Wise Bread (Jabulani Leffall)

Could the Chromebook Crush Windows?

Jabulani Leffall — Tue, 07 Jun 2011 09:36:15 +0000

It isn’t until your laptop temporarily becomes a useless brick than you begin to take a step back and look at how technology works. If you’ve ever found your PC or iMac not working because you needed to reinstall the operating system, perhaps the concept of planned obsolescence has crept into your head. (See also: Make Your Computer Faster Instead of Buying a New One)

If you’re not familiar with planned obsolescence, it’s an idea that's built into the life-cycle of most of our technology — basically, designing products and applications with a limited shelf life.

But will Google change that with its new Chromebook? The Chromebook has an operating system and browser in one, which means it enables a user to surf the web and house applications (such as word processing, spreadsheets, media player functions, etc.) and files on a server somewhere you’re not. This way, if your laptop becomes a brick because your Windows, Mac OS X, or other proprietary operating system is on the fritz, you can always access your files on another device — your phone, another laptop with Internet access, or even your desktop at work.

Google's Chromebook laptops — from Samsung and Acer — will be available June 15 and are priced between $349 and $500. This price is comparable to buying an operating system alone out-of-the-box and having to upgrade, and considerably less expensive than outfitting a PC with no software package at all. For those willing to try out Microsoft Office-like web apps such as Google Docs, or who just need web surfing and e-mail capabilities, the price is a steal. The Chromebooks are cheaper than iPads, most fully-loaded smartphones iPhones, and most PCs.

Even better, because Chrome is a web-based OS and browser in one, the system will update itself for free. Google makes most of its money off of search and web surfing, which is why the hardware with a dual core processor is the only hard cost here for individuals. (For businesses, a $28-per-month subscription fee dwarfs Windows' and Apple's license renewals and hardware upgrades.)

It's a welcome prospect as none of the "software" features coming with the Chromebook (in theory) would require a trip to a big box retailer where guys wearing polo shirts would charge you more money than you need to pay to fix your computer.

Of course, the opportunity cost here is that while the Chrome operating system is “free,” it takes up your free time in learning about it, to gain the technical savvy required to break the chain to Steve Jobs and Bill Gates.

That said, it’s important to look ahead to the possibility of increased adoption of technologies like the Chrome OS. After all, how many of us have felt like dopes when we've waited too long to upgrade our operating systems and realized how much it would now cost to do so? A lot of us (raising hand right now), I’d wager.

Written by Jabulani Leffall and published on Wise Bread. Read more Technology articles from Wise Bread.

Don't Buy Memories, Make Them

Jabulani Leffall — Fri, 10 Dec 2010 14:00:09 +0000

I'm all about cheap, or at least cheaper, gifts this holiday season. Further still, I'm all about creating gifts that actually last in value and relevance past the next news cycle, and I'm really "bout it, bout it" when it comes to gifts my toddler son won't have broken and be crying over by December 26.

This year I thought of something to give him that could address all of those concerns. Here's the backstory:

Lexington I. Leffall, my first-born masculine child, loves things that move: planes in the sky, big trucks that rumble and grumble, and trains that have gone from being "choo choos" to "train trains" and now just plain "trains."

But what he has the most affinity for is buses. His first complete sentence, coming at about 16 months, was not a sentence but a musical phrase yelled out at an ear-bleeding level: "ALL THROUGH THE TOWN." (He had a musical yellow bus with a red button on it, that when pressed, it blurted out this song.)

And all through the town — and country — we went together. We moved on airplanes, buses, trains, and trollies in my native Los Angeles, Washington D.C., Chicago, parts of New Mexico, San Diego, and New York City. Peering out of the window, his eyes were illuminated with the type of joy, wonder, and intrigue that evokes envy in a grown man with "real-world" issues, wishing I could be as passionate about something this little guy is about things that move.

Wherever we go, Lex grabs all the brochures from the buses and trains, attempts to read them, plays with them, and calls out the stops as if he is the driver, conductor, or operator. He has dozens and dozens of brochures from a half-dozen cities.

So this year I cut, pasted, and stenciled. With the help of a craft enthusiast, I created a masterpiece of memories: a scrapbook called "Lexington's Book of Buses, Trains, and Trollies." (Shhhhhhhhhhhhh, don't tell him; it's for Christmas). It takes a little time, effort, and creativity for that person you love and care about. But scrapbooks are a great way to preserve memories, especially for little ones who still get thrills from just looking at pictures of the things they love, whether they're buses or butterflies.

If you think scrapbooks are corny or time-consuming, or you don't know where to start, there are sites such as Scrapbook.com that can stoke the fire.

So "scrap" the wonton consumerism and hit the books, so to speak. If you already have pictures, old magazines, or in my case, bus brochures, the source material is free. The cost of an album or book and materials is nominal at $20 to $45 compared to (insert the price of whatever hot doo-hickey here) that will be obselete by Boxing Day.

Sure, you'll get a few other trinkets to play with, champ, but I hope you like you big book, Lex!

I can't wait to see his face.

Written by Jabulani Leffall and published on Wise Bread. Read more Shopping articles from Wise Bread.

U.S. Banks and the Tokyo Drift

Jabulani Leffall — Thu, 21 Oct 2010 12:00:10 +0000

You already know the story, but perhaps it may happen again. It's that familiar.

A nation reeling from popped real estate and financial collapse mopes through a recession and struggles with a crisis of confidence, its president making pledges that everything will be okay.

It sounds like a broken record, doesn't it?

Well, except I'm talking about Japan and the president in question is not Barack Obama but Junichiro Koizumi, and the year in question was 2001, not 2010.

But it is 2010, and parallels to Japanese banking in the 1990s and our banks in the "oughts" now abound.

Four words: bad loans and deflation risk.

That's five words, but it's important to note that recently, U.S. banks such as BB&T and Sun Trust both set up special panels to explore potential exposure to deflation.

Deflation is the general decrease in the price level of goods and services across the board, usually due to a systemic downturn and the resulting desperate effort to cut prices to compete. Deflation also sometimes results from monetary policy that overdoes it in an effort to avoid inflation. Ironic, isn't it?

According to Reuters:

BB&T ran its books through a stress test to gauge the bank's performance in a scenario in which there is deflation for the next 10 years, as part of the bank's own internal projections of various economic scenarios, Chief Financial Officer Daryl Bible said."

Why does Japan in the 1990s keeps coming up?

At the outset of the U.S. crisis in early 2008, the American Enterprise Institute examined Japan's lost decade, about which the think tank says that an "economic cycle driven by a collapse in the market for an asset — such as land or housing — to which the banking system is heavily exposed is a dangerous beast."

That "dangerous beast" was Japan 20 years ago and it ended just 10 years ago. That dangerous beast could also loom here in the U.S. today. The common denominator: bad bank loans were, by and large, the culprit.

As the Reuters piece points out, Japanese banks discovered what is now known as the "lost decade"; deflation means that loan collateral values decline, exacerbating already under-performing loans.

The article goes on to say:

Loans may become more likely to fail, as borrowers tire of paying high rates of interest to finance assets that are worth much less than they had been previously. A second credit crisis could emerge."

If regional powerhouse U.S. banks such as Sun Trust and BB&T — both of which received TARP money and both of which are present in areas hit by rising foreclosures — are either thinking about or hedging against deflation, then it's only a matter of time before cheap money and sluggish economic growth increases the possibility of making widespread deflation an actual reality.

Indeed, the risk of continued deterioration of already bad loans continue to scare U.S. banks, which have a danger of falling further into hock on outstanding loans to say nothing of the continued "quantitative easing" at the U.S. Federal Reserve and currently low Treasury yield curves.

Who better to explain what might happen than Bank of Tokyo-Mitsubishi UFJ, Japan's largest bank and "lost decade–bad loan" poster child?

According to a Bloomberg piece earlier this summer, the bank's proprietary trading chief Kenichi Imai had this to say:

With the effect of government stimulus measures wearing off, the U.S. economy may face a prolonged soft patch, rather than a double bottom."

Soft Patch? Opposite of a hard patch? Flaccid? Sounds maybe a little bit, I don't know...deflated, even.

Let's hope not.

As Bill Isaac, chairman of LECG Global Financial Services and a former FDIC chairman, points out, deflation is not good given that U.S. banks are still assessing non-performing and under-performing loans and testing their balance sheets against deflationary scenarios.

Think you've heard this already? Just wait.

Written by Jabulani Leffall and published on Wise Bread. Read more Financial News articles from Wise Bread.

Is GDP Still Important?

Jabulani Leffall — Thu, 02 Sep 2010 12:00:12 +0000

Every pundit, politician, and economic forecaster (even smarmy financial dilettantes such as myself) have remarked that the recent recession was the worst economic calamity since the great depression.

It's a very dramatic, historic and urgent thing to say — something that you want to have on record that you said — if for nothing else than to be part of history.

Yeah, except it's dead wrong, in a manner of speaking. How would we know whether this past recession is actually the worst recession since the Great Depression? The measure of what is or isn't recession, Gross Domestic Product (GDP), wasn't even invented and implemented until after 1941. And wouldn't you compare it to other recessions, and not to the Great Depression, when there was no SEC, no Social Security, no FDIC no HUD, etc. back then?

So why is GDP so important? Or is it even important anymore? One critic of GDP, Alan Atkisson, even goes so far as to call GDP the "Manhattan Project of Economics."

I wouldn't resort to nuclear and apocalyptic allusions, but I will say that perhaps it's time to reevaluate how we measure economic growth and how we psychologically mind-bomb people by telling them that if there is no GDP growth they have to get scared.

In a nutshell, GDP measures economic growth based on production and consumption of goods and services, or to be more accurate, it is a measurement of "final goods and services officially made" quarter by quarter through a full calendar year.

I asked a friend, a former investment banker for Goldman Sachs and other institions, what he thinks of GDP. He said, "Ask yourself what we're 'officially making' in this country right now and you have my answer."

Elaborating further, he said the formula for GDP is flawed and has outlived its usefulness: Private consumption + Government Spending + (Exports-Imports).

What does that equal? Well in typical I-banker vernacular which I won't repeat here, he said the country, based on this formula of measuring economic health, is headed for the same fate as a nut or bolt twisted and fastened to a wall.

Alternative Measurements

Since I'm a solutions-oriented man, I won't spend the whole post whining. In that vein, there are three upstarts that could, should, or might make a run at the shiny title belt GDP now holds around its bloated consumption-dependent waist.

The Index of Sustainable Economic Welfare: Expenditures balance against mutually-assured environmental destruction.
The Genuine Progress Indicator (GPI): Production growth that actually demonstrates the betterment of human beings.
The Happy Planet Index (HPI): Are we happy with our stuff? Is killing the planet and contributing to standard of living inequities actually fulfilling in the long run?
Gross Personal Product (GPP): All of the stuff that we buy: plastics, deliberate obsolescence polymers, and really gross food packages that aren't biodegradable. Oh, and the sticky oil from the Gulf of Mexico — ewww, grosssss.

OK, so the "GPP" is something that you saw here first and exclusively (maybe) — I made it up. But doesn't it start with our personal attitudes? Are you tired of having your homeland measured by cold, impersonal, flawed statistical comparisons? What makes you happy: what you produce or what you consume?

I now leave you with the words of Simon Kuznet, commissioned by the State Department to study political economy in the late 1930s and early '40s and often considered the inventor of GDP. (Ironically, he then essentially said in the 1960s, "don't use this measure.")

Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what.

With pressing environmental concerns and an unsustainable economy based more than 70% on the consumption of stuff — more than 90% of which we basically don' t need — those "distinctions" that Kuznet spoke of are what we have to figure out as individuals and as a nation.

Written by Jabulani Leffall and published on Wise Bread. Read more Financial News articles from Wise Bread.

Who's Your Data? The Myths and Misnomers of Unemployment Figures

Jabulani Leffall — Sun, 13 Jun 2010 16:32:23 +0000

By now you probably know that data is a group of informational bits, facts, figures, ideas, quantities or patterns in behavior, collections of samples or a group of scientific measurements collected to show informational bits, facts, figures...etc. etc.

Yeah but did you know data is the plural of the Latin word datum?

Oh you didn’t care?

Okay I didn’t either until I found out. And it turns out that datum is seldom used because 1) The word data is so pervasive and 2) Datum by itself is boring and inconclusive. There’s nothing to compare a single datum to except other data.

You can’t have data without datum but without data, datum doesn’t make sense.

The same is true for analyzing that precious unemployment and labor data that comes out every week. Sure it may be enough for some to look at a fluctuation and see how many made a claim on lost jobs and look at the exact number the U.S. Department of Labor came up with to determine if it’s time to jump off a bridge or not but without context or comparative data more than "400,000 new jobs added" means jack sprat.

Case in point, with the latest unemployment figures that came out the week of May 30, we found that more than 400,000 new jobs were on the books. Good right? Well, turns out that some 360,000 of them were a result government jobs — temporary U.S. Census-related jobs to be exact.

More numbers will be out for the first week of June by the time you read this. And they will be crunched into contexted, rounded, shaped, seared, marinated for your taste buds.

Thus the truth, that you will hear nowhere but here, is that ambiguity is more useful in measuring true unemployment than any actual pinpoint numbers. But that’s too complicated isn’t it? It’s bad enough that some of us can’t find a friggin’ job so don’t go mucking with our data!

The reality is that because of the different classes of employment (skilled labor, non-farm labor, farm labor, seasonal, professional) and different types of unemployment (cylical, structural, classical, frictional) we can derive no stone or iron-clad figure but only make a guestimate that is based on unemployment claims-divided-by- workforce-equals-rounded-up-or-down unemployment rate.

Whew!

But these figures that are released every week to the delight or consternation of prognosticators, traders and financial market dilletantes, are really bogus in making any real predictions or decisions.

Why?

Well, because as this Wall Street Journal opinion joint points out, there are about six different data sets based on six different definitions of unemployment — that’s tons of data made of each individual datum if you will — which, given different variables, can put unemployment at as high as 16% but as low as 6% rather than the 9.7-9.9% range that it is these days.

This list of six read like German submarines and Irish rock bands:

U1: Percentage of labor force unemployed 15 weeks or longer.
U2: Percentage of labor force who lost jobs or completed temporary work. (Bono is employed though.)
U3: Official unemployment rate per ILO (International Labour Organization) definition.
U4: Workers who are fed up and not filing claims anymore or have had claims expire.
U5: People who picked up odd jobs and want to work and are available to work but realize they make more by filing unemployment or working in cash heavy businesses than they do by working at Taco Bell or Home Depot. These are defined as those who ”would like” to and are able to work, but have not looked for work recently per their state department of labor claim filing criteria.
U6: Part-time workers who want to step their game up but can’t because no one in their field is hiring full-time, the pay is not good, or the market is too crowded and therefore they don't try. Part-time is better than no time.

Based on these different definitions, one could go by many measures that incorporate census and claim data that is often old, incomplete or inconclusive, or all three by the time Katie Couric relates it to us.

As Alan Reynolds, a senior fellow at the Cato Institute and a much smarter man than I , points out, statistical voodoo is often used to make a weak job market look stronger or a stronger job market look worse than it actually is.

Talk about mucking with the data.

Then the spin starts and the market reacts based on incomplete math and unfinished bits of datum and the news people report with long faces and gloom and the sad jazz music plays on NPR based on another down day on the market. This, ladies and gentleman is the crucial weekly data that the movements of our stock portfolios are based on and our overall psychological profile is based on monetarily. So often our micro decisions are made based on incomplete findings, skewed survey sample, focus-group findings, polling, varying sample sizes, and findings that are either contextually dubious or outright wrong. This is the case with U.S. Department of Labor Jobless claims numbers and it's this misinformation, half-truth and piece-of-Apple-to-describe-an orange data that shapes poltical funding, economic forecasts and all of the jaw-dropping stuff that's reported in commoditized accounts on a daily basis by various outlets.

Good thing you make your decisions based on actual facts huh? Well do you?

Written by Jabulani Leffall and published on Wise Bread. Read more Financial News articles from Wise Bread.

Moments in the "Garden of Eatin"

Jabulani Leffall — Sat, 29 May 2010 17:00:03 +0000

I know what I’m doing differently this summer.

No, it doesn’t involve the length of my shorts or a different vacation destination. Instead it's something that I can do, every day and every week — at least in the wake of Memorial Day and up through Labor Day — and try to perhaps incorporate year around: eating better for much cheaper.

In the past couple of years, I’ve had a few culinary and nutritional epiphanies, but this past week, just before Memorial Day, the come-to-the-light moments were palpable, tangible.

Moment 1: I sat down as a guest at a house with enough room for a garden with my first born son and ate a fresh spinach and lettuce garden salad — literally from the backyard. It had just been walked into the kitchen and washed. As the fresh green vegetables pimp-smacked my taste buds into a preservative-free realm of sublimity, the four year old Leffall man-child pointed out the obvious: “This tastes different, Daddy.”

Yes son, it does and not only that, it tastes better and it’s better for us.

If you know me or you’ve read my posts on this site, you’ll know I’m not the “shockable” type. I believe in daily irony and find myself smirking at most things good or bad, but imagine my delight, experiencing something I hadn’t experienced in more than 20 years since Grandma’s garden in East Texas — an organic experience without the buzzword.

Yes, a fresh food experience — no pesticides, no transportation wear and tear, no artificial light, no plastic bags, no huge line at the grocery store, no skeptical eye. Suddenly I’d been transported to another time and at once enlightened about what I’ve been missing and doing wrong — even when eating right — for the past two decades.

Moment 2: A day later, I saw a segment on the Today show about the Dirty Dozen. Apparently the U.S. Department of Agriculture says apples, cherries, peaches, bears, raspberries, strawberries, potatoes and even my beloved spinach, are all on a list of 12 fruits and vegetables that should, if possible, be purchased organically because of (throaty gasp) higher levels of pesticide residue than others. Whaaaaa?!

Moment 3: Two days after that was a farmer's market visit. I discovered that Community Supported Agriculture (CSA) accounts for the farmer's market summer season, between Memorial Day and Labor Day. More on that in a minute but first a primer on my farmers market experiences.

My previous dalliances at farmer's markets were always in large urban centers, gawking at all the sunflowers and yes sun dresses, young people carrying Yoga mats and sampling wares from farms 2 to 8 hours away being hawked by mostly wholesalers with retail savvy and retailers of small outlying health food stores passing themselves off as farmers with farm fresh products.

As always, it was good to get outside, but similarly almost always a less than organic experience at these farmer's markets to say the least. And I always seemed to be out of cash, and it was a hassle to leave the market and go to the ATM and then come back.

But at this particular farmer's market last week, I talked to an actual farmer who hipped me to the concept of a CSA prepaid account and card. I could simply put $400 on a card and through 20 weeks of produce in the summer season, I would be spending $20 a week on fresh fruits and vegetables cultivated with homegrown seeds and organic pesticides extracted from flowers. If I didn’t want to do the $400, I could even get $50 gift cards and max those out, sparingly and gradually. I could even order ahead, get the amount deducted from my card and show up for express check out.

Soooooooooo…by the time you read this, I will have enjoyed some organic bok choy garnishing a local whitefish over a bed of wild rice. That head of bok choy was less than two bucks. In the store — and I checked — it’s five simoleons and I have no idea where it came from or what it went through, to boot.

The USDA estimates that Americans spends more than 30 percent of their monthly household budgets on food, with a national grocery bill of more than $2 trillion annually.

Based on that data, it’s likely that in the aggregate, over the average Memorial Day weekend alone, many families typically spend between $100 to $400 just for that holiday weekend on chips, hot dogs, and other wonderful American starches — not least because of the fact that demand spikes on weekends like that.

Yet $400 for the whole summer could get you fresh stuff — such as an organic ginger, lemon and cayenne pepper seltzer concoction that I picked up — and get the experience of tasting before you buy, talking to the person that grew it, saving some money and living better in the process. Whaaaaaa?!

I'm thankful and glad for these recent moments. Yeah, I definitely know what I'm doing differently this summer.

Written by Jabulani Leffall and published on Wise Bread. Read more Food and Drink articles from Wise Bread.

Financial Fear Factors

Jabulani Leffall — Thu, 27 May 2010 12:00:05 +0000

Have you seen the latest headlines: “market down on fears,” “fears stoke market decline,” or “fear pushes broader market down”?

Of course you have and in different forms, incessantly, constantly, for about the past three years.

Last year in a special report titled Greed and Fear: The Future of Finance, The Economist attempted to examine what caused the global recession and presented greed and fear in a chicken and egg scenario. What it always comes back to though is fear — this is where greed comes from — mostly fear that there will never be enough of something, whether tangible or emotional.

On a personal finance level, this fear has largely driven the collective consciousness into a manic-depressive cycle of frugality and then frugal fatigue, then exuberance and then recycle, repeat, rinse our fluctuating sensibilities.

Most of this was and is driven by fear of uncertainty, of not having, of being on the bottom of the economic wrung as it were. And it is fear that, if we’re not careful, will drive us out of our pragmatic middle ground when it comes to making financial decisions.

Case in point, this past fiscal quarter there were lines long lines for iPads and there were also long lines just for the chance to apply for job &mdash.

There are not many stories about financial maintenance or careful planning, because this is not sexy enough and this is part and parcel to our overall attitudes as collective consumers. The latest housing numbers, the latest crash, the latest interest rate hike or decrease, the latest this, the latest that.

Such now, now, now attitudes tend to foster more irrational fear and short-term euphoria than moves that will change thinking and subsequently, habits. Such is the juxtaposition of supply and demand and the gap between want and need in our still fragile economy.

There are rising corporate earnings but individual wages are flat. In fact, most economic data suggests that despite adjustments for inflation real income has been declining since the 1970s. Not enough to create jobs and sustain growth yet we are in a so-called recovery, which many forecasters say will be stunted by& many factors including, well, more fear.

Their combined debt tops $40 billion and the U.S. Labor Department expects 40 states to be in debt to the federal government by year's end, underscoring the labor market's problems in the deepest recession since World War II.

Yet Apple Inc. had a 90% gain in second-quarter profit and retailers have had a record 12-week rally in their share prices in anticipation of a recovering economy spurred by an increase in shoppers fearful about being caught without the latest trinket.

Fear it seems, is now a recession-proof business.

What juncture has all this fear of the unknown, fear of being destitute, fear of being ridiculed for not having brought us to when it comes to making our own financial decisions?

Like what has gradually been happening to the middle class, the middle ground of financial planning and preparation is also slowly disappearing.

What happened to the balance of hopes, expectations, and appreciation of possibilities with a realistic assessment of limitations? Were we ever at that point as a society? If we were, can we ever get there again?

The truth is that we can’t always defer gratification but we can’t always seize the moment. Yet our spending habits have us falling into these extremes, especially in these trying times.

So how do we overcome this fear? Here are five quick ways.

Know what you’re afraid of

Financial failure is often times an unavoidable if not an unpredictable thing but this does not make you a failure. What are you actually afraid of? Perceptions of others? Or loss of lifestyle? There’s an old saying that if money can solve all your problems, you’re doing fine. Thus, identify the source of your fear.

Know yourself

It’s never too late to change your spending habits or attitudes toward money as money is not like time in the respect that it can always be borrowed, earned back, come in a windfall or be procured by rebuilding your life or through hard work. What are you willing to take with you from a burning house and how does that inform your money attitude?

Do something

It doesn’t have to be money or work related, it doesn’t have to generate income initially. But take action, do something you enjoy for free first, get the blood pumping and the mind going about solutions. Go for a walk or run, go hear some music, pick up a book around your house and read, do some house work, take in a blog about overcoming your fears (smile). If you find yourself stuck in thought, move forward by doing something, anything to carry yourself forward from the stasis of fear. After all, if you’re behind on this bill or that bill and you don’t have the money, what can you do about it right now except move forward somehow? That constructive movement may just bring you to a resolution.

Produce what you consume and vice versa

If you’re generating $3,000 a month and spending $5,000 it probably isn’t that you’re not bringing enough in but there is a deficit of both money and even-minded thinking. You, like a good percentage of people in the rest of the industrialized world, are living beyond your means and beyond. When budgeting, separate the must haves, the could haves, the needs and the wants. Try an experiment that matches up every dollar you make with every dollar you spend, one for one. It will be fun and you might learn something about yourself.

Start planning

Living in the now is always the hardest part of overcoming fear about anything, especially fear of the lack of money or fear of being destitute, or even those unwarranted fears about social setbacks that stem from not having. Plan for the worst and expect the best. What is your most pressing financial fear? If it’s debt, shift your so-called “disposal income” to debt reduction or build a rainy day fund and don’t touch it.

Hope for the best and expect the worst. But being afraid isn't going to solve anything.

Written by Jabulani Leffall and published on Wise Bread. Read more Personal Finance articles from Wise Bread.

New Credit Card Rules: Who Really Benefits?

Jabulani Leffall — Wed, 24 Feb 2010 15:00:02 +0000

By the time you imbibe these words with your eyes it will be easier to pay your credit card bill, easier to run up your bill, and easier to absolve yourself the responsibility of charging your card to the max.

As a preface, some of the new credit card reform rules that passed earlier this week did eliminate some very annoying and predatory business practices designed to line the pockets of credit card companies, and that’s a good thing.

Practices such as randomly increasing interest rates on outstanding balances, double-cycle billing, or carry-over balance billing are shady at the very least and outright usury at the most.

That said, it's a misnomer to, for lack of a better term, bill this as a victory for the people, to label what is essentially a passive bailout, reform. Yes it’s a misnomer — not quite a farce, but the word reform is not quite accurate either.

Let’s look at some of the fine points of the ruling, which at the end of the day is really meant to encourage you to go back into the store to get the GI Joe with the Kung-Fu grip; or take that vacation that you can’t afford to take; or go ahead and charge that engagement ring because after all, the best things in life are free and diamonds are forever.

Credit card issuers can’t randomly or just up and slap new interest rates on you. This is good because you can pay your bill and budget when you can pay and how much you pay without having cartoon eyes in the next billing cycle.

Credit card companies must give at least a month and a half (45 days) notice of any changes in card terms. This is positive because cardholders who don’t like the new terms should do what they should in most cases do anyway — pay off the balance and cut the card up.

Cardholders cannot be charged over-credit-limit fees unless the cardholder authorizes an over-limit transaction. Unless it’s literally a matter of life or debt, this shouldn’t apply to you. You don’t need those new Jet Skis and it won’t kill you to keep paragraph-paragraph passing that Kindle until the price comes down.

Credit card companies must state their rules clearly and tell customers how long it will take to pay off their balance. This is good in spirit but any cardholder who says they read fully the terms of their card contract — that is unless they’re a lawyer or a scholar in the ancient language of Bureaucratese Latin — is fibbing, maxed out, or both. Nonetheless, the closer to plain English — probably won’t say “do not use this plastic card unless you produce more than you consume” — the better for “victims” who find themselves in the hole.

Card companies can’t push up rates in the first year. This leaves room for 45 days notice on increased rates and room for interest rates to go up in the second and third year to push interest up after you charged that electronic step ladder and later decided to hire a roofer.

Credit card payments that are more than the minimum must now to be charged to senior debt. This has nothing to do with High School, College, or Grand Slam breakfasts at Denny's. What it means is that the older or most pressing consumer debt with the highest interest rate will be where your $30 bucks on your $2700 balance goes, instead of just paying for interest and late fees. Like the “over-limit transaction” rule, if you’re a beneficiary of this you’ve already done way too much.

Credit card companies cannot charge interest if debt is paid on time. This is the most sensible rule of all, and shame on credit card issuers who were doing otherwise.

Issuers must get the signature of a parent or guardian when extending credit to consumers under the age of 21. This is a great idea but probably still won’t stop college kids from going to the ATM with their credit cards or using branded cards.

In the end, the Obama administration will get a pat on the back for fighting for the little guy, but these are new rules encourage you to come back once again and spend what you don’t have. They also don’t apply to what you’ve already spent, which you didn’t have.

Unfortunately, credit as originally intended, used to be a financial tool for the industrious, used for business growth, as a promissory note against gold or something tangible. This credit model is no more. There are credit markets where you can trade debt for debt ,even trade based on the probability that a third-party will be a deadbeat. Face value for face value is no more in this system of credit.

It used to be that credit was used as a deferred payment through promise designed to spur risk and motivate borrowers to produce. Now as our unemployment, savings rates, and consumer debt levels suggest, credit has in more modern times been used by the upper class to hold everybody for ransom. The upper middle and middle class have used credit to pay off other debt and laugh heartily at the neighbor who has the Range Rover 4.0 instead of the Range Rover 4.6. The lower middle class and working poor has used credit to float ourselves as we look for better opportunities or pay our way through college or look for a new job but still want to fell “alive” via our purchases and in some cases, unemployed nights on the town.

To be sure, these new rules may be a good crusade, but what many or perhaps not enough are wondering aloud, is whether the new rules will encourage the same behavior that made them necessary in the first place.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Social Media and Identity Theft in 2010

Jabulani Leffall — Tue, 05 Jan 2010 15:00:04 +0000

In the next few days and weeks you will be bombarded with things to watch for in 2010 — you know, lists and such.

They will detail ways to save, what the best vacation destinations are, who's hot and who's not — you know, the important stuff.

Most of this important stuff, such as this blog post for example, you may wish to share via a social networking site: Facebook, Twitter, LinkedIn, MySpace — you know, the important sites.

But hark, hark I say, these sites are actually important sites because millions use them. And millions such as yourself, will be vulnerable to scams, trickery and tomfoolery that will at best lead to some embarrassing hijacking of your page or computer and at worse, help a hacker dial down into what in the data protection world is called PII or personally identifiable information. We've covered a little bit of this in this blog but never enough.

Allow me to pose this question: Would you walk into a dark alley that says "Check out this really cool video of you and your friends"? Would you& trust a Bobby D. like character who says "I got some nice dresses for ya, right around the corner if you walk into that alley"? Would you walk into that alley with your ID in hand, brandished for all to see?

Of course not. You are, after all, kind of sane. I mean you're reading this aren't you?

Yet so many people want to check out those cool videos and see which designer dresses that Bobby Digital has for them every time they log on. Sure they'd skipped the dark alley but only to do the same exact thing digitally on Facebook, et. al, every single day.

This is why Antivirus software firms such as McAfee and Symantec both see 2010 as a breakthrough year for social media sites — wait for it — surprise, uhh yeah, a breakthrough in terms of them being attacked by hackers.

What's alarming, if not brow-raising, is that most of the hacks on your favorite social portals for posting, partying, pandering, pithiness, and persiflage will take place because you or someone you know, walked into that dark digital alley in search of fun, just curious and also just plain careless.

“Mostly it's the users in an individual or small business environment through carelessness,” said David Bloom, a Los Angeles-based consultant specializing in social media. “Like Pogo said, ‘We have met the enemy and it is us.

Indeed most hacker intrusions count on curious users who they can snare by simply having the users click on web links or log in via fake web pages that look like the homepages of the most popular social media destinations.

Spoofing, for instance, involves hackers sending you phony alerts or messages supposedly from your friends, or in the case of Twitter, followers. But once you click on them there’s the possibility of being re-routed potentially malicious sites or triggering automated viruses or remote code execution, which gives a hacker control of your browsing session.

Phishing, meanwhile, also counts on user participation but usually uses more familiar subject matter to users as bait. Users might get an “emergency” message, or a “video of you” from a friend. Another method is a fake error message from your social networking site requiring your action.

With Phishing, users are most often lured into clicking on a spoofed link or page such as fake web pages that look like home pages of trusted web sites — i.e. Facebook — where users unwittingly type in login information or click on page links.

By extension, links are becoming an important component of social networking security. Recently the heavy use of condensed URLs or web addresses (tinyurl and bit.ly) to post links on Twitter and Facebook has made easier to access or cut and paste into a web browser. On the flip side, the URL shorteners can also make it nearly impossible to identify the domain or origin. This increases chances of clicking on a spoofed or malicious link. Also, URL shorteners can also help spammers to evade spam filters installed on personal computers.

“Whether its tinyurl or bit.ly technology, users are getting into the habit of clicking links that they don’t know or trust,” says Corey Thomas, Vice President of Product and Operations for IT security firm Rapid7. “This makes it much easier for a hacker to highjack the target’s system. The most important thing in a situation like this is letting users know the potential risks of tiny URLs and that they should not be clicked on unless absolutely necessary.”

Someone can easily Tweet this blog and shorten the url from Wise Bread to something that looks like an algebra equation and bam you now have "nice dresses."

So remember this year as you give status updates on where you are and what size shoes you're wearing while sitting there, people, perhaps even the wrong people, will be watching and waiting.

Cue ominous musical score and ring in 2010 with vigilance.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Book 'Em This Season

Jabulani Leffall — Wed, 23 Dec 2009 15:00:03 +0000

We all remember where we were and what we were doing when we finished. We experienced the utter exhilaration, the awed silence, and the pining for more. It’s a personal experience that we have each shared over a duration of time and were better off for it, mostly. Either way, it leaves an indelible impression, evoking some sort of emotion, and spawning years worth of conversations.

I’m talking about reading.

Rarely in this day and age can you be this quiet and learned and intimate — the lost art that is a craft, one of the last crafts that delineates art.

Based on how quick the words Internet Column became Web logging and that turned into blogging, we all know reading is changing and changing rapidly. I was reminded of this the other day. In this vein, I spied a recent discussion thread on a popular social networking site — let’s call it libro de cara — where a nominally famous author and cultural critic said he was at a popular bookstore that rhymes with Carnes and Sobel and was perplexed about what to get for friends.

Being the mischievous twit that I am, I suggested he buy a Kindle, then invite 12 friends over, for some wine, cheese and a little paragraph-paragraph pass action.

No, No, that’s two paragraphs and you let go of it, it’s her turn — pass the Kindle before I get ugly off in here!

I pondered this in the context of the Holiday Season we are now embroiled in and I thought what better time to just give away a book for Christmas. Not buy one — give one away that you already have and preferably, have already read.

We all have a book sitting on our shelves that may or may not be in mint condition, but it may be in mint condition and if it is, then that’s all the better. But this book sitting on our shelves changed our thinking, made us more well-rounded, made us mad, made us idealistic, made us cynical, but in all ways it enraptured us.

Suggestion: If you care about a person or group of people, find some books that you’ve read and taken care of and write a personalized note.

Thought you might like this because…

You're never look at things the same after you…

I was such-and-such years old when I read this and I gotta tell you…

This is right up your alley, literally the story begins in an alley…

I’m talking about a book report, which is really the most original part of the gift. A book report, complete with the book itself, given to a grown person, impressionable teenager, spouse, office pal, whoever.

Give it away because with this nearly no-cost gift, it’s literally the thought that counts and if they read it, the impression will last longer than the new Halo or even that Pass-the-Kindle party you had — not to mention hundreds of dollars cheaper.

Here’s the deal: get a nice card and write a hand-written or neatly typed note, or make a book marker with a famous quote from the book or with a memory you shared with the gift recipient. Even better, if you have personal info and the person is a close friend, fill out a library card application and put it in the book. We all could use a trip there; they have DVDs and software rentals and Internet access for — gasp — free.

If you’re gonna book ‘em, here’s a tip straight from Colonel Obvious — the Capitan has been promoted — the book should be “pre-owned” and not “used” if you know what I mean. It should be classic and antiquated but not archaic and asbestos-laden with the pages of ears like Golden Retrievers. Moreover, an overabundance of highlighted sharpie notes, saying “I really like this part right here” and “I know riggggghhht,” are equally unacceptable. Also on the don’t-do-it list are literally swollen passages from when you thought it was cool to read under an umbrella in a warm thunderstorm.

The book ‘em initiative is really what the Holiday Season in general and Christmas is about — not just the giving of things, but of ideas, thoughts, experiences — things that make lasting impressions. It’s about transcending the temporary December 25-31 gratification and compulsory euphoria of most consumer goods.

Case in point, my son, who just turned four, four days before Christmas mind you, yawned when he got a new bike from me — literally yawned. But his eyes lit up like white-hot distance quasars when I gave him a considerably cheaper toy replica of a municipal bus line we’d rode out to the park one day, and an accompanying book full of pictures of buses.

That’s the spirit of this book ‘em initiative. I don’t remember half of what I got last year for Christmas, but I remember what I gave. I remember the priceless coffee table books and re-gifted children’s books that were passed to me over the years for Christmas, the ponderings they inspired, and how it feels to read that last sentence.

Feel me on this one people, I said, how it feels to read that last sentence — Happy Holidays.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Da' Buy World: Considering "Blue Saturday"

Jabulani Leffall — Sat, 28 Nov 2009 14:00:03 +0000

Looking for bargain prices on items you know you don't need is kind of like building man-made islands in the Persian Gulf and Indian Oceans in the shape of the world, hoping that people will buy them for millions of dollars and live on them, despite rising sea levels.

Let me say that with the exception of a pancake breakfast for my son, I boycotted Black Friday.

For this post, I had planned to bang out a cautionary tale about Black Friday. I was going to talk about the potential bait and switches — at least those that are on the surface.

You know buy one TV, get one free and it turns out that they give away your grandma’s wood TV to set the new TV on top of.

Or the suits, buy one get one free. Only they don’t tell you what you’re getting is a suit with a lapel so low Matlock could wear it and a style so played out that Sonny Crockett and Rico Tubbs would meet you in Miami with matching Ray-Bans with a string attached to them to put around your neck.

That’s all well and good — personal finance news you can use with some nods to 1980s crime and punishment dramas — quirky stuff.

But that’s not what I’m going to do now because not only has it passed by already but I’m sure you’ve read a thousand Black Friday “beat-the-house” stories.

Consider this a post mortem.

What I saw out of my two pundit eyes and my third analytical winker was a potential metaphorical Blue Saturday. Blue for an economy still under water worldwide, and blue for the genre of music you play when you're sad because you've spent or borrowed too much and can't pay your bills.

I look and I foresee many hangovers from the continual devil-may-care, spend-until-you-feel-better mentality that helped cause “The Great Recession.”

There were two Black Fridays, just in case you didn’t know.

Even as shoppers — many of whom are probably behind on their bills, jobless, nearly jobless or underemployed — crowded the malls, rich sheiks a world away scratched their heads and wrung their hands because they can’t pay their bills either.

Dubai World, the sovereign wealth fund, of one of the Middle East’s richest governments, is as much as $80 billion in debt and has asked its banks for a six-month stay of execution — so to speak — on about $59 billion in debt repayments.

Basically they’re saying they can’t pay for six months and they are “restructuring.” This news sent the stock of every major bank and real estate company in the world down last week and many of these banks, we will soon find out, are more exposed to a Dubai collapse than they care to admit.

Back to the mall.

Am I trying to hate on your new cashmere sweater or clearance sale pumps or new television you got to put on top of your old one? Am I hating on your new fancy phone?

Certainly not, I told you in my last post to suit up so I'm not railing against capitalism and I'm definitely not saying what to do. It’s your money and life; plus we all live with the wicked paradox of an economy predicated on its citizens buying things they don’t need to keep a consumer-based economy on life support.

Back to Dubai.

Dubai World’s restructuring will affect Japan’s real estate companies adversely. Japan has price deflation problems already and is the world’s second largest economy, and the Yen is creaming the dollar right now.

Are you seeing the outside correlation yet?

Financial patterns, we have found, as well as weather patterns, travel east and then around the world. This cold front is already spreading west. Closer to home, British banks could be exposed to Dubai to the tune of $50 billion or more and those banks are already in trouble to begin with.

And over the Thanksgiving Holiday, American banks with potential exposure in Dubai were eerily quiet — perhaps PR folks and executives were out on Michigan or Fifth Avenues.

Right now you’re saying to yourself: "Dubai World? Are you kidding me J, this doesn’t affect me one bit and why am I reading this?"

Fair enough, but let me close with a little more info on Dubai World.

Dubai World is famous for the ostentatious man-made island plots of land in the nearby bay and Indian Ocean that they made for no reason, thinking they would sell like man-made islands shaped like a map of the world or hotcakes.

Dubai World and the government that funded it, didn’t anticipate gluts in demand and didn’t anticipate this big of a margin call either. British banks weren’t thinking about it, neither were Japanese or Australian real estate companies, so why would you be?

And that’s the problem right there. It takes more downturns for people to look again and see that this is not a game and that if the decisions of a few are affecting the masses, the masses, who set the agenda as consumers and the labor force need to change spending habits and approaches to consumption.

But is that in the cards?

Like Dubai World, with its own form of hyper-flashy uber capitalism, American retailers are famous for the ostentatious man-made phenomenon known as “Black Friday” where retailers try to break even for the whole year in what is the start of what they hope will be a 45-day buying spree to push full-year earnings numbers up.

The retailers, like the shoppers they serve, are reacting, reaching for short-term gratification, trying to right the ship with the ring of a cash register. Meanwhile not many are anticipating ancillary forces which can’t be accounted for when everyone’s busy buying things that in many cases, they didn’t or don’t need just to feel better.

All this instead of improving our station, mentally. Setting financial goals or “Wise Breading,” as a verb, is about making the choice not only to be thrifty, but to use wisdom through experience and apply it in financial planning.

Yet a large part of the populous still remains visibly and invisibly chained to repeating self-destructive patterns, even amid the worst downturn in almost a century.

Ask yourself this: what do you think you’ll be pondering six months from now, when you look back on Black Friday of 2009?

Do you think it will matter a little, or a lot?

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

The Law (of) Suits: Insurance for Men

Jabulani Leffall — Thu, 05 Nov 2009 16:00:23 +0000

In this blog, on this site, I usually explore ways to think about spending rather than ways to actually spend. That’s not my blogcallojob (blog calling or job) to tell you how to spend.

But I’d like to pop a sales tag of conversation for fellow men, or women with fellow men in mind, reading this right now and speak plainly. I’m about to tell you how to spend money on something for which the worth cannot be measured.

It brings smiles, impromptu favors, more respect, more enigma, better service, attention — usually the right kind — and did I mention smiles and respect.

Not the automobile — the suit.

Recently I was riding home with a soon-to-be jobless, soon-to-be former colleague. One word: awkward.

But before he dropped me off, I asked where he was headed, and he said to the mall. And, curiously, making my own judgment on what one could be buying when one knows one won’t have a job, I ask, for what?

He says a suit.

A light goes on and I nod because it makes sense. I nod proudly, in fact, at him. I say to myself, smart man. I nod in whimsical favor because he’s thinking about investing in his future rather than moping over his present. I nod because he wants to plunk money down for something that in most cases brings the immediate return of self satisfaction as well as the intangible prospect of being in the right place and the right time, looking darn good.

He mentioned he didn’t want to “over do it” expense wise. Of course I understood that and then proceeded to rattle on about what could be done. I proceeded to monopolize the convo on what the pros and cons were of different aspects of suit procurement.

Suits, I don't remember saying but will say here, are like insurance for the professional and non-professional but skilled American man. They are insurance for the man who wants to make inroads into achievement and stand out with a statement on who he is when wearing that suit.

It’s like a financial plan: better to be impeccably prepared (overdressed) than woefully underdressed (unprepared).

Now let’s say you’ve paid your rent and gotten your groceries and have all your necessities and you’re a grown, able and responsible man with $300 to $500 and are in the market for a suit.

Okay, you’re like my friend. After asking him what he planned to spend, without revealing too much of the young man’s business, I went into a diatribe where I leaned back in the passenger seat and expounded wisdom using the famous pyramid hand gestures that most pseudo experts use on talk shows. This is the essence of what I said.

Suit up premium

Heck yeah: Classic is called classic for a reason. For instance, classic American clothier Brooks Brothers recently harkened us back to the era of smartly-clothed ad executives from the popular television series Mad Men. The classic look remains just that and outlasts any fashion week. Plus the clothes usually last longer and are of better quality.

Uhhh but wait: The issue here is that suits that are tailored to your specifications and/or made of fine fabrics from top labels, usually begin at $400 per suit. Maybe not the extravagant purchase you want to make right now but there are always sales and alternatives. Maybe you’re a forward thinker who sees their world beyond the recession or even sees opportunity in it. Maybe you want to go make an unmistakable statement. But maybe you don’t which brings us to our next alternative.

Suit up quickly and bountifully

Heck yeah: If you happen to live in a place with a population greater than half a million, there should be at least one or two places that have this type of sale: Three suits for “x” amount of dollars in a package. In other words, what you would pay for one Brooks Brothers or discount Italian or English designer suit, you can get three off-brand no-frill wool or down-market fabric suits, which you can freak just right if you have the right style sense.

This is probably the greatest stitch-for-stich value because it gets you through the week and month and maybe even the year and allows you to mix and match if you have a pre-existing and respectable shirt game and at least one good pair of shoes.

Uhhh but wait: You may be sacrificing quality, which is kind of like buying liability without getting uninsured motorist. After four or five trips to dry cleaners, it’s literally a wrap for these types of suits. I’m not talking about the plastic coating to protect them from the elements. I’m talking about fabric thinning and the appearance of nappy lent beads on your suit. There's not an afro-pick or lent brush in the world that can remedy this type of wear and tear. But that brings us to the last alternative.

Suit up without a suit

Heck yeah: If you’re easing into the game or just a novice or a stylish but not a “suit” man, you know how to accessorize on the cheap. Get a really nice blue or black sport coat or blazer, even a gray or solid brown one: or all four if you go to a thrift shop.

I’m talking blazer now chums. This is not to be confused with a suit jacket but an actual coat, which that 9 times out of ten won’t match your pants directly. You can use your style to go for the professorial, business casual look and perhaps hunt Ebay or your local thrift store for “pre-owned” quality coats that will compliment brand new pants. Get brand new pants — don’t be a tightwad on that.

Also if you’re not going to get a full suit, don’t be a tightwad on shirts either. They should be dry cleaned or brand new and if you’re considering your budget, why not buy a shirt that no one else has from a site such as ShirtsMyway.com. This site claims to have 7 trillion different designs. With that many variations, you will have your own style and through bulk save money by not having to go to the mall and be bilked by someone trying to get a commission. You design it and you order it. No plug here as I don’t own a single shirt from that site but I like the idea and am considering it.

Back to the stand-alone blazers. Save on the coats, up the quotient on the pants and shirt and it’s the cheaper, less high-maintenance alternative. You can wear them with ties or with an open-collared dress shirt and maybe just maybe on rare occasions throw it on with jeans and sneakers if you believe you can pull it off. Or if you believe you can wear a straight face if you don’t pull it off.

Uhhh but wait: You should be able to pull this off if you want to earmark this as a professional style. Remember, it’s not a suit and shouldn’t be carried off as one. If the pants are the same color as the jacket, please let them be close to the same fabric and if not, know your ledge. Shiny silk blazer and corduroy pants might get you unemployed as fast as the trickle-down effect of your company’s falling earnings. Corduroy and silk pants might get you beat up or laughed at so hard you feel like you’re getting beat up. Double polyester — let’s not discuss that.

Why are you still reading this? Go get a suit, no okay wait…look. This is mostly tongue and cheek and there are bigger issues in the world I know, but at the same time, if you’re a professional or professional aspirant between 25 and 50 years of age, you should own a suit.

If you are not independently wealthy through some sort of athletic ability, pop song, technological innovation or government defense contract — in which case you might wear a lot of Hawaiian shirts and khaki — you need to have at least one dark blue or black suit.

If not, you ought to be thinking of a good mix of what was described up here. Are you a grown man or what?

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Recession Journal VI: It's OVER!!!!!!!!!!!! Any Questions?

Jabulani Leffall — Sat, 31 Oct 2009 16:00:04 +0000

Are people grabbing strangers in the street and kissing them yet?

Do you see the quivering, multi-colored ticker tape floating in the wind? How about the pitter-pat of feet toward the mall?

Are the talking heads flailing their arms with tales of you winning and the terrorists losing with your purchase of a new smart phone or a plasma television?

Are you happy now?

I ask these things because it’s finally over, technically, officially — the recession is over.

The latest U.S. Commerce Department figures reveal that America's economy grew at a 3.5% pace in the third quarter, beating economist expectations and turning in the best growth numbers in two years.

For any of those still feeling the personal blues and responding to this jargon with a resounding ‘whaaaaa,’ any positive gross domestic product growth after consecutive quarters of contraction or negative GDP, signals a technical, if not literal, end to the recession.

In this case, the latest GDP figures ended four straight quarters of negative GDP growth.

Indeed a relatively bullish equity market — with duller horns than recent years but still bullish — and respectably performing bond market, along with government stimuli and small surges in consumer cars and home purchases, is responsible for the growth.

So I’m checking in with you, how do you feel? Feel good? Okay, you sitting down?

Good.

Well here’s what our "post-recession" looks like right now.

In the same week that good GDP data pulled the United States out of a recession, there's also mixed to bad news where other economic indicators are concerned.

For one, consumer confidence is down.

I asked you how you were feeling, how come you didn’t tell me?

The so called "current conditions" indicator from the Conference Board, which was also recently released, fell to 20.7, and is near its lowest level in 26 years.

This is due to the continually lackluster labor market, where the current jobless rate of just under 10% — 9.8% to be exact — is the highest since 1983.

Okay I know that sucks, but are you comfortable?

Apropos, the ABC Consumer Comfort Index, also recently dropped on investors like it’s hot, indicates that consumers are as uncomfortable about current conditions and about spending as they were during peak levels in discomfort this summer.

And of course, we found out, in that same fateful week that consumer spending had nosedived in September by the largest amount in nine months. And incomes, to say nothing of disposable incomes, were flat across the board.

Still happy?

No, no, sit down, this’ll only take a bit longer. Cop a squat.

Further — yes this came out the same exact week too — while the S&P/Case-Shiller home-price index climbed 1% from the prior month, seasonally adjusted, after a 1.2% increase in July, sales of new U.S. homes unexpectedly fell in September.

The fall of home sales points to fear about lingering foreclosures and the end of tax credits for home buyers that could hamper a housing industry recovery.

Speaking of foreclosures, the U.S. Census Bureau — yes recently they said this — the number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier.

Meanwhile durable goods orders are up, but continued high unemployment looms in the shadows, as does the potential for a wild correction in commercial real estate.

Additionally, buried in the basement of the Commerce Department's glowing is data that reveals the inflation-adjusted disposable personal income of consumers falling fell 3.4%, almost the same percentage of positive GDP growth.

Don’t get mad at me, I’m just being real.

Okay, put the torches and pitchforks down. I repeat, we are officially out of a recession folks.

But the long-term effects of new or amended spending habits, our country’s personal and government debt and how we respond now that we’re out, will determine our personal and collective future.

Do you plan to get out there and make something happen? Do you plan to wait until the coast is clear? How has your philosophy changed, if at all?

I know, I know, more questions but as Ken Mayland, president of ClearView Economics pointed out to me in a, to belabor the point, “recent” conversation, “questions are all we have in the present.”

And the more we ask of our government and ourselves where fiscal and personal decisions are concerned, the more answers we have.

This post was included in the Carnival of Money Hackers.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Recession Journal V: Mind, The GAP

Jabulani Leffall — Wed, 14 Oct 2009 15:00:11 +0000

Ours is a society of self-actualization, both real and imagined. There are best-selling books and rich-to-death gurus who peddle “secrets,” visualizations and the fostering and eliciting of new mind sets for individual transformation.

Some self-improvers go so far as to cut pictures out of a magazine and put them on a cork or “vision board,” so that they can attain the perfect house, husband, life career position, amount of money and bliss.

There something to this even for the sharpest of cynics. So much of how we perceive what we read, see and hear everyday about market fundamentals and economic determinants is based on sentiment.

This begs the question: can we think our way out of this recession as corporate citizens and collective consumers?

Recently, on a late-night, three-episode bender, watching a new network show via the Internet — I don’t own a television and thus am saving some wise friggin’ bread with no cable bill every month — I noticed that many of the advertisements had common themes: either compassion, nostalgia for affordable quality or upbeat sentiments.

Saturn for instance, knows it’s hard out there. Northwest Mutual Insurance says anyone can be strong once but can you be strong over the long haul, or something to that effect, after which it brags on its investment track record. Charles Schwab offers more “bang for less buck.” Chucky you naughty, frugal boy.

Apropos of this pattern, a couple days later, I noticed this story in the New York Times about the rose-colored specs of advertisers. Apparently Bank of America, despite the fact that its CEO just quit, says in a new ad that “America is growing stronger everyday.” General Electric, itching to offload its media properties to focus on industry and having made job cuts, according to the report, has an ad showing GE workers who still have jobs, working. Levi Strauss & Company has hearkened back to its frontier-era roots and is biting Walt Whitman’s funky rhyme style to sell us jeans with a pioneer theme.

The power of suggestion is at play here as it always is but people forget that advertising is media too, the most powerful media some would argue. After seeing images of recession over and over and over again, after hearing about the weakness of the dollar and the rise of China and India, perhaps seeing a well done skit about new loans at Bank of America, a heart string pulling story about manifest destiny or an everyman’s journey to financial freedom will change…our minds.

The study of the mind, psychology, is a more exact science in determining out attitudes toward money than say economics or even the behavioral and environment-driven discipline of sociology.

True enough, our everyday spending decisions are based on the economics of our lives and our given realities and also based on our social strata, but ultimately attitude, mind state, is what makes us put those dollars down.

I’m hungry for that particular thing. That’s a cute sweater that I can only get here. I think I need a new TV. When I get some money I think I’m going to buy that. If I had the money I think I’d buy that. Or, you know, I think I feel good about this purchase. I think this is great.

These are thoughts that go through billions of consumers heads in some variation or another every single day and in more advanced or to use a more apt term, commercial societies, these thoughts are tapped into by advertisers almost non-stop.

So if advertisers reflect good times, promise good times or keep bombarding us with promises of good times to come or regale us with thin and thick veiled slices of Americana, perhaps things will turn around.

I know with Christmas coming up, nothing makes one feel better like buying a good gift, feeling worth something, seeing a smile on their child or love one’s face. Wouldn’t it be interesting to see if there was, despite a downward forecast from the National Retail Federation, some kind of yuletide shopping rally that shocked everyone and got everyone back into the malls.

This is not likely to happen and there would be no real lesson for us if a turnaround led to a return to consumerism that made banks, apparel companies and industrial firms even happier than their ads, but the mind is a powerful emitter of hope, creator of purpose. But the mind can also, in the words of Rick James for what he said about cocaine, be a “helluva” drug when thoughts based on delusion and forced euphoria — the kind that tells us these shoes will make us feel better.

Think once, think twice, think about this.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Recession Journal Part IV: The Double-Dip Trip

Jabulani Leffall — Fri, 11 Sep 2009 15:04:09 +0000

Have you ever been broke as Jack's magic beans?

You know, broke as when said beans dropped on the floor because he brought home magic beans instead of food?

Have you ever been that hard up for cash but anticipating a reprieve?

Oh you have.

Okay, well, do you remember how you felt when that direct deposit finally hit or you heard that the check really was in the mail? You felt better right?

Do you remember the euphoria of going from broke to liquid, if only temporarily, and did the money start to burn holes in your pockets on account of you spending it already in your mind before you withdrew cash, wrote a check or swiped a card?

If you're familiar with these questions and can answer them honestly then you are a living breathing symbol of the economies of 1980-83 and 2007-2010.

Let me explain. For the past 18 months or so, most of us have "felt," broke, if only broken in spirit by the slew of continual bad news. In point of fact a great number of us were even broke literally if we or someone on whom we depended loss their job or home.

But now, oh but now folks, we have a potential reprieve — that's the good news. As of the start of September, everything from consumer confidence and expenditures, oil prices, retail sales and industrial output capacity is moving in a positive direction.

Financial market indices, as a result are up, buoyed by the psychological boosts these numbers bring. The S&P 500 index, for instance, hit an 11-month high the week of September 7, 2009.

And even the one down arrow is shaping out to garner a big thumbs-up as a recently-released Labor Department jobless claims last week fell to the lowest level since July.

But should we start spending in our minds now? Should we stimulate the economy and not let the terrorists win now?

Well that's up for debate but the truth is that we still don't know if a lift out of our lovely recession will be a “V” recovery for victory over being broke as beans or a ‘W” recovery — as in wait and see because we’re not out of the woods yet. Who knows, maybe we might even be in for a VW recovery. Wouldn't that bug you out. Marinate and then laugh if you care to.

So my good people, the "VW" or just "W" recovery, represents an up-down-then-up again recessionary trajectory, one that despite current indicators could be in the offing.

What to do?

Well, in a cursory web search using the search terms "Double-Dip Recession," I found Richard Marcus, associate professor of managerial economics and finance at the University of Wisconsin-Milwaukee and I knew that school was in.

And I knew that he has a handle on such things as money and the like. And I knew that he would likely pick up the phone himself and given the often genteel mannerisms of fly-over state residents, I knew he would actually talk to me if I explained who I was and why I was calling and that his work would help further an eventual point that I would be getting to.

Dr. Marcus likens the current economic situation to the extended double-dip recessionary period of 1980 to 1983. Back then, as it is now, there was major government spending and the recession was exacerbated by a severe credit crunch as well as monetary policy from the Federal Reserve that made the downturn more protracted.

Over static on my cell, Marcus posited that if forecasters are to use history as a guide, the 1980-83 downticks turned around with sustained spending, a tax cut and more “helpful monetary policy” and that nowadays if we want sustained change we should act accordingly.

Marcus says that while there is every indication that the current recession will soon be over, this economy is sort of like a swimmer underwater that comes up from air and then goes below again, only to come back up.

I like that he used wide-open metaphors that could apply to dips. He was doing my bidding (insert cartoon villain laugh here).

“I’d said before that I thought there’d be some upturn but I also said that the period 2007 to 2010, will likely take as long to right itself as that time in the 1980s,” Marcus told me. “This is because you have a tax increase that will kick in to slow the economy and eventually even $800 billion in stimulus money will teeter out. Plus the Federal Reserve has doubled the monetary base and they have to be more restrictive.”

Indeed despite positive economic data, the government’s current fiscal and monetary bend and that of the early 80s are two sides of the same coin in that policies in both eras seem, as Marcus puts it, “contractionary in nature.” Plus Marcus added that he expects overall unemployment to continue to rise, “likely going to 10 percent or above before it’s all over.”

And now back to you folks. How do you feel? Do you feel confident? Are you ready to pick up those broken beans and throw caution to the wind, take some risks, buy some goods, services or memories?

Or are you forever changed due to the emerging consumer ethos of frugality, caution and selectivity as the country emerges from the most pervasive downturn since the Great Depression?

<>Well consider the thoughts of yet another economist, Nouriel Roubini, from NYU, whom I probably could not have reached by phone to talk to in a short period of time even if I had one of those long-reaching thingamobobs that grab objects even while you're sitting down.

Roubini is known in many circles as “Doctor Doom,” and he has said that going forward, even if the recession ends, there might not be enough spending in this or other countries to offset the wicked drop in consumer demand from "over spenders" in the United States and Britain.

Yes the U.S. and U.K., which in recent years have become both home to some of the world’s most conspicuously consuming people, and also two of the countries hit hardest by all this crunchy credit.

So if you're thinking that a turnaround is here and your money is burning a hole in your pocket and you want to spend as you did in headier times, think again, double dip yourself before you trip yourself.

Whether the recession is finally over or not, remember when you were broke as a bean and remember how you felt.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Recession Journal Part III: How Low Can We Go and When Will We Get There?

Jabulani Leffall — Fri, 31 Jul 2009 12:00:11 +0000

As a business blogger, high-finance business journalist, business man and one who minds his business – who pretends to know what he's talking about – I pretty much always answer "stay in bonds," when called upon for investment advice.

I hate giving it so I don't. I tend to just pose more questions, as I do in all discourse, objectively presenting many sides of the equation. So people can make up their own minds

After all there are two sides to every story and then there's the truth.

So I thought I'd utilize the ever-changing world of telecommunications, in a figurative sense of course, to try to get at the most pressing question these days: when will this crappy economy turn up?

The answer is, well, when it bottoms out.

But when is that?

Hold on let me check (ring ring).

Hello economic bottom? Economists and forecasters called and left a message, again.

They said they’re still looking for you and you’re still hard to find.

Therefore indicators for recovery from and continued length of the current recession remain inconclusive.

They also said, "We hope to see you soon because you’re neither here nor there."

Indeed, the more economic information that comes out, the more guesswork there is. As of July 17, jobless claims are up to 554,000 – a sum that is less than June numbers but still up versus 524,000 in the previous week, according to FactSet Economics.

Also as of June, the national civilian unemployment rate rose to 9.5%, the highest it’s been year-to-date and average hourly wages are also down compared to last year and last month. Additionally Federal government debt is up to $11.5 trillion as of the end of June opposed to $11.3 trillion at the end of May.

Yet there are a few bright spots. Home sales, building permits and monetary supply, through historically low interest rates, are all up.

So now we can breathe a little bit right?

Well, not so much. Those figures are up while consumer confidence and industrial production output, as of the end of last month, are still down.

Why the disparity among all the leading indicators? And what does a stoppage of declining figures mean vis-à-vis inclining figures in the future?

Enter the Federal Reserve, which this week released its Beige Book survey to arrive at forecasts based on statistical and anecdotal economic evidence. In the report, the Fed said that most of its 12 regional bank districts are seeing a slower pace of economic decline for the months of June and July but didn’t go so far as to predict a turn around.

To the glass-half-full soothsayers, this comes as an early sign that the worst of the worst economic doldrums since the Great Depression is closer to coming to a halt and that thereafter an ascent of the proverbial bar graph of growth will emerge once again.

Such are the sentiments Fed chairman Ben Bernanke, who, despite seeing personal his assets take a 30% decline in 2008, is bullish on the broader economy.

Bernanke recently told Congress that the economy’s contraction “appears to have slowed significantly,” with demand and production showing “tentative signs of stabilization.”

He echoes other policy makers such as New York Fed Chief William Dudley, who predicted that a modest recovery in housing activity and car sales coupled with fiscal stimuli from the government would give the U.S. economy moderate growth in the second half of this year.

Then in the same speech this week, Dudley turned around and said "the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation."

The only grain of certainty to be gleaned from cautiously optimistic policy makers and from the Beige Book is that neither provides any tangible signs of outright growth.

For instance the Beige Book found that retail demand was “sluggish” in most areas, and that auto sales were “mixed.” Manufacturing was “subdued, yet slightly more positive.” Meanwhile, according to the survey, non-financial services businesses are “largely negative with a few bright spots.”

Yeah that's clearly the sign of recovery right? (Pshhaw!)

Lastly, the most telling indicator, bank lending, “was stable or weakened further” in most loan categories across all 12 Fed districts, with tightened credit standards in at least seven districts. It looks like finding that elusive V-shaped recovery as it relates to the current economic downturn is going to take a bit longer, despite some sporadic cheerleading and sparsely positive numbers.

Plus one must take into consideration that financial firms are still digging out of holes, which means credit will remain tight and in Dudley’s words, for the near-term still “limit the pace of the recovery."

Suffice it to say, policymakers, analysts, investment managers and consumers will all be calling again next week, next month and perhaps even next year, looking for you, economic bottom.

Are you still there?

Well folks it's not there right now, act accordingly.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Latvians Mortgage Their Souls For Cash

Jabulani Leffall — Thu, 09 Jul 2009 12:00:03 +0000

Anybody tired of hearing about personal, local and national budget crises? Would you like to step outside your personal sphere and just for a moment play the “relativity” card? That is where you are relative to others less fortunate. Are you feeling international?

Well, here’s the latest finance news out Eastern Europe, the Baltic republic of Latvia to be exact: their economy is cluster-bombed too.

Like the U.S., Latvia’s government is attempting to prop up its banks with savior capital and putting up cash for consumers who may be in heavy hock to local banks. Latvia’s version of economic stimulus plan could cost up to $80 million annually according to the Latvian parliament. That amounts to perhaps one year of compensation for Richard Fuld, of the erstwhile and now failed bulge bracket investment bank Lehman Brothers but that’s just for context.

Much like the U.S., property values in Latvia are plummeting and unemployment levels are hitting double digits as delinquent loan balances rise.

But here’s where Latvia takes a sharp left: People there are selling their souls for cash.

Not figuratively as some Americans do with payday and subprime or auto tile loans or crime or retail therapy as a spiritual and emotional analgesic -- but literally some Latvians are selling their souls.

This isn’t a misprint, a typo or a joke. As of this week more than 200 people have have signed away their immortal spirits for as little as $100 and as much as $1,000, according to Viktors Mirosichenko, proprietor of, shall we say, boutique Latvian finance house Kontona.

Whether the result of atheism or sheer desperation, people are putting up their intangible, unseen essence to get a little cushion coin. This despite the fact interest rates on the 90-day loans are as elevated as 1% a day.

Here’s what’s in the fine print of Kontona's (clearing throat) consumer finance package.

I, the undersigned do hereby take the loan from the Creditor under the known-to-me terms and conditions on the security of my immaterial intelligence, i.e. immortal soul. I also do hereby certify that the said bail is the property of the undersigned and is not promised to anyone,'

I repeat, this is not a hoax but is something straight out of the Faustian Bargain, a deal with darkness and avarice, fear and loathing, a deal for that which puts one above animals.

It was the French philosopher Alexis De Tocqueville, who in the 19th century posited that human beings make a “Faustian bargain” when “buying into the promise of material wealth and well being ahead of principle.”

This whole Latvian episode is whimsical albeit disturbingly so. It raises a greater question on the role that debt plays in our lives. Granted the Latvians that did take these loans out are thinking about the here and now and can buy back their spirits in 90 days at interest and it’s not like Kontona’s collection agency is going to call and say, “I going to need to margin call on that soul, I’m sending the repo man to come pick that up.”

That said, it makes me wonder what my threshold would be, what our threshold would be, what we would do in a desperate situation such as the ones these Latvians found themselves in. This is definitely a quandary that one cannot handicap unless starving, cannot say we wouldn’t do until it’s us.

Yet most in modern society will die with some kind of debt and events like these make one think about what’s important and why being responsible with money and refocusing attention on buying experience and time instead of things is of the utmost relevance.

It’s cut and dry. Your money or your life? Can you bring your wants and desires into parity with your well being, your self worth and esteem, your identity? Or will credit and debt have your nose needing skin grafts from putting it to the grindstone day after day to pay off an engagement ring. Or a flat screen or shoes or a car that loses value as soon as you put your blinkers on to turn out of the dealership. Or that house, whose floors echo with emptiness, tangible and otherwise, as you lift boxes and other things to depart because you can no longer afford it?

Chances are you won’t be putting your soul up as collateral for anything, anytime soon and this is the hope but on a larger level, have you compromised self to play catch up on a bill, to buy something you knew you shouldn’t? Have you indebted yourself to pay off an existing debt? Do you have a live-for-today-tomorrow-is-not-promised mentality and does that inform reckless monetary decision making?

Here’s what a man who works for Kontona and calls himself “Vesti Segodnya” said of the doomsday loans: “Business is business. We give people palpable cash. If a man values his soul, he’ll definitely pay back the credit. I guess, it’s all fair. Everyone can decide for himself, what’s more important.”
Indeed.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Not Taking Jack: How To Deal With Identity Theft

Jabulani Leffall — Sun, 21 Jun 2009 08:53:46 +0000

There's exists a saying that by the way hasn't been independently verified as coming from the Chinese: May you live in interesting times. I say: May I please catch a friggin’ break! Thus it is the subject of “May,” that will be the prominent theme in this post as I’ve been temporarily financially hobbled by anonymous jack moves in the month of May for the second consecutive year. Yes they got me again.

Last May, someone on a commuter bus in Costa Rica hit me for a laptop, a phone DVD and the leather case that carried all this items.

Last month someone went on a spree at Best Buy and Target in San Jose, which I haven’t been to in more than a decade, using my credit card, which – get this – was in my pocket the whole time in Los Angeles and other places that were not San Jose.

Nevertheless, there they were, procuring retail fare from these big-box stores. They even added insult to injury and I footed the bill for their trip on the BART train afterwards. They probably laughed and frolicked on the train with their plastic bags full of goodies.

Meanwhile I am currently trying to corral all the stakeholders – merchants, security staff, police reports and such - to work with my bank so I can get all of these funds back. This is a big pain but that’s a whole other post.

Now, so that your months of May, as it were, don’t turn into June gloom, here is my list of two major themes to consider when pondering reacting against and deterring identity theft.

Because in an era where many people are broke at a level not seen since my late grandmother caught snow flakes in a pan to make vanilla ice cream – in the depression era and beyond Granny Sam added milk, ice and vanilla extract, my mom said it was delish – people tend to steal things and you should be prepared.

Do the “after”math

Usually there’s no way to know what to do until it happens and you have to react. If someone takes over your card like they did with me, you may not find out until days or months later when you’re ordering a pizza and have to have that awkward “sorry-I-need-to-go-to-an-ATM-please-hold-my-ID,” speech with a skeptical waitress.

If you haven’t already taken preventative measures, you need to calm down and act immediately. If it’s a debit card, as painful as it may be, turn it off post haste, clear out your account, and/or transfer funds and shut it off pending an investigation. Some banks won’t even let you recover funds until your card is blocked or deactivated anyway.

If it’s a credit card, recovery is usually more forthcoming but theft can nonetheless haunt you anyway. Contact credit reporting bureaus immediately and get a free credit report from AnnualCreditReport.com. Some services such as CreditReport.com even boast a notifying service that let you know when substantial charges appear on your credit report. A good start for this would be use a credit monitoring service such as CreditWatch for 24/7 monitoring of your credit report.

Secure your PC

E-commerce is here to stay and in some areas, such as banking and specialty retailing, it may even some day supplant actual physical transactions at tangibly-touched locations. When it comes to making your hardware, software and web surfing a safe bet, preventative measures can sometimes be just as effective as or even more effective than detecting fraud. First tip: don’t get your laptop stolen and you can increase the chances of this by not leaving it unattended. Second-tip, secure and/or frequently refresh your cookies – the mechanism that saves your passwords and sign-in info - using Internet options in Windows.

Also opt for a Windows sign in when you first boot your PC so no one can just walk up and snoop. By the way, if you’re at an airport or a coffee shop, try, if you can to sit with your back to the wall whenever possible and watch out for nosey “shoulder surfers.” Third, as much of a racket as antivirus software can sometimes be, get some from a reputable vendor with a good support staff.

A common thing for credit card number thieves and their hacker cohorts to do is dump malware on your PC after you’ve clicked on a malicious webpage that was supposedly on a trusted Web Site. Sometimes they even extort you into buying off-brand AV software just to clean your system. They figure you might be embarrassed so you do it to prevent the Geek Squad or Computer Store technician from gouging you by doing a sweep of your system and installing AV software, something that can cost as much as 400 smackaroos.

That’s why this is a smart play by enterprising hackers because the Joseph Heller of it all is that if you don’t buy the thief’s AV software you’re going to pay anyway. If you do get extorted though, the thief not only has your money for their bait and switch software but they also now have, what’s called personally identifiable information (PII), which includes credit card info, that can be used to create fake “cop-and-drop” cards, which I suspect was done at Target and Best Buy, using my number for just one day of devil-may-care purchases. In a cop-and-drop situation, the miscreant knows that someone will get wind of it soon so they “spreed up” and then get in the wind themselves.

Lastly if and when you switch computers wipe all data off your old joint. A good flash drive should do the trick.

Hopefully thinking about these things will help some of you from getting your physical stuff and/or personal info and hard-earned loot cuffed, leaving you with the arduous task of finding ways to use “month-puns” to hide your sorrows from the world when violated.

For 2010, I’m taking some of my own advice and also crossing my fingers with lessons learned and vigilant eyes and ears.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Conspicuous Spending: Fading to Black

Jabulani Leffall — Thu, 30 Apr 2009 06:07:00 +0000

“Consumption is evidence of wealth, and thus becomes honorific, and…failure to consume a mark of demerit.”

--Thorstein B. Veblen, The Theory of The Leisure Class

Alligator-skin shoes: $200. Candy-painted El Camino, sitting on gold Daytona rims with a ludicrous sound system and hydraulic lifts: $75,000. Chinchilla fur coat, even though it’s California: $600. Being a local celebrity – you know where I’m taking this – priceless.

I didn't buy this. I've never purchased these things. God no. This is what I saw growing up on different occasions. And the allure of it all seemed priceless, against logic, against better judgment, but priceless nonetheless. At least it was priceless to me back then before I found out that a PE ratio wasn’t how many times I played hooky versus dressing to play flag football at school. This was also prior to me coming to learn that a mutual fund wasn’t two friends throwing in $2.50 each on a value meal.

According to data compiled recently by essayist and retired patent attorney Richard Everett, African Americans are projected to have spending power of approximately $1 trillion a year by 2010. That will be a significant increase over the roughly $800 billion Blacks are believed to have spent in 2006.

Point is, without caring where it’s going and sometimes where it comes from, many Americans in general and black Americans in particular -- and on the whole -- tend to spend a lot. This is an anecdotally and statistically verifiable fact from the poorest end of the strata to the most affluent. I make light of this situation because I come from it. I come from neighborhoods where I and millions of other youth were reared.

In these enclaves there were no doctors, no lawyers and no financial consultants. There were only hustlers, gangsters and of course the occasional working-class 9-to-5er or blue collar worker who, through conspicuous consumption, was attempting to emulate the look, vibe and aura of the ghetto-rich. This was and is our own version of the “Joneses.”

There seems to be a sense in the black community and it seems in the community at large that possession is nine-tenths of self-worth.

An August 2007 study by Kerwin Charles, Erik Hurst and Nikolai Roussanov at the university of Chicago found that “a large body of anecdotal evidence suggests that Blacks devote a larger share of their overall expenditure to consumption items that are readily visible to outside observers than do whites. Automobiles, clothing, and jewelry are examples of these forms of "visible" consumption.” It also found that whites with the same incomes consume equal or more from a real cost perspective, although the items are less visible.

I should have known better right? I had a great example because my mother drove an orange 72 VW Super Beatle for the better part of a decade and made me “earn” the things I wanted through incentivized programs such as “chores” and “doing well in school,” imagine that?

But outside was a different story. Then as it sometimes is now, the mentality is “get it now,” “get it fast,” “got it … good” -- just get it. This was the consumer ethos of a black child growing up in the 1980s when Air Jordan shoes were, literally to die for.

Author and social critic Bill Mackibben pointed out also in 2007 through his research that money buys happiness right up to about $10,000 income per capita globally on an aggregate basis. Presumably because one is happy not to be starving. Anything other than that, he asserts, is just buying things. In our country we usually buy “things” in a situation when short-term impulse diverges and falls out of cadence with long-term thinking.

I’m at once loathed and relieved to admit that what I brought out of my childhood as I moved up the educational and social strata was the emotional baggage of not having. Yep, I retained the pathos rather than remembering the goal-laden, gold-starred chart on the back of my apartment door that allowed me to think methodically about what my goals were. Only through hindsight do I learn the lessons from being a kid about the chart that allowed me to arrive at the rationalization that my purchasing journey was more important than my destination, the car I drove to get to my destination and for that matter what I was wearing when I arrived. Consumption charts anyone? Why not reward yourself when you actually deserve it and have reached a savings goal? This seems like something worth doing if we must buy that which we don't really need but really enjoy. Earn it.

I look at these spending patterns approaching astronomical numbers and of course there are aberrations in my community, as well as the larger American community, of people who are frugal and save. But $1 trillion in purchases right up through a recession by a group that is less than 5% of the American populous is an alarming figure for all of us, especially when there aren’t that many similar studies for fragmented groups of whites. This means that if 5% of America is collectively spending $1 trillion by next year, despite a downturn, then look for the savings rates! No really, look out for them because they are so low that we hardly know they exist.

As I look at these numbers, I’m reminded that anything I can wear or sit on is not a long term asset. I’m reminded that it isn’t the mink coats and souped up cars that kill you but the small stuff: premium channels you don’t watch, accessories to clothes you don’t need, small repetitive expenditures over time like morning coffee, eating out, renting a movie, taking it home, putting it down and hitting the Cineplex anyway.

As I look at these numbers, I simultaneously reminisce and peer forward as I think about credit and how it encourages immediate gratification. If you don’t have it, why buy it?

And while I cringe at these numbers and think about all of the sociological, psychological and political origins of why some of my people spend this way, I am reminded that the color of money is not black or white but green and green is associated with growth. From a monetary perspective, none of us will ever grow – wealth or otherwise – through conspicuous consumption.

Now if you would excuse me, I have to return this mink coat, it will be summer soon.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.

Fresh Mint: 'Recession-proof' ideas make good business

Jabulani Leffall — Tue, 17 Mar 2009 04:05:33 +0000

Listen closely to what am I saying? That's right, you can’t hear me. Okay, read closely if you can. What you are about to see is more rare than a Cardinal lighting upon a dimming light post in the South Bronx.

That would be me shilling for any financial product or service, much less bigging-up an Internet destination that could divert traffic away from myself and my wisebread.com companeros.

But it’s time to dispense props to Mint.com, which just logged-on its millionth user (Ol’ boy in the picture – not me of course - is grinning ‘cuz ol’ boy is ‘bout to get Riyyyyyyyyyyatttch).

Now back up where you stand or in this case sit, as you read this. I’m not just a flag-sock hack, going with the direction of the wind and propping up success.

I did some investigating and this site can indeed be a welcome respite from the convoluted madness of Excel sheets, the banality and antiquity that is Quicken (Software in a box is going the way of the Capri pant) and the general headache of brick and mortar budgeting.

Folks, I’m not going back on my word about the tabbed binder because you still need that nuclear option. On the other hand, Mint lets you consolidate everything and if you’re bogged down by both busy-ness and business, this might be a viable option since retail banking isn’t the most pleasant experience and shopping malls have horrible parking and as they become increasingly cavernous, move into parity with specialty and electronic retailing as preferred spending options.

That said, it would make sense to be able to look at bank balances, credit cards, assets, credits, debits, liabilities and monthly budgets in one place at anytime day or night. Because let’s face it, some of us don’t even do that in six or seven places.

If you still think I’m selling wolf tickets, in a year in and a half the site has tracked more than $50 billion in transactions or to put it another way, one day’s pay from the government to AIG. It also professes to have saved its users more than a collective $100 million.

Either way, it’s a solid thing to try out if you’re reading this right now and you want to try something different and you’re tech savvy or you just need something to talk about.

As far as security is concerned, the site counts Verisign and MacAfee, transaction security and malware repellent companies respectively, are partners to the site.

I’m really pointing this out to drive home the point of self-evaluation and accountability as a journalist/hack/personal finance “haikuist” and Hip-Hop John Henry would do. It’s marinating I know.

Okay now as you try to re-focus after just having your mind blown, understand that this one-stop-shop site – I’m talking about Mint as well wisebreaders – can help keep you honest. Not only that, it can force you to sit down and face the truth about what you may or may not need, or more important, what you may not even know you’re losing.

Take a look. It ain’t going to make you richer or broker but it might get you to thinking. And if that happens, uh-oh check your pulse because you may be morphing into a money-saving machine. Boo-ya!

*Disclaimer: Jabulani Leffall, monetary gadfly, doesn’t endorse nor have a personal stake in Mint.com and remains a loyal humble servant to wisebreaders. Jabulani Leffall will not benefit financially, personally, emotionally or spiritually from increasing unique users on another site and putting more money into someone else’s pocket. Jabulani Leffall is void where prohibited and not currently available in NY, MO, SD, ND, Del., NJ and the Democratic Republic of Congo. Thank God this blog is not subject to credit approval. Jabulani Leffall will not ask where the money came from if someone were to CHAC (Cut him a check) for no reason.

Written by Jabulani Leffall and published on Wise Bread. Read more articles from Wise Bread.