My Journey to Millions

While it has been in the news recently, it became official yesterday, Anheuser-Busch is no longer an American Company.  That’s right, your favorite domestic beer company is now owned by beer GIANT InBev - you can find some full articles HERE, HERE and HERE.  Never heard of InBev?  Guess Again - from their press release today:

…over 200 brands that includes global flagship brands Budweiser, Stella Artois and Beck’s, fast growing multicountry Brands like Leffe and Hoegaarden, and strong “local jewels” such as Bud Light, Skol, Brahma, Quilmes, Michelob, Harbin, Sedrin, Cass, Klinskoye, Sibirskaya Korona, Chernigivske, and Jupiler, among others. In addition, the company owns a 50 percent share in Grupo Modelo, Mexico’s leading brewer and owner of the global Corona brand, and a 27 percent share in China brewer Tsingtao, whose namesake beer brand is the country’s best-selling premium beer…

While I have indicated (on many occasions) that I am all about free trade and competition,  I think it is a great thing for the local economies that InBev is keeping the breweries and offices, as well as the brands we know and love.  They even changed their name from InBev to Anehauser-Busch InBev!

As I looked at the google chart I started to think…How much money would I have if my parents bought me a share of BUD on November 18, 1984 (despite the fact that I only would have been 3 years old)?

I have no idea how to put in a google finance graph into my post so if you click HERE you can see what I am talking about.

You could have bought one share of BUD for $2.76 on November 18, 1984.  Then the share split a couple times (3:1 in 1985; 2:1 in 1986; 2:1 in 1996; 2:1 in 2000) leaving us with a grand totals of 24 shares.  Those shares were then bought by InBev in cash (rather than InBev stock)  for $70/share. 

Well $70 * 24 shares = $1,680 ($1,677.24 profit in 24 years). 

A gain of 60,769.56% and a Annualized Return of 2,530%! These numbers do not even include Dividend Reinvestment which would exponentially increase these numbers via the wonders of compounding. 

Before you start to feel confident about picking the next 24 year home run…go google the symbol GM. 

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My older brother got married on Friday, so to say the least, last week was nuts around my parts.  I gave him a very generous gift, but to be honest it was the same exact generous gift he gave me 5 months ago.  So I got to thinking - what personal finance advice could I offer him? and boom it came to me.  

After we received all of our gifts, we partitioned those gifts that I KNEW I had to give back within 18 months. They were then placed in a separate ING account titled, “Wedding Gifts.”  So, when this wedding came around I wrote a check from my main account - but had the money coming to it from my ING account.   

Why did I do this? 

As explained in my flaws post (HERE) I need to separate my dollars (even if it is just artifically under ING titles) as not to spend it.  If personal finance is 80% Mental (and 30% physical) then isn’t this idea amazing!?

Anyone else have any personal finance advice I can spread to my brother?

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Updated My Journey to Millions! How do you like it? Any thoughts suggestions? I will even take “I hate it, put back your old look!”

The change was for the readers, so whatever you want changed, let me know! Thanks

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Unless you have been living under a rock for the past year or so, you have been hearing about the bank crises and how almost every bank needs cash (and quickly).  So I guess it is not surprising, that bank fees are rising and if you don’t watch out you may get hit with an avoidable fee.  According to the Wall Street Journal, Personal Finance Section, here are some of the increased fees (full article HERE):

Last week, Citigroup Inc.’s Citibank started charging some customers a new $10 “overdraft protection transfer fee” to transfer money from a savings account or line of credit to cover a checking-account shortfall.

Over the past year, J.P. Morgan Chase & Co.’s Chase, Bank of America Corp., and Wells Fargo & Co. have boosted the fees they charge noncustomers who use their automated teller machines to as much as $3 per transaction.

In July, for example, Comerica Inc.’s Comerica Bank raised fees in Michigan for customers who want to stop payments or get a cashier’s check. Last year, 

PNC Financial Services Group Inc.’s PNC Bank introduced a processing charge of $3 for customers who use their debit card to get a cash advance at a teller window.

Consumers are likely to see the most pain from bounced-check and overdraft fees. “By the end of 2009, you will start to see fairly substantial increases in overdraft fees” for the big banks, potentially to as high as $40 per occurrence from a current range of $32 to $35, says Mike Moebs, chief executive of Moebs $ervices Inc., an economic research firm in Chicago.

Already, Bank of America, Citibank and Washington Mutual Inc. have raised their overdraft fees this year, while Wells Fargo raised its insufficient-funds fee in certain markets in July. Many banks are also adopting tiered-rate structures that assess a lower penalty for first-time occurrences but quickly ramp up the costs for repeat offenders.

I know this seems counterintuitive, but I actually think this is a good move for banks.  Think about it, if you are responsible and not lazy, you won’t incur any extra charges or fees, but your bank theoretically will become healthier.  

Three easy ways to avoid these fees:

1. Know your account.  Whenever a friend or family member asks for introductory help the first thing I do is check their main checking and savings account.  NO ONE should ever get hit with minimum fee charges anymore - there is just too much competition between banks when you consider all online and alternative (i.e. Fidelity Checking) accounts.
2. Think about ATM Trips - I wish someone told me to stop being an idiot in college as I got banged out for $2 - $4 bucks every time I visited an atm at college/college bar.  Alternatively, use an account that will reimburse your ATM fees.  ING Electric Orange Checking provides over 37,000 ATMs worldwide through the all point network.  I went to the All point Website and found out that there are “2,024 Allpoint ATMs within 50 miles, and 3,302 within 100 miles.”  Want more of a reason? ING offers a $25 bonus for depositing $250 into a savings account.  Either Contact me for a referral HERE or use the links on the right hand side.
3. Watch your Checking - Overdrawing on your account SUCKS most have done it but doesn’t make it hurt less when you see those fees (which I guess are about to go up)! 
    

Have you seen your fees go up? What bank? What Fees?

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I know the title may be a tad dramatic, but I read an article from The Economist where the Author makes note that the deficit had been reduced (from 2004 to 2007) by, at least in part, due to the increase in income taxes from the wealthy getting wealthier in this country.  Take a moment to really think about how profound that statement is! As the rich got richer, they paid income taxes at a marginal rate of 35% (or close to it). 

As such, if we are to follow Obama’s plan through the logical end - when we take those paying taxes at 35% then give it to someone whose marginal rate at 15%, the IRS will collect less taxes - while congress is spending more.

I never even thought about this aspect of domestic taxing/spending, and kind of got excited (in a geeky ecnomics kind of way) when I read it, but this is not the point of this post.  I thought it would be interesting (in that same sort of geeky economics way) in looking up whose income taxes actually supports our country for no other reason then I find it interesting.  

Info derived from Tax Policy Center’s Table 08-0079 (entire version found HERE)

Isn’t that amazing! The two lowest fifths of all Americans actually have a negative tax rate probably due to the Earned Income Tax Credit (a vast subject for another day).  

While I understand that a progressive tax system is necessary, but wow - our system is only going to get MORE progressive.  What do you think? Should we have a more progressive system? Should we tax the rich more? Get rid of the negative tax rates?

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Not sure if this blows up my spot - but it is my birthday today! Happy Birthday to me.

Update:

After checking the blog today, I thought to myself what a sh!tty bday post to myself.  As such, we need to update some stuff as a sort of time capsel for myself to check come next year. 

Personal Life:

At the ripe old age of 26 I got married to a wonder woman, that I respectfully refer to as The Wife on here.  We own a great condo that is more or less ran by my 4 pound dog.  Yes, I have a 4 pound dog - it is gay as hell but I love the damn thing.  This time next year I’d like to be on my way to starting a full family (i.e. kid).  Not sure what that means right now, either trying or going towards having a kid.  Scary as shit to write that.  Along with that I would like to be at the very beginning of looking for a new, bigger place.  The Wife works from home (which helps in the first goal above lol) and her parents don’t live near us, so it is only fair that we have the room for an office, a child’s bedroom, and room for her parents to stay.

Professional Life:

I am currently with a great company, doing work that I love.  I can’t complain here at all.  This year, I have passed my Series 6, Series 63, Life/Accident/Health Insurance Sales.  For personal reasons I have yet to get admitted to the New York State Bar despite passing that horrible test! So my goal before I turn the big 2-8 is to stop being an idiot and get admitted. 

Personal Finance Life:

Debt:

After making the conscious decision to get rid of debt, The Wife and I are down over 15%! 

Barring any mass disaster in my life, I want all consumer debt down to ZERO way before my next birthday.  This is not a crazy goal, hell, I think we are going to be rid of it by the end of the first quarter if we get a few good bonuses and a sick tax refund.  Even without those this debt will be gone before my next birthday. 

Income:

I have become more and more obsessed with additional streams of income.  As of today, I have no concernable streams of income besides my job and that scares the sh!t out of me.  So a goal for next year would be to figure something out for this problem and quick.

Well this is my new Birthday post to myself, I think it is much better!

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This post is not your usual Personal Finance Blog post (although I like to think most of my stuff isn’t the “usual”).  This is not a post discussing whether I am going to lease or finance my next car.  

Rather, I have had a burning question that I couldn’t find an asnwer for, by the way, if I did find the answer I would have just shared it rather than posing my problem!   So here it is:

Why do Automobile Companies Lease?

Of course I checked Wikipedia, but here is all the info I found:

For the leasor, leasing generates income from a vehicle the leasor still owns and will be able to sell or lease again once the original lease has expired. As consumers will typically use a leased vehicle for a shorter period of time than one they buy outright, leasing may generate repeat customers more quickly, which may fit into various aspects of a dealer’s business model.

Considering more and more companies are shutting down leases I must be on to something! 

Lets do some real life math:

For our singular control example we are going to use The Wife’s old car.  We are using it because I know the numbers for it.  Her old car was a 2006 Nissan Altima which she leased for $265/month with $2,000 down - the asking price was a bit above $25,000.  The lease was for 36 months, so technically it shouldn’t even be up, but we negotiated the hell out of a 2008 model trading it in 8 months early due to mileage concerns.  This will make my math look even better later on.  Well:

• $265 X 36 Months + $2,000 down payment = $11,540 

So with a quick search I found on www.autotrader.com I could get a 2006 Nissan Alitma with about 36,000 miles (12,000 miles/yr for 3 years) for about $16,000 before negotiations from a Nissan Dealership.  So lets do some simple math:

• $11,540 + $15,000 (I can’t even pretend that I would pay asking price on a 3 year old car) = $26,540.  
• The difference? $1,540

Lets put in some “speed bumps” in our calculations:

1. I am sure I can get it even lower than $15,000 in this market
2. If there was a brand new type of model then there would be an even great depreciation (think those current commercials - “The totally brand new Mazda 6″ - how much did the 3 year old Mazda 6s drop?
3. Is the dealer going to have offer a new warranty?

I do have four Hypotheses that are in order from least likely to most likely…but I would LOVE to hear other hypotheses (or an actual answer):

Hypo 1:

Try to dissuade people from returning their leased car.  When I say dissuade I mean making them jump through hoops to get rid of the car.  

Hypo 2:

I am using the wrong car model -  Nissans aren’t a good example and the Wife and I are incredible negotiators and I worked the Nissan Dealership.  I hope the wife and I are this good.  

Hypo 3:

The company is happy to keep the $1,540 and multiply this by hundreds of thousands of cars - YAY profits! 

Hypo 4 - This is most likely the answer:

I am using the wrong numbers.  I shouldn’t be using the sticker price of $25,000 but rather the cost of the car to Nissan.  If Nissan is making $10K per car and then they are making an extra $1,500 plus the normal profit, now that makes sense.  

Does anyone else know the real answer? 

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Why We Have the Electoral College

Random Mid-day post (at work currently) but this video emphasizes the reason the Founding Fathers in their infinite wisdom proposed the Electoral College!

Maybe when I get home tonight I’ll do a post on what the electoral college is, but right now this video needs to be shared!

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