tires on your old car seem pretty cheap in comparison.
5. Are you fully funding your 401(k) and Health Insurance? If you answer "No" to either, than you have no business buying more shit. You are just hurting yourself, over time. And this is why we have to have a "mandate" for health care coverage - because deadbeats like you spend their health care dollars on a Camaro and then stiff the hospital (and the rest of us) for the money.
If you are not funding your retirement, well, it will catch up with you, over time - and you will be miserable at an older age. Even in just a few short years, it will catch up with you. If you have no savings and are heavily leveraged in debt, forget about buying a house or starting a business - or doing anything other than working as a drone to pay your bills.
Yes, Americans complain they work "paycheck to paycheck" - but they do this voluntarily and willingly - in most instances. I examine the finances of many such complainers, and usually find their budgets padded with smart phones, Cable television, and not one, but two new car payments. They have all the toys and all the bills. But of course, savings and health care are not among them.
They can afford it - but they really can't afford it. Not if they did the real math.
A shiny new car! You can afford the monthly payments, right? Or can you?One thing the "Affordable Health Care Act" is forcing us to do, is consider health care as part of our budget. For many of us, this is already the case - we fulfill our part of the Unwritten Social Contract by buying health insurance, because we are not idiots and not white trash.
Others prefer to go without health care, claiming they cannot afford it, while at the same time buying a motorcycle and cable television.
But beyond health care, there are other things that you should be funding as well - such as your Estate.
Many a young person forgoes contributing to their 401(k) program on the premise that they will "do that later" and the $300 a month they are not spending on their own retirement is money that can buy beer or a new car.
They don't realize how hard it is to try to play "catch up" later on in life, and how advantageous compound interest is to them - when they have nothing but time.
So they would rather have a shiny new econobox car and no money in the bank, than a real net worth and an old clunker. That is, in a nutshell, their choice. And it is a choice a staggering number of Americans have made these days - and this is going to come home to roost, in a big way, as the bulk of the baby boomers retire in the coming decade.
One popular search that finds this blog is, "How can I retire on $1500 a month?" and that is sad indeed. These are folks trying to live single on Social Security. You do the math on that - how can you live on $1500 a month. You'd probably be better off without a car at all.
How did those folks get there? It didn't happen suddenly at age 60. It started at age 23, when they bought that new Camaro - which has long since rusted out and gone to the junkyard. They wanted to have a hot car at that age. But hot cars last maybe a few years, at best. The hot car of 1985 is a bad joke, today.
Trashing your future for a car is nonsense. But people do it all the time.
Why? Well, Joe Salary Slave takes home $3000 a month, after taxes, which might be about $50,000 a year, gross. He pays $1200 on rent or a mortgage payments, leaving him $1800 to spend on utilities, food, and other expenses. To him, $500 a month on a car payment doesn't seem like a lot of money, compared to $1800 he has to spend!
But of course, if he is a young person, his insurance is another $200 to $300 a month, particularly after a couple of speeding tickets. Pretty soon, his disposable income is down to bubkis - and we can't figure out why he is broke. After all, it can't be the car - that only costs $500 a month!
But it gets worse - a lot worse. In order to have more "stuff" now, our young salaryman decided not to participate in his company's 401(k). Or maybe, after facing a tighter budget, he cuts his contributions severely. This is a dumb move.
And maybe, if his company doesn't offer health insurance, he doesn't bother to fund his own plan - thinking that as a young person, he is healthy enough, and spending $99 a month on health insurance is a "waste" anyway. It is short-sighted thinking.
The problem is, you have to fund these things over time. And if you don't, well, you will be in a bad place later on.
Here are some simple rules of thumb to apply before you take out a loan or buy some big-ticket item - or even a small item with a recurring monthly fee (like cable TV or a cell phone):
1. What is Your Net Worth? If you can't answer this question, borrowing and spending are bad ideas. I know I was in that situation when I was 25 - not having a clue as to whether I even had a net worth. And probably the reason why, was, it was negative. Yes, what little savings I had and equity in my home were dwarfed by car payments, credit card debt, and student loan debt. My net worth would not go positive until I was about 30. And that is just sad, let me tell you. And unnecessary.
2. How large is the purchase relative to your net worth? I wrote before about the fellow I saw who had a $70,000 BMW parked in front of a $120,000 modular home. A pretty stupid way to live, frankly. But many people do this. I was at another neighborhood recently, where the homes sell for under $200,000. The neighbor had a new Mercedes, BMW, a Luxury SUV, an expensive boat, and a Jet Ski parked out front. His depreciating assets cost more than his home.
Yes, you can kid yourself that you can "afford" to lease a brand-new BMW or a Mercedes, or even buy one. But it is pretend wealth not real wealth. And spending $70,000 on a car when your net worth is barely $50,000 makes no sense at all. In ten years, that car will be worth $15,000 - I know this, because that's when I would buy it. And the damage to your net worth is staggering.
If you are looking at a car that costs more than your home or your net worth, think about this carefully. In the few years it takes to pay off a car loan, you could more than double your net worth. Or have a cool car for a few years. Which is dumb and which is smart?
3. What are the hidden costs? As I noted in the real cost of owning a car even a $20,000 car can cost $8000 a year, in terms of depreciation, gas, oil, tires, insurance, etc. When I tallied all this up, I realized that even a "paid for" car costs you, in terms of depreciation - even if you don't drive it much. Every day it sits there, it is worth less. And yes, some day you will sell it and realize that loss.
The monthly payment is only part of the deal.
4. What is the overall transaction cost? Most people think in terms of monthly payment. If you learn nothing else here, get out of that mindset - it is the road to poverty. When you say "my car costs $500 a month" you are talking only about car payments, not the overall transaction cost over time. When you add that up, it can be staggering - and make putting a new set of tires on your old car seem pretty cheap in comparison.
5. Are you fully funding your 401(k) and Health Insurance? If you answer "No" to either, than you have no business buying more shit. You are just hurting yourself, over time. And this is why we have to have a "mandate" for health care coverage - because deadbeats like you spend their health care dollars on a Camaro and then stiff the hospital (and the rest of us) for the money.
If you are not funding your retirement, well, it will catch up with you, over time - and you will be miserable at an older age. Even in just a few short years, it will catch up with you. If you have no savings and are heavily leveraged in debt, forget about buying a house or starting a business - or doing anything other than working as a drone to pay your bills.
Yes, Americans complain they work "paycheck to paycheck" - but they do this voluntarily and willingly - in most instances. I examine the finances of many such complainers, and usually find their budgets padded with smart phones, Cable television, and not one, but two new car payments. They have all the toys and all the bills. But of course, savings and health care are not among them.
They can afford it - but they really can't afford it. Not if they did the real math.
"Stocks slammed by gloomy jobs report" - Really?
To contact us Click HERE
This stock guy looks worried about something! OMG! The world is going to end! Oh, wait, it is a stock photo.
The idiot media is at it again. Bad news sells - sensationalized news sells. And sensationalized bad news sells like hotcakes. We all want to hear the "ain't it awful" story, it seems. As Americans, we are chock full of self-loathing.
On MSNBC this weekend, this story, accompanied by the worrisome photo above:
Let's look at this one thing at a time. Were stocks "slammed" as the report claims? Well, they fell 124 points, which at a level of 12,700 amounts to about 0.9%. Yes, that is a lot in one day, but then again, we've had larger swings, in fact in recent weeks. And in a normal market, you will see swings like this, usually in response to good and bad news.
Look at the statistics they manufacture here - "the worst decline since June 21!!!!" Oh, wait, that was two weeks ago. Um, just saying the market went down is not as exciting as a "worst decline since..."
What's next? "The worst decline on an odd-number day in a month with the letter "R" in it...."
Third thing to notice, "The index fell as much as 194 points earlier in the session." What does that mean? It means that at the end of the session, prices started going back up. The DOW was increasing - by 70 points, by the end of the session. The market digested the news, took a hit, and then started back up before the end of trading on Friday. This is reported as bad news. Funny how that works, eh?
As for the employment numbers, they are no big surprise to me. Having lived through worse recessions, I realize that employment doesn't bounce back like a rubber band - and neither will housing prices. People who expect that a major recession like this will just be "over" like a sudden Florida thunderstorm, are sadly mistaken. It will be a few years before we recover fully, and whoever is President then, will claim credit for it.
And that is how economies work - they are really less dependent on the actions of Presidents than the actions of the economy.
In 1980 we saw 10% unemployment. A lot of people got laid off, many were offered "early outs". Factories closed and many never worked again. I saw this happen to my Dad.
And when factories re-opened, or new factories or new jobs were created, a lot of the people laid off in 1980 were not rehired. Why? Often their jobs were obsolete, their job skills were obsolete, and their wage requirements were too high - and sea of young people were willing to work for less.
I hear sob stories from middle-management people who lost $100,000-a-year jobs doing stuff that really could have been handled by a website or an app. Companies realize that they really don't need to rehire these people. White collar workers in particular are being hit this time around - you don't need a $100,000 human resources manager when there are fewer human resources to manage.
It is like pruning a bush. You don't try to glue the severed limbs back on - you wait for new ones to grow.
This is, of course, cold comfort to the fellow who lost his job. But of course, he put away money for this inevitable conclusion, so he is all set for an early retirement. Right?
Oh, he didn't. He spent it all on leased cars and overpriced houses and credit card debt. I see. He is a victim here. Obama has done him wrong.
Factory orders are edging up, as are orders for durable goods. But of course, things are not rocketing back to pre-2007 levels. Like with most recessions, we will ease back with slow growth, which can actually be a good thing. After all, what did fast growth really do for us in the long run? It got us here, is what it did.
But of course, MSNBC never analyzes things to that level. They are not reporting the news, only keeping score at a football match. And just reading score numbers and making alarming pronouncements rarely produces much insight into anything.
Our economy putters along - this is to be expected, and not alarmed about. It will take years for employment and housing prices to get back to levels of 2007. So get used to this. Nothing any political candidate can do will accelerate the trend, period.
And no, vague promises of "fixing things" are not likely to work.
This stock guy looks worried about something! OMG! The world is going to end! Oh, wait, it is a stock photo.The idiot media is at it again. Bad news sells - sensationalized news sells. And sensationalized bad news sells like hotcakes. We all want to hear the "ain't it awful" story, it seems. As Americans, we are chock full of self-loathing.
On MSNBC this weekend, this story, accompanied by the worrisome photo above:
Stocks slammed by gloomy jobs report
Stocks fell sharply Friday after dismal jobs data reinforced the view that the economy is stuck in a slow-growth rut.
The market saw its worst decline since June 21, knocking the Dow Jones industrial average down 124 points by the close of trading. The index fell as much as 194 points earlier in the session.
Stocks saw their worst weekly performance in over a month.
News that the world's largest economy created just 80,000 jobs in June -- far fewer than needed to lower the 8.2 percent unemployment rate -- added to evidence that Europe's debt crisis is weighing on global growth.
Let's look at this one thing at a time. Were stocks "slammed" as the report claims? Well, they fell 124 points, which at a level of 12,700 amounts to about 0.9%. Yes, that is a lot in one day, but then again, we've had larger swings, in fact in recent weeks. And in a normal market, you will see swings like this, usually in response to good and bad news.
Look at the statistics they manufacture here - "the worst decline since June 21!!!!" Oh, wait, that was two weeks ago. Um, just saying the market went down is not as exciting as a "worst decline since..."
What's next? "The worst decline on an odd-number day in a month with the letter "R" in it...."
Third thing to notice, "The index fell as much as 194 points earlier in the session." What does that mean? It means that at the end of the session, prices started going back up. The DOW was increasing - by 70 points, by the end of the session. The market digested the news, took a hit, and then started back up before the end of trading on Friday. This is reported as bad news. Funny how that works, eh?
As for the employment numbers, they are no big surprise to me. Having lived through worse recessions, I realize that employment doesn't bounce back like a rubber band - and neither will housing prices. People who expect that a major recession like this will just be "over" like a sudden Florida thunderstorm, are sadly mistaken. It will be a few years before we recover fully, and whoever is President then, will claim credit for it.
And that is how economies work - they are really less dependent on the actions of Presidents than the actions of the economy.
In 1980 we saw 10% unemployment. A lot of people got laid off, many were offered "early outs". Factories closed and many never worked again. I saw this happen to my Dad.
And when factories re-opened, or new factories or new jobs were created, a lot of the people laid off in 1980 were not rehired. Why? Often their jobs were obsolete, their job skills were obsolete, and their wage requirements were too high - and sea of young people were willing to work for less.
I hear sob stories from middle-management people who lost $100,000-a-year jobs doing stuff that really could have been handled by a website or an app. Companies realize that they really don't need to rehire these people. White collar workers in particular are being hit this time around - you don't need a $100,000 human resources manager when there are fewer human resources to manage.
It is like pruning a bush. You don't try to glue the severed limbs back on - you wait for new ones to grow.
This is, of course, cold comfort to the fellow who lost his job. But of course, he put away money for this inevitable conclusion, so he is all set for an early retirement. Right?
Oh, he didn't. He spent it all on leased cars and overpriced houses and credit card debt. I see. He is a victim here. Obama has done him wrong.
Factory orders are edging up, as are orders for durable goods. But of course, things are not rocketing back to pre-2007 levels. Like with most recessions, we will ease back with slow growth, which can actually be a good thing. After all, what did fast growth really do for us in the long run? It got us here, is what it did.
But of course, MSNBC never analyzes things to that level. They are not reporting the news, only keeping score at a football match. And just reading score numbers and making alarming pronouncements rarely produces much insight into anything.
Our economy putters along - this is to be expected, and not alarmed about. It will take years for employment and housing prices to get back to levels of 2007. So get used to this. Nothing any political candidate can do will accelerate the trend, period.
And no, vague promises of "fixing things" are not likely to work.
Winning by Not Losing
To contact us Click HERE
In a foot race, coming in first is winning. In life, just finishing the race is winning.
Winning by not losing. What do I mean by that? In life, particularly in America, it seems everyone wants to "win" all the time. They want to have a fancy car, the latest electronics, the "in" t-shirt from the local mall (not that t-shirt, the other one! Please, no one wears those ones anymore!).
They want to have the right clothes, the right watch, the right house in the right neighborhood with the right kind of appliances and the right kind of counter-tops. They want to watch the right kinds of TeeVee shows, so they can be up on the latest happenings. They want to be accepted by their peers and be seen as "with it" and popular.
They view this lifestyle as "winning" in the economic race of life. So long as they have the correct SUV and the fancy bathroom, go to the right places on vacation, and of course have their daily designer coffee (held head-high, arm raised, elbow out, label facing outward) they can show the world they are winning.
In places like New York City, they take this to ridiculous extremes. Women have to have the right shoes and $5000 pocketbooks (and those are the cheap kind) and send their children to the "right" preschool whose tuition cost more than Harvard. They are trendy, they are chic, they are so much better than everyone else - and they are "winning"!
But of course, it is a pile of false values. The expensive pre-school is not really that much better than the one their maid sends her kids to. And the designer coffee takes like crap. And the $5000 handbag is made in a sweatshop overseas, right next to its $150 knock-offs.
But worst of all, many of these folks are not really winning, but only appearing to win - financing all of this on a mountain of debt which will catch up with them, over time. And in the last five years, it has caught up with a lot of Americans, who are pissed off (but not rightfully so) that someone has taken away their "dream".
Trying to win at life is a flawed goal. Because life is not a game with "winners" and "losers" and the scoreboard, if there was one, is not tallied with dollar signs or fabulous prizes.
Moreover, even if it were so, there can only be one winner in any given match, and a whole host of others will come in second place - if not dead last. If your happiness is predicated on your winning then you will be in for a whole lot of misery in life - as few people win in that way.
As in a law firm, in any company, or indeed, any society there are a few people on top (those 1%'ers the pot-smoking OWS crowd whines about) and a lot of people coming in second place. Statistically, the odds of you being that wealthy, powerful, successful, or whatever, are very slim.
And that is why I left the big-city law firm. I didn't get an "A" in probability, but I realized that the odds of me making partner in a law firm were far less than 1 in 10. Why stick around running a race you cannot win? Particularly when someone else profits from your efforts?
This is not to say you should not try in life, only that you should get comfortable with the reality of your life and embrace your mediocrity - as odds are, you are mediocre. I mentioned in another posting regarding Vance Packard about "strivers" - the people who are just a little bit above middle class, to the point where they can taste a little bit of wealth. As Packard noted, these folks will spend themselves broke trying to be what I call pretend rich.
The very poor and middle class, they know what their lot will be, and they act their income. The very rich can do what they want. But the so-called upper middle class ends up bankrupting itself, when they spend just one notch above their station in life.
And that is one sure way to lose at the game of life - to chase after the material as an indicia of success and happiness, only to end up broke and unhappy. Just running the race and being successful at your own level - and happy - is the key.
And in reality, if you can do this, you may end up winning more than the fellow who comes in first. I regularly get e-mails from my old colleagues in the law business who chased after those false dreams. They bought the mini-mansion with the granite countertops, and they lease the fancy new cars and their troubled spoiled children are off in private schools. And they are miserably unhappy. They are trapped in their jobs - needing that huge paycheck to finance it all. And they hardly know their children or their spouses (plural, as they are usually on a second or third one). They have won the race, at least according to the media cues they relied upon, but at age 50, it all seems so unsatisfying.
In my own life, I can attest to this as well. We had the vacation home, the fancy cars, the boats, and all of that. It was fun - for about 30 seconds. Then we realized that things were not an end in and of themselves. Doing things was better than owning things. So we sold it all, cut way back, and can live on less - or nothing at all. Owning ourselves was the best thing we could buy.
Does this mean we have all the fancy stuff? No. We drive older cars, and don't buy designer coffees anymore. And we realize that all that sort of crap was just a false set of values promoted by a media machine that - big surprise here - wanted to sell us something. The promised to make us "winners" if we would just buy all the right crap. It was a false promise.
Winning in life is just a matter of not losing. And often "trying" to be a winner is about the only way you can really lose.
Life is not a race. It is more of a walk. Enjoy the walk.
In a foot race, coming in first is winning. In life, just finishing the race is winning.Winning by not losing. What do I mean by that? In life, particularly in America, it seems everyone wants to "win" all the time. They want to have a fancy car, the latest electronics, the "in" t-shirt from the local mall (not that t-shirt, the other one! Please, no one wears those ones anymore!).
They want to have the right clothes, the right watch, the right house in the right neighborhood with the right kind of appliances and the right kind of counter-tops. They want to watch the right kinds of TeeVee shows, so they can be up on the latest happenings. They want to be accepted by their peers and be seen as "with it" and popular.
They view this lifestyle as "winning" in the economic race of life. So long as they have the correct SUV and the fancy bathroom, go to the right places on vacation, and of course have their daily designer coffee (held head-high, arm raised, elbow out, label facing outward) they can show the world they are winning.
In places like New York City, they take this to ridiculous extremes. Women have to have the right shoes and $5000 pocketbooks (and those are the cheap kind) and send their children to the "right" preschool whose tuition cost more than Harvard. They are trendy, they are chic, they are so much better than everyone else - and they are "winning"!
But of course, it is a pile of false values. The expensive pre-school is not really that much better than the one their maid sends her kids to. And the designer coffee takes like crap. And the $5000 handbag is made in a sweatshop overseas, right next to its $150 knock-offs.
But worst of all, many of these folks are not really winning, but only appearing to win - financing all of this on a mountain of debt which will catch up with them, over time. And in the last five years, it has caught up with a lot of Americans, who are pissed off (but not rightfully so) that someone has taken away their "dream".
Trying to win at life is a flawed goal. Because life is not a game with "winners" and "losers" and the scoreboard, if there was one, is not tallied with dollar signs or fabulous prizes.
Moreover, even if it were so, there can only be one winner in any given match, and a whole host of others will come in second place - if not dead last. If your happiness is predicated on your winning then you will be in for a whole lot of misery in life - as few people win in that way.
As in a law firm, in any company, or indeed, any society there are a few people on top (those 1%'ers the pot-smoking OWS crowd whines about) and a lot of people coming in second place. Statistically, the odds of you being that wealthy, powerful, successful, or whatever, are very slim.
And that is why I left the big-city law firm. I didn't get an "A" in probability, but I realized that the odds of me making partner in a law firm were far less than 1 in 10. Why stick around running a race you cannot win? Particularly when someone else profits from your efforts?
This is not to say you should not try in life, only that you should get comfortable with the reality of your life and embrace your mediocrity - as odds are, you are mediocre. I mentioned in another posting regarding Vance Packard about "strivers" - the people who are just a little bit above middle class, to the point where they can taste a little bit of wealth. As Packard noted, these folks will spend themselves broke trying to be what I call pretend rich.
The very poor and middle class, they know what their lot will be, and they act their income. The very rich can do what they want. But the so-called upper middle class ends up bankrupting itself, when they spend just one notch above their station in life.
And that is one sure way to lose at the game of life - to chase after the material as an indicia of success and happiness, only to end up broke and unhappy. Just running the race and being successful at your own level - and happy - is the key.
And in reality, if you can do this, you may end up winning more than the fellow who comes in first. I regularly get e-mails from my old colleagues in the law business who chased after those false dreams. They bought the mini-mansion with the granite countertops, and they lease the fancy new cars and their troubled spoiled children are off in private schools. And they are miserably unhappy. They are trapped in their jobs - needing that huge paycheck to finance it all. And they hardly know their children or their spouses (plural, as they are usually on a second or third one). They have won the race, at least according to the media cues they relied upon, but at age 50, it all seems so unsatisfying.
In my own life, I can attest to this as well. We had the vacation home, the fancy cars, the boats, and all of that. It was fun - for about 30 seconds. Then we realized that things were not an end in and of themselves. Doing things was better than owning things. So we sold it all, cut way back, and can live on less - or nothing at all. Owning ourselves was the best thing we could buy.
Does this mean we have all the fancy stuff? No. We drive older cars, and don't buy designer coffees anymore. And we realize that all that sort of crap was just a false set of values promoted by a media machine that - big surprise here - wanted to sell us something. The promised to make us "winners" if we would just buy all the right crap. It was a false promise.
Winning in life is just a matter of not losing. And often "trying" to be a winner is about the only way you can really lose.
Life is not a race. It is more of a walk. Enjoy the walk.
Is it Possible? Yes, it is.
To contact us Click HERE
If you save regularly, over time, even a middle-income family can accumulate a million dollars by retirement. And in the coming years, they will have to, as a million dollars really won't be a lot of money in 30-40 years.
I recently received a missive from a fellow in his 20's, clearly expressing skepticism that anyone, in this day and age, could really save up a million dollars by retirement, on an average income. I hear this complaint a lot these days, on various online blogs and discussion groups, and in sardonic comments made by people in response to news stories.
The narrative is like this: "You can't win, so you might as well not bother trying. I tried saving up some money once, and all I ended up with was a hundred dollars, so I spent it on pot. The whole system is stacked against you, and the Wall Street Fat Cats just take it all, so you might as well just spend your money on a car or a motorcycle or a new iPhone."
And it is a narrative that is worldwide. In Japan in the 1980's, a new phenomenon occurred. Young Japanese men and women, well into their 20's, with jobs, would live at home with their parents. Housing prices in Japan were skyrocketing, and they felt there was no way that they ever, ever would be able to afford a house, so why bother even trying? Besides, it was more fun to "hang out" with their friends, and spend all their money on flashy electronics, trendy clothes, and fun things do to (Japanese youth are very well attired, to be sure). Was this a wise choice? Of course not.
And today, we see the same argument raised in the USA - and indeed, many of my friends made the same argument when I was in that age group. In a response to my posting about how idiotic "bling rims" are, a young wanna-be "gangsta" said that he expected to be killed in a drug violence anyway, so he might as well ride in style.
If this were true, I would say to go for it - we need more "gansta" types to die in this county. But alas, many annoyingly live on, instead, clogging our nation's jails, and then going on welfare when they get out, living far too long to be of any use to anyone. The "live fast, die young" theory has one huge hole in it - not enough die young.
No, the real danger is you living too long - which happens with surprising regularity. You outlive your money, and end up on welfare or trying to get by on Social Security - wishing you had planned better for the future.
And you could have. But chose not to.
And choosing not to save on the grounds that "the system is stacked against you" is nonsense - and often just an emotional justification to do something stupid like buy a new Camaro.
But if we go to our compound interest calculator, you can see that if you make an average salary (in this country, about $50,000 a year) for 45 years (a working lifetime) and invest about 10% ($5000) you will end up with about $1,046,193.36 by retirement.
You can play with the numbers all you want - your actual return on investment is likely to be higher. Maybe you cannot afford to invest as much. But over time, you will save an enormous amount of money if you choose to do so.
But you have to choose to save, over having Cable TV. You have to choose to save over having a new iPhone. You have to choose to save over having an Abercrombie t-shirt, or a new Scion, or some other foolish purchase.
Many people chose not to save. I know I made some bonehead choices at that age - choosing a motorcycle over investing. Choosing to buy a brand-new economy car, over the paid for car I already had, or even a secondhand car that would have cost half as much to own.
And I regret those decisions, as they cost me a lot of money, detracted from my peace of mind at the time, and degraded my overall net worth, cumulatively. And let me tell you, it is far better to have money in the bank and peace of mind than a new economy car in your driveway.
I was lucky in that I ended up doing well in Real Estate and had a decent career in the law. I was able to salvage my finances. Others don't have those choices. The poorer you are, the more important it is to choose well.
But of course, the poor make poor choices, in both senses of the word. And maybe there is nothing we can do to "save" them. They will get payday loans and title pawn loans and throw money at clapped-out used cars that they paid too much for, until they park the carcass on their front lawn. They are not very bright, which is why they end up poor.
But if you are a fairly smart person making a middle-class salary, there is no reason you should end up stupid and poor - unless, of course, you follow the siren song of the media to consume more and more. Or, if you listen to your broke and brain-dead friends who buy new cars and show off their smart phones and ridicule you for brown-bagging your lunch.
If you listen to them - and assume that spending is good and having a lot of fancy crap is nice, and you believe their depressed thoughts that "the systems is stacked against you, so you might as well live for today" - then yes, you will end up poor.
And that is the beauty of the thing. It is all a choice you make, and you make alone. No one forces you to buy a Scion and pay thousands a year to insure it at age 24. But the car companies have entire lines of cars targeted at the youth market because they know that 20-somethings are idiots when it comes to money, and will spend it all trying to "look cool". Who in their right mind would buy a Hyundai Veloster?
There are, of course, ways to live well, on not a lot of money. You can buy a secondhand Miata and pay cash, for a lot less than a $20,000 Scion or Hyundai - and cut your insurance costs in half. And you will have a lot more fun. That's just an example.
These are the choices we make, in everyday life. You choose badly, bad things happen. Most people choose stupidly.
You'll have to pardon me if I don't feel sorry for folks when they make poor choices. Why is this? Because no one ever felt sorry for me when I made bonehead choices. And I made a lot of them!
If you save regularly, over time, even a middle-income family can accumulate a million dollars by retirement. And in the coming years, they will have to, as a million dollars really won't be a lot of money in 30-40 years.I recently received a missive from a fellow in his 20's, clearly expressing skepticism that anyone, in this day and age, could really save up a million dollars by retirement, on an average income. I hear this complaint a lot these days, on various online blogs and discussion groups, and in sardonic comments made by people in response to news stories.
The narrative is like this: "You can't win, so you might as well not bother trying. I tried saving up some money once, and all I ended up with was a hundred dollars, so I spent it on pot. The whole system is stacked against you, and the Wall Street Fat Cats just take it all, so you might as well just spend your money on a car or a motorcycle or a new iPhone."
And it is a narrative that is worldwide. In Japan in the 1980's, a new phenomenon occurred. Young Japanese men and women, well into their 20's, with jobs, would live at home with their parents. Housing prices in Japan were skyrocketing, and they felt there was no way that they ever, ever would be able to afford a house, so why bother even trying? Besides, it was more fun to "hang out" with their friends, and spend all their money on flashy electronics, trendy clothes, and fun things do to (Japanese youth are very well attired, to be sure). Was this a wise choice? Of course not.
And today, we see the same argument raised in the USA - and indeed, many of my friends made the same argument when I was in that age group. In a response to my posting about how idiotic "bling rims" are, a young wanna-be "gangsta" said that he expected to be killed in a drug violence anyway, so he might as well ride in style.
If this were true, I would say to go for it - we need more "gansta" types to die in this county. But alas, many annoyingly live on, instead, clogging our nation's jails, and then going on welfare when they get out, living far too long to be of any use to anyone. The "live fast, die young" theory has one huge hole in it - not enough die young.
No, the real danger is you living too long - which happens with surprising regularity. You outlive your money, and end up on welfare or trying to get by on Social Security - wishing you had planned better for the future.
And you could have. But chose not to.
And choosing not to save on the grounds that "the system is stacked against you" is nonsense - and often just an emotional justification to do something stupid like buy a new Camaro.
But if we go to our compound interest calculator, you can see that if you make an average salary (in this country, about $50,000 a year) for 45 years (a working lifetime) and invest about 10% ($5000) you will end up with about $1,046,193.36 by retirement.
You can play with the numbers all you want - your actual return on investment is likely to be higher. Maybe you cannot afford to invest as much. But over time, you will save an enormous amount of money if you choose to do so.
But you have to choose to save, over having Cable TV. You have to choose to save over having a new iPhone. You have to choose to save over having an Abercrombie t-shirt, or a new Scion, or some other foolish purchase.
Many people chose not to save. I know I made some bonehead choices at that age - choosing a motorcycle over investing. Choosing to buy a brand-new economy car, over the paid for car I already had, or even a secondhand car that would have cost half as much to own.
And I regret those decisions, as they cost me a lot of money, detracted from my peace of mind at the time, and degraded my overall net worth, cumulatively. And let me tell you, it is far better to have money in the bank and peace of mind than a new economy car in your driveway.
I was lucky in that I ended up doing well in Real Estate and had a decent career in the law. I was able to salvage my finances. Others don't have those choices. The poorer you are, the more important it is to choose well.
But of course, the poor make poor choices, in both senses of the word. And maybe there is nothing we can do to "save" them. They will get payday loans and title pawn loans and throw money at clapped-out used cars that they paid too much for, until they park the carcass on their front lawn. They are not very bright, which is why they end up poor.
But if you are a fairly smart person making a middle-class salary, there is no reason you should end up stupid and poor - unless, of course, you follow the siren song of the media to consume more and more. Or, if you listen to your broke and brain-dead friends who buy new cars and show off their smart phones and ridicule you for brown-bagging your lunch.
If you listen to them - and assume that spending is good and having a lot of fancy crap is nice, and you believe their depressed thoughts that "the systems is stacked against you, so you might as well live for today" - then yes, you will end up poor.
And that is the beauty of the thing. It is all a choice you make, and you make alone. No one forces you to buy a Scion and pay thousands a year to insure it at age 24. But the car companies have entire lines of cars targeted at the youth market because they know that 20-somethings are idiots when it comes to money, and will spend it all trying to "look cool". Who in their right mind would buy a Hyundai Veloster?
There are, of course, ways to live well, on not a lot of money. You can buy a secondhand Miata and pay cash, for a lot less than a $20,000 Scion or Hyundai - and cut your insurance costs in half. And you will have a lot more fun. That's just an example.
These are the choices we make, in everyday life. You choose badly, bad things happen. Most people choose stupidly.
You'll have to pardon me if I don't feel sorry for folks when they make poor choices. Why is this? Because no one ever felt sorry for me when I made bonehead choices. And I made a lot of them!
8 Temmuz 2012 Pazar
Saving versus Investing
To contact us Click HERE
Saving and Investing are two different things....
As I noted in Real v. Fake Investing, a lot of people obsess about where to invest, not how to invest. They think the name of the game is finding the secret key - the winner stock - putting down a bet and then winning the lottery when it pays off.
And yes, when I was in my 20's, I thought that, too. Why? Because I watched a LOT of television, and that is all they preach on television. The shouting guy says "buy" and "sell" as if those decisions will make you rich. And the shouting guy is dead wrong - as his record attests to. Invest using his advice, and you will be broke.
There is a difference between SAVING and INVESTING, and for most middle-class Americans, the best we can do is to SAVE.
Why is this? And what is the difference between the two?
Well, SAVING, as the name implies, means putting money aside for a rainy day. That rainy day could be your retirement, or perhaps an emergency fund. Or money to buy a car, or fix your roof. If you set money aside for these inevitable contingencies, you will have it when you need it - as opposed to borrowing it and paying interest, or worse yet, being broke later in life.
As I have noted before, the bulk of the money you end up with in your 401(k) will likely be the money you put in it. Sad, but true. So the more you put in, the better off you will be.
True, you might be able to double or triple your money, over time. In a good market, you might double your money every seven years. But then you will hit a bad market (as we have) and be lucky to break even for a few years. Over time, you will do well, of course - provided you SAVE.
INVESTING, as the name implies, is taking a pile of money and using it strategically to make more money. This requires some knowledge on your part - some smarts - as well as insight. But most of all, it requires that you are willing to assume some risk - often a lot of it.
If you SAVE money, there usually is little risk. You put money in an FDIC insured account, or into blue-chip stocks, or government bonds, and other relatively safe investments. The worst that can happen, usually, is that your gains don't keep up with inflation.
With INVESTING, however, you can lost some or all of your money and end up broke. You buy a speculative stock, and it gets hammered, you might lose half your investment. It goes bankrupt, you lose it all. And in the last few years, this has happened to me, only with stocks that at one time, would have been considered "blue chip" - such as General Motors.
Over time, of course, you can't afford not to invest at least a little bit. But what do you invest in? If you are an average, middle-class American, you have no special insights into the market (and no, what you hear on TeeVee, shared with 300 Million other people, is not a special insight).
You can try stock-picking. It is not a swell idea. Why? Because even if you spend hours researching a stock, there is someone else who spends days, weeks, and years doing it. There is a guy who does nothing but watch that stock. You can't beat him.
And my own experience with stock-picking reflects this. Some of my best "picks" were embarrassing accidents. Some of my thoughtful choices went bankrupt. I bought $3000 of General Motors Stock, and it is now gone forever. I bought $750 of Avis stock, while intoxicated, on a whim, and it soared to $12,000 in value. I bought stock in a company called Morningside, and it shot up 50%. Great insight? Hardly. I mistook the company for a different one with a similar name. Duh.
You might as well go to Vegas. My portfolio of "picked" stocks is doing OK, overall, only because I have diversified it to include corporate bonds, income-producing stocks (that pay dividends) and some blue chips. It isn't making a lot of money - but it isn't losing any. Perhaps I am making 5% a year, if that. I could make more, but can I afford the risk?
So what else is there to do? Ahhhh.... Mutual Funds! These were touted to us in the 1980's as the answers to all our prayers. Really smart guys who know about stocks would take our money an invest it for us. And in return, they get..... well, some of our money. How much? I can't tell you. No investment adviser, even the ones at Fidelity, can tell me how much they make and where they take the money out.
The fellow at Fidelity - which is one of the better companies - says they don't charge me fees. But someone is paying for that glass-paneled office and that oak desk. By August 1, 2012, we are supposed to get statements from our Mutual Fund companies, detailing exactly how much they are making from our money. I am willing to bet they try to obfuscate this data as much as possible.
Some funds are more egregious that others, of course. Some take out 5% up front, and it can take you a year or more just to break even. Others take out fees every year. Some do both. It is never clearly explained or understood.
The bottom line, is, though, if your money makes 10% in the market, you are going to get something less than that.
But all that being said, Mutual Funds are, in some regards, the only game in town, particularly if you are investing (or is it saving?) in a 401(k) plan.
Of course, there are other ways to "Invest" - such as in your own business. I invested in Real Estate back in the 1990's because I felt that at least it was something tangible that I understood and could control. And knowing the market and property values, as well as how to manage the properties, I did pretty well.
Others, who got into the market late, and who didn't understand the market, values, or management, lost their shirt. These are the types of "Fake Investors" who just buy whatever is being hyped on television. And they always lose their shirts. They buy Facebook stock. They buy Gold. They buy Apple - after it has shot up in price.
So what is the answer? I wish I had one - a sexy answer that was simple and unique and clever, and guaranteed to make you a pile of money over time. But there isn't one. There is no Genie or magic lamp.
The best you can do is to SAVE money, and invest some of this in a variety of things, putting no one big chunk into any one thing, unless it is a very, very safe investment. Warren Buffet can afford to gamble a million dollars - we can't.
And do the research on your investments, or at least try to. But part of this research is learning about companies and what balance sheets should look like, as well as understanding all those numbers such as P/E ratio and the like. Quite frankly, most people don't have the capacity to really be able to understand investments and accurately and correctly distinguish between a "good" investment and a "bad" one.
And to some extent, this is why our 401(k) system is ultimately flawed. By turning us all into investors we are being asked to so something we have no skills at. And for many people, this will work out horridly. It is a given that a few folks will put all their money into high-risk investments and likely lose it all and end up destitute. A few others might "strike it rich" or at least do moderately well, over time. The bulk of us, if we are lucky, can only hope to do "OK".
And that is assuming that all these people SAVE in the first place - in order to INVEST. A startling number of Americans have not even bothered to SAVE at all - or have saved very little. Investing in the wrong stocks or funds is one way to possibly end up broke. Failing to SAVE, however, guarantees this result.
And perhaps that is the most fundamental difference between SAVING and INVESTING.
Saving and Investing are two different things....As I noted in Real v. Fake Investing, a lot of people obsess about where to invest, not how to invest. They think the name of the game is finding the secret key - the winner stock - putting down a bet and then winning the lottery when it pays off.
And yes, when I was in my 20's, I thought that, too. Why? Because I watched a LOT of television, and that is all they preach on television. The shouting guy says "buy" and "sell" as if those decisions will make you rich. And the shouting guy is dead wrong - as his record attests to. Invest using his advice, and you will be broke.
There is a difference between SAVING and INVESTING, and for most middle-class Americans, the best we can do is to SAVE.
Why is this? And what is the difference between the two?
Well, SAVING, as the name implies, means putting money aside for a rainy day. That rainy day could be your retirement, or perhaps an emergency fund. Or money to buy a car, or fix your roof. If you set money aside for these inevitable contingencies, you will have it when you need it - as opposed to borrowing it and paying interest, or worse yet, being broke later in life.
As I have noted before, the bulk of the money you end up with in your 401(k) will likely be the money you put in it. Sad, but true. So the more you put in, the better off you will be.
True, you might be able to double or triple your money, over time. In a good market, you might double your money every seven years. But then you will hit a bad market (as we have) and be lucky to break even for a few years. Over time, you will do well, of course - provided you SAVE.
INVESTING, as the name implies, is taking a pile of money and using it strategically to make more money. This requires some knowledge on your part - some smarts - as well as insight. But most of all, it requires that you are willing to assume some risk - often a lot of it.
If you SAVE money, there usually is little risk. You put money in an FDIC insured account, or into blue-chip stocks, or government bonds, and other relatively safe investments. The worst that can happen, usually, is that your gains don't keep up with inflation.
With INVESTING, however, you can lost some or all of your money and end up broke. You buy a speculative stock, and it gets hammered, you might lose half your investment. It goes bankrupt, you lose it all. And in the last few years, this has happened to me, only with stocks that at one time, would have been considered "blue chip" - such as General Motors.
Over time, of course, you can't afford not to invest at least a little bit. But what do you invest in? If you are an average, middle-class American, you have no special insights into the market (and no, what you hear on TeeVee, shared with 300 Million other people, is not a special insight).
You can try stock-picking. It is not a swell idea. Why? Because even if you spend hours researching a stock, there is someone else who spends days, weeks, and years doing it. There is a guy who does nothing but watch that stock. You can't beat him.
And my own experience with stock-picking reflects this. Some of my best "picks" were embarrassing accidents. Some of my thoughtful choices went bankrupt. I bought $3000 of General Motors Stock, and it is now gone forever. I bought $750 of Avis stock, while intoxicated, on a whim, and it soared to $12,000 in value. I bought stock in a company called Morningside, and it shot up 50%. Great insight? Hardly. I mistook the company for a different one with a similar name. Duh.
You might as well go to Vegas. My portfolio of "picked" stocks is doing OK, overall, only because I have diversified it to include corporate bonds, income-producing stocks (that pay dividends) and some blue chips. It isn't making a lot of money - but it isn't losing any. Perhaps I am making 5% a year, if that. I could make more, but can I afford the risk?
So what else is there to do? Ahhhh.... Mutual Funds! These were touted to us in the 1980's as the answers to all our prayers. Really smart guys who know about stocks would take our money an invest it for us. And in return, they get..... well, some of our money. How much? I can't tell you. No investment adviser, even the ones at Fidelity, can tell me how much they make and where they take the money out.
The fellow at Fidelity - which is one of the better companies - says they don't charge me fees. But someone is paying for that glass-paneled office and that oak desk. By August 1, 2012, we are supposed to get statements from our Mutual Fund companies, detailing exactly how much they are making from our money. I am willing to bet they try to obfuscate this data as much as possible.
Some funds are more egregious that others, of course. Some take out 5% up front, and it can take you a year or more just to break even. Others take out fees every year. Some do both. It is never clearly explained or understood.
The bottom line, is, though, if your money makes 10% in the market, you are going to get something less than that.
But all that being said, Mutual Funds are, in some regards, the only game in town, particularly if you are investing (or is it saving?) in a 401(k) plan.
Of course, there are other ways to "Invest" - such as in your own business. I invested in Real Estate back in the 1990's because I felt that at least it was something tangible that I understood and could control. And knowing the market and property values, as well as how to manage the properties, I did pretty well.
Others, who got into the market late, and who didn't understand the market, values, or management, lost their shirt. These are the types of "Fake Investors" who just buy whatever is being hyped on television. And they always lose their shirts. They buy Facebook stock. They buy Gold. They buy Apple - after it has shot up in price.
So what is the answer? I wish I had one - a sexy answer that was simple and unique and clever, and guaranteed to make you a pile of money over time. But there isn't one. There is no Genie or magic lamp.
The best you can do is to SAVE money, and invest some of this in a variety of things, putting no one big chunk into any one thing, unless it is a very, very safe investment. Warren Buffet can afford to gamble a million dollars - we can't.
And do the research on your investments, or at least try to. But part of this research is learning about companies and what balance sheets should look like, as well as understanding all those numbers such as P/E ratio and the like. Quite frankly, most people don't have the capacity to really be able to understand investments and accurately and correctly distinguish between a "good" investment and a "bad" one.
And to some extent, this is why our 401(k) system is ultimately flawed. By turning us all into investors we are being asked to so something we have no skills at. And for many people, this will work out horridly. It is a given that a few folks will put all their money into high-risk investments and likely lose it all and end up destitute. A few others might "strike it rich" or at least do moderately well, over time. The bulk of us, if we are lucky, can only hope to do "OK".
And that is assuming that all these people SAVE in the first place - in order to INVEST. A startling number of Americans have not even bothered to SAVE at all - or have saved very little. Investing in the wrong stocks or funds is one way to possibly end up broke. Failing to SAVE, however, guarantees this result.
And perhaps that is the most fundamental difference between SAVING and INVESTING.
Savings versus savings
To contact us Click HERE
You can't have Savings without savings. Huh?
I received two inquiries recently, that I think have the same answer.
The answer is the same - saving money so you have Savings.
The word "Saving" is confusing. It has at least three meanings (English is a hard language to learn!).
First, when we go shopping, you see signs that say "Sale, 50% Off! Great SAVINGS!" But of course, you are not really "Saving" anything, you are SPENDING, and the price discount is just a price adjustment to market value. Remember that: Nothing is sold in the marketplace for less than market value. By definition, when an item is sold in the market, its price IS market value. But the point is, stores use (or misuse) the term "Saving" in the context of price reductions. It is one definition of the word, but a poor definition.
There are two other definitions or usages of the term "SAVING" as well. We talk about "Saving" money in a Savings Account at the bank. This usage of the term is fairly straightforward - Savings are money that is retained - the difference between your income and your expenditures. Most Americans have no Savings - or very little. And that is sad. And they have no Savings for a reason, as we shall see.
There is a third definition as well - cutting budget expenses from your life. If you get rid of Cable Television, you are "saving" $100 - in a very real sense. Unlike the grocery store, which screams at you that you are "saving" 50 cents on a jar of pickles, when you cut out expenses entirely, you are really making a "savings" in your life.
And with that "savings" you can put money into "Savings". And in fact, in order to have "Savings" you must first create "savings". Oh, but this gets confusing!
Perhaps we should distinguish the two, as we did with millionaire versus Millionaire - by capitalizing one.
So, let's call "Savings" with a big-S, the money you have in the bank, in your Savings Account.
And let's call "savings" with a small-s, the money you cut from your budget.
Now it is a little clearer when I say that in order to have Savings, you must create savings!
In a way, it is like the Federal Budget (or the way it should be). If you cut taxes a dollar, you have to cut expenditures by a dollar. The Republicans failed to do this, for eight years. The Democrats, of course, have hardly done any better. Both are to blame for not finding savings to create Savings.
In other words, if you want to start to accumulate money you need to spend less than you earn. This is the big problem - the big nut to crack - for most people. Most of us start out spending every dime we make, and thus have no Savings.
We then try to save up some money in our Savings Account, only to find out at the end of the month that we have bills to pay. So we cash in our Savings - or worse yet, rack up debt - and end up nullifying our efforts.
The easiest way to Save (big-S) is to save (small-s). In other words, if you want to Save up $100 in your Savings Account, you must first find a $100 savings in your budget.
It is as simple as that. Unless you have savings, there will be no Savings. And I know this firsthand, and also because I have seen others do it. Joe Paycheck decides he is tired of being broke all the time and wants to have "money in the bank" - so he decides to get a Certificate of Deposit and plunks down $1000 at his local bank.
Problem is, there is nowhere in his budget where that $1000 could have come from. His pattern of spending is that he spends every penny he makes. Without first finding $1000 in spending cuts, he will be out of money before the end of the month.
And he is. So he puts more and more expenses on his Credit Card, until that starts a running balance, and he ends up deeper and deeper in debt.
And you see this with 401(k) plans. Joe Paycheck decides he's going to Save up a lot! He opts for a full 15% deduction from his paycheck! A great sentiment, but first you have to find the savings to put into Savings. That first paycheck rolls around, and Joe is short of cash - so he puts his lunch on a credit card (instead of brown-bagging it) and debt accumulates.
Find the savings first, then put the money into Savings. Pretty simple concept - but it eludes most of us.
I know that as a younger man, I would sign up for a Savings plan, and not think about where the money would come from in my life. I though I would just "adjust" somehow, and spend less, without making any real concrete plans. You can guess how that worked out - Badly.
Now some folks take the wrong lesson away from this - they assume they "can't afford to Save" merely because they refuse to save. And you see this, as the gas station, when Thelma roars up to the pump in her clapped-out Saturn, runs into the store, uses a $3 ATM machine to get $20 cash, buys cigarettes, a soda-pop, chips, and a lottery ticket, and then pumps $5 in gas into her old heap. If you asked her, she is "living paycheck to paycheck" and "can't afford to save!"
But cutting out ATM fees alone would make a hefty pile of savings she could put into Savings.
And that was the point of my "Can You Really Afford It?" posting. We think we can spend up to our income, but unless we are funding our Savings, we really can't.
Finding savings to create Savings, however, can be a fun game to play. Give up your daily Starbucks habit and put $5 a day into a jar. At the end of the month, put that $150 into your Savings account or your 401(k). Cut the Cable TV and set up an auto-pay in your checking account to put the same dollar amount as your cable bill into a Savings or investment account. You won't miss the money, because your net cash-flow will be the same and you won't be hurting for money, because you have budgeted for Savings by making savings in your budget.
And so on, and so on. Having Savings requires sacrifice - making savings. But doing one can be rewarded with the other.
If you just try to "Save" without making corresponding cuts in spending your Savings plans will be derailed in short order. If you have tried to Save in the past - without saving first - you probably had that frustration - "why is it so had to Save?" we say. But you can't Save money, without cutting spending first - by the same amount - to create a savings in your budget.
So, if you want to start Saving - start saving. Does that make any sense?
You can't have Savings without savings. Huh?I received two inquiries recently, that I think have the same answer.
First, a young person wanted to know how to go about starting to invest.
Second, another person was asking, if they gave up credit cards, how they could feel "secure" if an emergency came.
The answer is the same - saving money so you have Savings.
The word "Saving" is confusing. It has at least three meanings (English is a hard language to learn!).
First, when we go shopping, you see signs that say "Sale, 50% Off! Great SAVINGS!" But of course, you are not really "Saving" anything, you are SPENDING, and the price discount is just a price adjustment to market value. Remember that: Nothing is sold in the marketplace for less than market value. By definition, when an item is sold in the market, its price IS market value. But the point is, stores use (or misuse) the term "Saving" in the context of price reductions. It is one definition of the word, but a poor definition.
There are two other definitions or usages of the term "SAVING" as well. We talk about "Saving" money in a Savings Account at the bank. This usage of the term is fairly straightforward - Savings are money that is retained - the difference between your income and your expenditures. Most Americans have no Savings - or very little. And that is sad. And they have no Savings for a reason, as we shall see.
There is a third definition as well - cutting budget expenses from your life. If you get rid of Cable Television, you are "saving" $100 - in a very real sense. Unlike the grocery store, which screams at you that you are "saving" 50 cents on a jar of pickles, when you cut out expenses entirely, you are really making a "savings" in your life.
And with that "savings" you can put money into "Savings". And in fact, in order to have "Savings" you must first create "savings". Oh, but this gets confusing!
Perhaps we should distinguish the two, as we did with millionaire versus Millionaire - by capitalizing one.
So, let's call "Savings" with a big-S, the money you have in the bank, in your Savings Account.
And let's call "savings" with a small-s, the money you cut from your budget.
Now it is a little clearer when I say that in order to have Savings, you must create savings!
In a way, it is like the Federal Budget (or the way it should be). If you cut taxes a dollar, you have to cut expenditures by a dollar. The Republicans failed to do this, for eight years. The Democrats, of course, have hardly done any better. Both are to blame for not finding savings to create Savings.
In other words, if you want to start to accumulate money you need to spend less than you earn. This is the big problem - the big nut to crack - for most people. Most of us start out spending every dime we make, and thus have no Savings.
We then try to save up some money in our Savings Account, only to find out at the end of the month that we have bills to pay. So we cash in our Savings - or worse yet, rack up debt - and end up nullifying our efforts.
The easiest way to Save (big-S) is to save (small-s). In other words, if you want to Save up $100 in your Savings Account, you must first find a $100 savings in your budget.
It is as simple as that. Unless you have savings, there will be no Savings. And I know this firsthand, and also because I have seen others do it. Joe Paycheck decides he is tired of being broke all the time and wants to have "money in the bank" - so he decides to get a Certificate of Deposit and plunks down $1000 at his local bank.
Problem is, there is nowhere in his budget where that $1000 could have come from. His pattern of spending is that he spends every penny he makes. Without first finding $1000 in spending cuts, he will be out of money before the end of the month.
And he is. So he puts more and more expenses on his Credit Card, until that starts a running balance, and he ends up deeper and deeper in debt.
And you see this with 401(k) plans. Joe Paycheck decides he's going to Save up a lot! He opts for a full 15% deduction from his paycheck! A great sentiment, but first you have to find the savings to put into Savings. That first paycheck rolls around, and Joe is short of cash - so he puts his lunch on a credit card (instead of brown-bagging it) and debt accumulates.
Find the savings first, then put the money into Savings. Pretty simple concept - but it eludes most of us.
I know that as a younger man, I would sign up for a Savings plan, and not think about where the money would come from in my life. I though I would just "adjust" somehow, and spend less, without making any real concrete plans. You can guess how that worked out - Badly.
Now some folks take the wrong lesson away from this - they assume they "can't afford to Save" merely because they refuse to save. And you see this, as the gas station, when Thelma roars up to the pump in her clapped-out Saturn, runs into the store, uses a $3 ATM machine to get $20 cash, buys cigarettes, a soda-pop, chips, and a lottery ticket, and then pumps $5 in gas into her old heap. If you asked her, she is "living paycheck to paycheck" and "can't afford to save!"
But cutting out ATM fees alone would make a hefty pile of savings she could put into Savings.
And that was the point of my "Can You Really Afford It?" posting. We think we can spend up to our income, but unless we are funding our Savings, we really can't.
Finding savings to create Savings, however, can be a fun game to play. Give up your daily Starbucks habit and put $5 a day into a jar. At the end of the month, put that $150 into your Savings account or your 401(k). Cut the Cable TV and set up an auto-pay in your checking account to put the same dollar amount as your cable bill into a Savings or investment account. You won't miss the money, because your net cash-flow will be the same and you won't be hurting for money, because you have budgeted for Savings by making savings in your budget.
And so on, and so on. Having Savings requires sacrifice - making savings. But doing one can be rewarded with the other.
If you just try to "Save" without making corresponding cuts in spending your Savings plans will be derailed in short order. If you have tried to Save in the past - without saving first - you probably had that frustration - "why is it so had to Save?" we say. But you can't Save money, without cutting spending first - by the same amount - to create a savings in your budget.
So, if you want to start Saving - start saving. Does that make any sense?
Health Insurance Refund
To contact us Click HERE
If you pay your own health insurance premiums, you may get a nice check in the mail this year.
The GOP continues to pound the Affordable Health Care Act, even if most of its provisions have yet to go into effect. Now we are told that the "fine" for not buying health insurance is "the biggest tax increase ever! Ever, ever, ever!" You know, the GOP in describing tax increases always reminds me of a five-year-old boy describing a circus. They are prone to exaggeration.
Tax or fine, take your pick. But it is a voluntary tax if it is one - if you choose not to buy health insurance. And their math on the "biggest tax increase ever! (Ever, Ever, Ever!)" is based on the flawed concept that ever single person in the United States who doesn't presently have health care coverage will pay the fine instead of buying coverage.
Um, that is sort of a deception, isn't it? And what did I say about people who lie to you? Yup, the relationship will go downhill from there.
But in addition to this horrible fine, and the gadwful prospect of not being excluded from a policy due to "pre-existing conditions" and of course the nasty prospect of allowing your children to remain on your policy to age 26, is another horrific nightmare of the Affordable Health Care Act - your refund.
Yes, you will likely get a refund check, if you have been paying your own health insurance premiums over the years. How much is anyone's guess, and it will depend on your insurer, and how much money the insurer pays in overhead and profits, versus actual health care:
Pretty interesting, huh? Basically, what they are doing is taking health care and making it like a regulated utility. You can make money, but only so much. And since only 20% of your income can be used for overhead and profits, it puts real pressure on the insurance company to squeeze overhead.
Of course, it might work out the opposite way. If the spend MORE on health coverage, they can make more money. So there is an incentive to "up sell" the customer for more care, so that they can charge higher premiums, and thus make more money. The more medical services you receive, the more money you make. This could backfire in a big way - it does not encourage people to rationalize their own use of medical care. The hypochondriac is now the insurance company's best customer!
Perhaps that is why the nation's insurance companies are in favor of this new law....
But all that being said, I am not sure the alternative is any better. Remember, we've had the alternative, for decades now, and seen how it works. And no, I am not voting for "trust me, I'll fix everything, but I won't go into detail how." I know a pig-in-a-poke when I see one.
Note: It appears that my refund will not be very large, as Blue Cross is already a very efficient company. Others, such as Humana, will be handing out larger checks.
If you pay your own health insurance premiums, you may get a nice check in the mail this year.
The GOP continues to pound the Affordable Health Care Act, even if most of its provisions have yet to go into effect. Now we are told that the "fine" for not buying health insurance is "the biggest tax increase ever! Ever, ever, ever!" You know, the GOP in describing tax increases always reminds me of a five-year-old boy describing a circus. They are prone to exaggeration.
Tax or fine, take your pick. But it is a voluntary tax if it is one - if you choose not to buy health insurance. And their math on the "biggest tax increase ever! (Ever, Ever, Ever!)" is based on the flawed concept that ever single person in the United States who doesn't presently have health care coverage will pay the fine instead of buying coverage.
Um, that is sort of a deception, isn't it? And what did I say about people who lie to you? Yup, the relationship will go downhill from there.
But in addition to this horrible fine, and the gadwful prospect of not being excluded from a policy due to "pre-existing conditions" and of course the nasty prospect of allowing your children to remain on your policy to age 26, is another horrific nightmare of the Affordable Health Care Act - your refund.
Yes, you will likely get a refund check, if you have been paying your own health insurance premiums over the years. How much is anyone's guess, and it will depend on your insurer, and how much money the insurer pays in overhead and profits, versus actual health care:
The nation’s health insurance companies will refund approximately $1.1 billion dollars to their customers this summer. It’s one of the new benefits of the health care reform law.
The U.S. Health and Human Services Department expects 12.8 million Americans to get some of this money – although in the majority of cases that refund will be sent to employers.
Under the Affordable Care Act, health insurance companies are required to disclose how much of your premium dollar they actually spend on health care and how much they spend on administration, such as salaries and marketing. In the past, consumers did not have a right to this information.
But here’s the real game-changer: The 80/20 rule. If the insurance company spends less than 80 percent of premiums on medical care it must rebate the excess. For large group plans (the kind provided by companies that employ 50 people or more), health insurance companies must spend 85 percent of the premiums on medical care.
Pretty interesting, huh? Basically, what they are doing is taking health care and making it like a regulated utility. You can make money, but only so much. And since only 20% of your income can be used for overhead and profits, it puts real pressure on the insurance company to squeeze overhead.
Of course, it might work out the opposite way. If the spend MORE on health coverage, they can make more money. So there is an incentive to "up sell" the customer for more care, so that they can charge higher premiums, and thus make more money. The more medical services you receive, the more money you make. This could backfire in a big way - it does not encourage people to rationalize their own use of medical care. The hypochondriac is now the insurance company's best customer!
Perhaps that is why the nation's insurance companies are in favor of this new law....
But all that being said, I am not sure the alternative is any better. Remember, we've had the alternative, for decades now, and seen how it works. And no, I am not voting for "trust me, I'll fix everything, but I won't go into detail how." I know a pig-in-a-poke when I see one.
Note: It appears that my refund will not be very large, as Blue Cross is already a very efficient company. Others, such as Humana, will be handing out larger checks.
What comes easy is usually horribly bad for you.
To contact us Click HERE
What comes easy is usually horribly bad for you.
In another posting, I noted:
It makes sense, if you think about it. Think about things that are fun to do and easy and pleasurable. Are they good for you?
Just about any time someone offers you instant gratification, it usually comes with strings attached - usually to your wallet.
Now think about things that are good for you. They are all HARD to do!
If you think about this for a minute, the answer to getting ahead is simple: Just do hard things. Take Calculus instead of Sociology. Eat a salad instead of a Big Mac. Drink water instead of Lite Beer. Go for a walk instead of watching TeeVee. Drive the speed limit instead of racing everywhere.
Of course, that goes against the American way, these days. We are told that lazy thinking is the way to to - blame your problems on immigrants, or the opposing party, or whatever. Nothing is your fault. You should not only not work hard - you should have it easier. That is the message we are getting.
But I think on a personal level, it pays to "do the hard thing" in the long run.
Originally posted October 29, 2011. Updated July 6, 2012
What comes easy is usually horribly bad for you.In another posting, I noted:
"What comes easy is usually horribly bad for you - just think about it for a second."And as I typed those words, I thought to myself, "Gee, that was actually a profound thought, Bob!" Maybe there is a generalization we can make here. Things that come easy in life are bad for you, and things that are hard to do are good for you. Maybe this provides a simple road-map to happiness.
It makes sense, if you think about it. Think about things that are fun to do and easy and pleasurable. Are they good for you?
1. Fast Food
2. Booze
3. Easy Sex
4. Drugs
5. E-Z Financing
6. Buy Now - Pay Later!
7. Put temp tags on it and drive it home tonight!
8. Nothing-down mortgages, Variable Rate Mortgages
9. Spending money
10. Watching TeeVee
Just about any time someone offers you instant gratification, it usually comes with strings attached - usually to your wallet.
Now think about things that are good for you. They are all HARD to do!
1. Work
2. Exercise
3. Eating Right
4. Not cheating on your spouse
5. Not drinking too much
6. Saving money
7. Reading a Book
8. Learning
9. Spending Less
10. Delayed Gratification
If you think about this for a minute, the answer to getting ahead is simple: Just do hard things. Take Calculus instead of Sociology. Eat a salad instead of a Big Mac. Drink water instead of Lite Beer. Go for a walk instead of watching TeeVee. Drive the speed limit instead of racing everywhere.
Of course, that goes against the American way, these days. We are told that lazy thinking is the way to to - blame your problems on immigrants, or the opposing party, or whatever. Nothing is your fault. You should not only not work hard - you should have it easier. That is the message we are getting.
But I think on a personal level, it pays to "do the hard thing" in the long run.
Originally posted October 29, 2011. Updated July 6, 2012
Western Union Scams
To contact us Click HERE
Any time someone asks you to send money by Western Union, chances are, it is a scam.
I wrote before about PayPal. It is not a bad service, although the fees are very high. How high? Well, one of the founders can now afford to build spacecraft. That high.
But a funny thing - when PayPal became popular, the government freaked out, claiming that it would be a conduit for money to be sent to Terrorists. And they forced PayPal to jump through a number of hoops to prevent this from happening.
In fact, our entire banking system has been crippled by a number of regulations regarding the international transfer of money. Try sending a wire from your bank sometime - it is damn near impossible, without giving them a set of fingerprints.
I once went to the bank to send a wire transfer, and they refused to do it, because I forgot to bring my driver's license. Even though the manager of the bank knew me personally, they needed a driver's license. Even though there was a photocopy of my driver's license in their files with my last wire transfer, they wouldn't do it.
The wire transfer clerk, a recent Arab immigrant wearing a hijab, no less, explained to me that they couldn't be too cautious because I might be sending money to terrorists. Irony, no? (I switched my business to another bank that kept all my credentials in a file, and I could wire money with a fax and a phone call. Still a pain, but less so that being interrogated by someone who barely speaks English).
So, sending money from one person's bank account (which can be traced to an individual) to another bank account overseas (again, which has a name attached to it) is a "loophole" that needs strict regulations to be closed up. Well, OK, I guess.
So, while the U.S. Government cracks us up to Paranoia Code Level Orange, (what ever happened to that, anyway?) over sending money overseas, they leave one huge-ass gaping hole in our financial system - a Wild West free-for-all where you can pretty much do whatever you want, legal or illegal, with no consequences whatsoever and send money anonymously anywhere in the world, irrevocably and with no way of tracing it.
And yes, I am talking about Western Union.
Almost every scam on eBay, Craigslist, or on the Internet in general, involves Western Union in some form or another. And when you talk to the Police (as I have) they throw up their hands and say, "Well, what can we do?" - as if we are helpless to regulate a U.S. Corporation involved in the money-laundering business.
For some reason we can regulate PayPal, but not Western Union.
What does this mean for you, the consumer? Well, never, ever use Western Union, ever.
Unless you are an illegal Mexican migrant trying to wire money home to Cuernavaca, there really is no legitimate reason to use Western Union.
And if someone asks you to wire money by Western Union - even if you think it is someone you know, chances are, it is a fraud.
THE PROBLEM IS THIS: Once you wire money via Western Union, it is gone, gone, gone, for good. You can never get it back, ever, ever, EVER! And no, there is no secret "code" that the recipient needs to get the money. That is a lie they use to get to you send money.
How many Western Union scams are there? How many stars are in the sky? And every day, a new scam comes up. What do they all have in common? Western Union.
If you want to avoid a scam, avoid Western Union, it is as simple as that. As soon as anyone asks you to wire money via Western Union, just walk away and assume it is a scam as 99.999999% of the time you will be right.
"Well," you say, "what about that other 0.0000001% of the time?"
You really don't understand the laws of probability, do you?
Here are some Western Union scams that I am aware of. Like I said, there are new ones cooked up every day. Often the amounts of money can be very small - a few hundred dollars or so. Bear in mind that $400 is a lot of money to someone in Russia or Somalia. Moreover, multiply that by 100,000 victims, and it adds up to millions of dollars, over time.
Don't be a chump!
The list goes on and on. The common denominator? Western Union.
So, one way to avoid these scams is to just walk away when you hear the words "Western Union".
You would think, wouldn't you, that Western Union would realize that their business is being used to propagate these sorts of scams, and take some measures to prevent them. But they don't. Legitimate or Scam, Western Union makes money either way - and is never liable for the consequences.
You would also think that the government, after giving PayPal and our Banks such a hard time about wiring money overseas, would close this loophole in our financial system. You might as well put a sign over every Western Union saying, "Terrorists and Criminals Welcome Here!"
But alas, we cannot rely on the government to protect us from criminals (although that is supposed to be one of the primary functions of government, right? Today, more than ever, "criminals" are being defined more as people who oppose the government, rather than people who try to victimize its citizens).
What we can rely upon, however, is our own common sense. If you hear the words "Western Union" just assume you are being conned.
Because you are.
Any time someone asks you to send money by Western Union, chances are, it is a scam.I wrote before about PayPal. It is not a bad service, although the fees are very high. How high? Well, one of the founders can now afford to build spacecraft. That high.
But a funny thing - when PayPal became popular, the government freaked out, claiming that it would be a conduit for money to be sent to Terrorists. And they forced PayPal to jump through a number of hoops to prevent this from happening.
In fact, our entire banking system has been crippled by a number of regulations regarding the international transfer of money. Try sending a wire from your bank sometime - it is damn near impossible, without giving them a set of fingerprints.
I once went to the bank to send a wire transfer, and they refused to do it, because I forgot to bring my driver's license. Even though the manager of the bank knew me personally, they needed a driver's license. Even though there was a photocopy of my driver's license in their files with my last wire transfer, they wouldn't do it.
The wire transfer clerk, a recent Arab immigrant wearing a hijab, no less, explained to me that they couldn't be too cautious because I might be sending money to terrorists. Irony, no? (I switched my business to another bank that kept all my credentials in a file, and I could wire money with a fax and a phone call. Still a pain, but less so that being interrogated by someone who barely speaks English).
So, sending money from one person's bank account (which can be traced to an individual) to another bank account overseas (again, which has a name attached to it) is a "loophole" that needs strict regulations to be closed up. Well, OK, I guess.
So, while the U.S. Government cracks us up to Paranoia Code Level Orange, (what ever happened to that, anyway?) over sending money overseas, they leave one huge-ass gaping hole in our financial system - a Wild West free-for-all where you can pretty much do whatever you want, legal or illegal, with no consequences whatsoever and send money anonymously anywhere in the world, irrevocably and with no way of tracing it.
And yes, I am talking about Western Union.
Almost every scam on eBay, Craigslist, or on the Internet in general, involves Western Union in some form or another. And when you talk to the Police (as I have) they throw up their hands and say, "Well, what can we do?" - as if we are helpless to regulate a U.S. Corporation involved in the money-laundering business.
For some reason we can regulate PayPal, but not Western Union.
What does this mean for you, the consumer? Well, never, ever use Western Union, ever.
Unless you are an illegal Mexican migrant trying to wire money home to Cuernavaca, there really is no legitimate reason to use Western Union.
And if someone asks you to wire money by Western Union - even if you think it is someone you know, chances are, it is a fraud.
THE PROBLEM IS THIS: Once you wire money via Western Union, it is gone, gone, gone, for good. You can never get it back, ever, ever, EVER! And no, there is no secret "code" that the recipient needs to get the money. That is a lie they use to get to you send money.
How many Western Union scams are there? How many stars are in the sky? And every day, a new scam comes up. What do they all have in common? Western Union.
If you want to avoid a scam, avoid Western Union, it is as simple as that. As soon as anyone asks you to wire money via Western Union, just walk away and assume it is a scam as 99.999999% of the time you will be right.
"Well," you say, "what about that other 0.0000001% of the time?"
You really don't understand the laws of probability, do you?
Here are some Western Union scams that I am aware of. Like I said, there are new ones cooked up every day. Often the amounts of money can be very small - a few hundred dollars or so. Bear in mind that $400 is a lot of money to someone in Russia or Somalia. Moreover, multiply that by 100,000 victims, and it adds up to millions of dollars, over time.
Don't be a chump!
1. Secret Shopper Scam: You see a website, or a Craigslist Ad, or get an e-mail saying that a company needs "secret shoppers". Such jobs are very, very rare, and usually they do not solicit strangers for this task. All Secret Shopper ads or promotions can be safely called as scams. Some ask you for money for "training" - others ask you to go to Western Union.
They may send you a cashier's check and ask you to cash it - and then wire the money to someone else, as a "test" to see how the customer service at Western Union is. The Cashier's check is fake, or course. It bounces, days later, and you may be out thousands of dollars. Not the bank, YOU. And you have no recourse but to pay it.
Another gag is to ask you to pick up a wire from Western Union, then go to another branch and wire most of the money to another person, usually overseas. You get to keep a small amount. While you may not lose money this way, you are acting as a mule for the Russian Mafia, Al Qaeda, or whatever.
Money laundering, what's not to like? Except jail, of course.
2. Lost Tourist: You get an e-mail from someone you know, or sort of know. They are in Europe on a short "break" (a term foreigners use for "vacation" - a tip-off right there) and have lost their wallet, or are under arrest, or whatever. They can't contact their family for some reason (too embarrassed, phone broken, whatever) and cannot contact their bank. They need money right away! Can you please wire them $500?
So you do, and think you are being a good Samaritan. On the way back from the Western Union office, you stop for gas and see the "Lost Tourist" filling his car up. What gives?
Well, of course he wasn't lost. Someone hacked his e-mail account and sent a broadcast message to everyone on his contacts list. And you bit on it. And somewhere in Europe (London is a usual target, home of many Muslim Terrorists) you've made someone very, very happy. You may have help fund terrorism!
Smart Move!
3. Car Scam: You see a really nice car that is worth $10,000, for sale for $5,000. You e-mail them, and for some reason, they take two days to respond (always). They make the pitch - the car is an estate sale or they just want to "get rid of it quickly" because of some story (Being deployed to Afghanistan, the latest gag). If you can wire them a $500 deposit - or even the whole $5000, they can hold the car for you.
They will claim you can put a secret "code" on the wire transfer, so if you are not happy with the car, they cannot claim the money, unless you send this "code". There is no such "code" - at least not that Western Union recognizes. The recipient can pick up the money, period.
(Think about it, if there was some "secret code" you could just wire the money, get the car and never send them the code! Why no just agree to wire the money when the car is received? Same difference. But secret codes sound so much more intriguing to the plebes).
Of course, there is no car. The person posting the ad doesn't live in America, like they claimed, but lives overseas and just "scraped" the photo from some other car ad site. You send the money, you never hear from them again.
4. Puppy Scam: Same deal as the car scam, but with designer dogs. A $1500 to $2500 purebred puppy is for sale! But the pitch is, they are getting out of the business or some such nonsense, and will send you the dog for FREE, if you will pay for the shipping (via airline). Just go to Western Union and wire them $450, please!
Again, there is no dog, just a photo of someone's pet they put in the ad. And they live overseas. They might use a "mule" to collect your wire, in Cleburne, Texas, and then re-wire it to the Russian Mafia from a Western Union in nearby Mineral Wells, Texas. You are out $450 and the Police cannot catch these people. I know this, as I have talked to them.
5. Certified Check Scam: See #1 above. The con artist sends you a certified check. The context for this could be varied. For example, it could be for the "Secret Shopper" scam outlined above, or if you are selling your car.
In the car scam, they send you a cashier's check for more than the sales price, and then ask you to wire the money via Western Union to a third party, ostensibly for shipping or some other reason.
Again, the money you wire is gone right away. The cashier's check bounces and you now owe the bank thousands of dollars.
The list goes on and on. The common denominator? Western Union.
So, one way to avoid these scams is to just walk away when you hear the words "Western Union".
You would think, wouldn't you, that Western Union would realize that their business is being used to propagate these sorts of scams, and take some measures to prevent them. But they don't. Legitimate or Scam, Western Union makes money either way - and is never liable for the consequences.
You would also think that the government, after giving PayPal and our Banks such a hard time about wiring money overseas, would close this loophole in our financial system. You might as well put a sign over every Western Union saying, "Terrorists and Criminals Welcome Here!"
But alas, we cannot rely on the government to protect us from criminals (although that is supposed to be one of the primary functions of government, right? Today, more than ever, "criminals" are being defined more as people who oppose the government, rather than people who try to victimize its citizens).
What we can rely upon, however, is our own common sense. If you hear the words "Western Union" just assume you are being conned.
Because you are.
7 Temmuz 2012 Cumartesi
Make Your Vacation Property More Profitable
To contact us Click HERE
Summer is here and it is in full swing. As a vacation property owner you need to maximize your return on your investment. This means finding ways to save and cut costs were you can. For those of you who own property in hot climates one easy simple to save money is to install low E window film on your windows that are exposed to heavy and direct sunlight.
Direct sunlight can heat up a home very quickly and allowing the full brunt of that light to travel through your window and to heat the interior of your home only makes it more difficult to keep it cool.
Ivacationonline online property owners are all over the US in areas such as Florida, Alabama, Mississippi, Georgia, Arizona, South Carolina and other typically warm states. These areas see sunshine typically all year and having a quality window tint can save you thousands in the long term.
First it will lower you cooling bill starting the very first day it is installed. You can pick the level of darkness of the film. 50% - 60% is normal. This reduces the suns rays but still allows natural light in. By reducing the sun light and lowering the strain on your AC unit to try to keep the home cool, you prolong the life of your AC unit, once again saving you money.
Here is one hidden benefit of window tint, it helps prevent fading of curtains, furniture, carpet, and other materials inside your home or condo.
One last point to cover is to check with your local power company or local government agency to see if they are offering a rebate to you for using window tint. Gulf Power in the Panhandle of Florida offers a rebate and it is not a drop in the bucket. A typical house can get $200-$300 back for using a certified window tint.
RSS our blog to get more information on renting your property and maximizing your profits from ivacationonline.com your property management software website.
Best Holiday Rentals Listings Sites Survey 2011
To contact us Click HERE
COHR recently conducted a survey of Holiday Rentals Owners to find which Holiday Rentals Listings Sites gave them the most bookings in 2011.
Perhaps not surprisingly, the bigger sites came out best in the survey.
Owners voted Homeaway as the best site overall, with 19% of Holiday Rentals Owners saying it gave them the most bookings. VRBO was only just behind with 18% of Owners saying they received most bookings on the VRBO site. Flipkey was third with 14%, a strong finish for a site that it definitely emerging as a major player in the Holiday Rentals by Owner industry.
Given the consolidation that has been going on in the Holiday Rentals marketplace, it is perhaps no surprise that 5 of the top 9 sites are owned by the Homeaway group. These are Homeaway, VRBO, Homelidays, Ownersdirect and Vacationrentals.
There were also two sites owned by Tripadvisor in the top nine i.e. Flipkey and Holidaylettings.
Among Free Holiday Rentals Listing Sites, Vacationrentals411 (18%) was the narrow winner over Adventurepads (17%). Vacationrentals411 was also the only free site to make the top nine overall sites.
(There were two sites that offer free trials that featured in the top nine: Flipkey and VacationHomeRentals .)
However, it was interesting to note that 26% of Holiday Rentals Owners said that they either don't use Free Holiday Rentals Listings sites or that they don't get any bookings from them.
You can find the full survey results on All Holiday Rentals Best Holiday Rentals Listing Sites Survey 2011 .
Google Data on Online Travel
To contact us Click HERE
12 Days of Deals - It's the holiday season and Homeaway are giving you 12 reasons to celebrate! Starting Cyber Monday, Nov 28th. Ends Dec 13th.
Google presented some interesting data on Online Travel at a recent Vacation Rental Manager Association’s Annual Conference in Orlando.
1. Vacation Rentals Search:
Searching for Vacation Rentals online is becoming more popular. Specifically, there has been 42% year on year growth for popular vacation rental queries at Google.com. There has also been 34% growth in overall travel terms over the same time period.
This is good news for vacation rental owners and indicates that the market is continuing to grow.
2. Travel Decision Making:
When making a decision, travellers in 2011:
read email from a travel company (27%)
used a search engine (85%)
searched online hotel reviews (49%)
read online travel reviews (37%)
read online comments (25%)
The importance of online vacation rental Reviews continues to grow. Although many vacation rental owners have mixed feelings about this trend, it is clear that vacation rental owners with a lot of (good) reviews will benefit in terms of increased bookings. Interestingly, 67% of travellers say they trust online reviews as much as word of mouth!
3. Travel Purchase Timeframe and Planning Window:
Although there will always be last minute bookings, most travellers began thinking about the travel purchase at least one month before taking their trip. The breakdown is:
More than 6 months (37%)
4-6 months before (8%)
2-3 months before (24%)
1 month before (21%)
3 weeks before (10%)
Again, this is good news for Vacation Rentals Owners, as it allows time to make arrangements for advance payment, key pick up etc etc.
4. Use of Mobile for Travel Search:
The use of Mobile in travel search is exploding and Google estimate that there will be
29.7M mobile travel researches by 2012 in US alone.
At the moment, 19.5% of Google queries in the hotel and accommodations category are on a mobile phone. There has been a 377% of year-over-year increase in query volume and an
844% increase in click volume in the last year.
The increase has been even more pronounced for Vacation Rentals, with Vacation Rental an increase 2 times the volume increase for general travel.
Intreresting to note that 9 out of 10 searchers have taken action as a result of a smartphone search. With almost 50% of Americans having a Smart phone by the end of the year, this is becoming increasingly important.
5. YouTube and Travel :
At the moment, 40% of all web traffic is online video and Google estimate that 90% of all traffic will be online video by 2014..
Increasingly, travel enthusiasts watch online video:
62% of travel enthusiasts watch online video on YouTube
70% of travel enthusiasts watch video watch when choosing a travel destination
69% of travel enthusiasts watch video watch when choosing accommodations in a destination
Hence, it might be worth posting a video of your vacation rental home!
5 Tips to Select the Right Mix of Vacation Rental Sites
To contact us Click HERE
VRBO Special Offer: Sign up for a 12 month listing and get your 13th free with VRBO.com. Use code CJQ4
$25 OFF 12-month fees at HomeAway.com when you enter code G307.
With the new season approaching, now is a good time to review your choice of vacation rental listing sites.
Most vacation rental owners use multiple vacation rent listing sites, including both paid and free sites. But how you select those sites can make a big difference to the number of enquiries and bookings you receive.
Here are my five tips for getting more bookings by broadening your base of vacation rentals sites.
1. List on at least 3 and preferably 5 paid listing sites.
Most of your bookings will come from established vacation rental sites. Most of these sites (with the exception of free trial periods, which I will come back to) charge for your listing, usually somewhere between $100 and $300 per annum. Depending on the size and number of vacation properties you own, spending up to $1,000 per year on marketing is a reasonable amount that will pay back with increased bookings.
I would suggest you start with the winners of the AHR Best Vacation Rental Sites to find some of the leading sites.
2. Choose vacation rental sites that are complementary.
Different vacation rental listing sites appeal to different demographics. You should carefully consider the mix of sites on which you list.For example, in my view, you should certainly choose at least one of the very large sites (e.g. Homeaway ). Being present on these large sites give you access to the many thousands of renters who search the vacation rental listings on these sites every day. Because these sites are so large, you may want to consider paying a premium to ensure you get the best placement possible. You also should make sure you understand how to improve your ranking in searches (e.g. Homeway allows renters to search by how recently availability was updated).
To complement your listing on such a large site, also list on at least one niche site that focuses on your particular geography or property type. For example, if your vacation home is in Spain, consider choosing a vacation rental site that specialises in Spain, such as Spain-Holiday.com. If you own a high end Villa, consider listing on a site that focuses on expensive Villas e.g. VIPVillas.com . Specialist sites such as these attract different renter traffic than the large sites and hence any enquiries you get are likely to be from a different pool of renters than the large vacation rental sites.
To further broaden your reach, consider adding a site that attracts renters from a specific geography. For example, if you have a vacation property in the US and are listed on Homeaway, you might also want to list on a site that attracts renters from the UK that are interested in travelling to the US e.g. Holiday-rentals.com .
3. Take Advantage of Free Trials
There are several sites that offer limited free trial periods, such as VacationHomeRentals or Rentalia . These are usually well established sites, but less well known that the very large sites. They hope that you will receive sufficient renter queries during the trial period to convince you to sign up for a full listing.
4. Take Advantage of Completely Free Sites.
There are a large number of free sites out there. Some of them, such as Adventurepads , are very well established and are a very good source of potential bookings. Others are new and offer free listings in order to build up the number of vacation homes listed with them. These may not offer immediate bookings, but could do so in the future.
I recommend that you list on at least 5 and preferably 10 free sites. Other than the time and effort to create your listing, there really is no downside. You can find a good list of free sites on AHR Free Holiday Rentals Sites
5. Track the performance of the sites you are listed on
I would recommend that you keep track of the source of all bookings and enquiries that you receive. At least once a year (preferably around the time of renewal of your paid sites), you should rank and evaluate the vr sites you are listed on. My recommendation is that you change at least one site each year, just so that you can continue to find the best mix of vacation rentals sites for your vacation home.
Finally, if you are looking for new sites, you should check out the COHR home page.
4 Tips for Converting Vacation Rental Enquiries into Bookings
To contact us Click HERE
Save $75 on new annual vacation rental listings at HomeAway.com with coupon code: FEB75. Offer valid 2/15 to 2/29.
Buy a 12 month listing on VRBO and get the 13th month free. Use coupon code CJQ4.
Many renters are now planning their summer vacations and hence most vacation rental owners will see a big increase in enquiries during the March - April timeframe.
However, how you handle these enquiries can make a big difference to the number of enquiries that actually convert into bookings for your vacation rental.
Here are 4 tips to increase your "conversion rate" of enquiries into bookings:
1. Respond quickly: it may seem obvious, but the quicker you responsd, the more likely that the renter will consider your vacation rental property. (Some time ago, Rentalia completed a survey which showed that only 25% of owners on their site responded within 48 hours.) By responding quickly, you get a head start in capturing the attention of the renter and agreeing a booking with them.
2. Phone the renter: Most owners respond by email and there are some good reasons for this. However, if you take the time to phone the renter, not only can you immediately answer their questions but you also have a chance to make a personal connection with them. This will make your vacation rental property stand out from other responses, giving you a higher chance of taking a booking.
3. "Sell" your rental property in your response: Whether your response is by email or phone, you should take the opportunity to re-enforce all the good reasons why the renter should choose to rent your vacation rental property. I am amazed at the number of owners who simply respond with "Yes, my property is available for those dates for $xx." Your response to an enquiry gives you a chance to make your property stand out by highlighting the unique features of your property, whether that is location, unique amenities etc etc. This is particularly important given that many of the vacation rental sites offer renters the facility to easily enter the same enquiry to multiple properties. You want to make sure that your response really stands out.
4. Be flexible on price: Particularly in the current environment, renters want to feel they are getting a good deal. The absolute price might not be the final determinant as much as whether the renter feels they have negotiated a good rate. I have noticed that I have a higher conversion rate if I indicate in my initial response that I am offering a special rate. Also, if the renter asks for a discount, I usually try to offer something, either a discount or a free extra night. Hence, I set my "list price" rates slightly higher, with this in mind. This give me the flexibility on price for cases where this will help secure the booking.
Best of luck with bookings for the coming season!
Kaydol:
Kayıtlar (Atom)