No better time to reappear

After disappearing from the world of blogging for almost three months what better time to appear than now? Two days after Lehman Brothers and AIG have become household names for unfortunate reasons and 50 days before the Presidential election. I will not comment on the election (for now at least) but I will comment on the sudden interest in the world of finance on every wesbite and column around. Actually I think I will not comment because I have nothing nice to say about this and the remedies put to use so far for this "disease" as the Wall Street Journal has called it make no sense. If you don't believe me read for yourself:

Worst Crisis Since 30's, With No End Yet in Sight

AIG in 30, or More Like 45, Seconds

Freakonomics: Economists’ Insights

Hello!!! I disappeared because I have been so busy. In addition to work I am in a summer program which means 5 nights of class and an unhealthy amount of reading. Hopefully it will be all for the best. Here are some good personal finance articles from the weekend.

Economy Can Wait; Stimulate Your Savings
Hoarding Nations Drive Food Costs Ever Higher
Is Your Tank Half Empty or Half Full?


By the way a personal project which I have always wanted to take on is one which can empower young women in developing nations to freely attend school during their menstrual cycle. Though strange to us, many young girls are forced to stay home from school for up to one week a month when their menstrual cycle begins. Menstrual pads are expensive or very inaccessible in smaller cities.

Though I was first put off by the idea of reusable menstrual pads, it now makes a lot of sense to me and it is a pretty clean invention. Many sites are now showing women how to sew these pads themselves and reuse them for years. With so many in the Western world now concerned with going green the idea is catching on albeit at a slow pace. However for the young girls in other nations this idea must spread like wildfire. It is appaling to think a menstrual cycle can possibly keep a young girl from passing a class if she misses too many days of class. Please visit the website of an organization green4girls.org which has already started this effort and hopefully when I get some time I will begin to teach myself how to make these later this summer. I have absolutely no sewing ability and have never tried but I will dust off my mother's old sewing maching and give it a try. It's for a good cause.

Simplify your (financial) life

I came across “Simplify Your Life” by Elaine St. James, a national best seller back in the 1990’s which is about exactly what the title states. Though the book is not about personal finance, it is amazing how much of the advice St. James gives also applies to anyone trying to straighten out their finances. Here are some of the best tips with regards to money that she gives.

1. Reduce the clutter in your life.
8. Cut your laundering chore in half.
19. Move to a smaller house.
20. Drive a simple car.
22. Build a simple wardrobe.
24. Rethink your meals with friends.
27. Cancel your magazine subscriptions. ( In addition to not having to pay for subscriptions, most magazines are trying to sell you more stuff.)
28. Stop the newspaper delivery.
33. If you don’t like the holidays, bow out.
37. Take a vacation at home. (Not applicable to me right now, because I need to really get away. But for the most part there are a lot of places right in our own backyard which we have never experienced.)
40. Rethink your buying habits.
41. Change the way you shop.
42. Reduce your need for goods and services.
43. Get rid of all but one of your credit cards.
48. Next time you buy a car, get it secondhand.
51. Work where you live or live where you work. (Though she was referring to the time saved not being on the road, gas prices today make this especially important.)
57. Simplify your eating habits. “Eliminate processed foods.” (These foods can be higher in fat and prices.)
58. Always split a restaurant meal.
60. Make water your drink of choice.
62. Pack your own lunch.

Small Financial Victories

As of today I have paid off all debt with the exception of my college loans. I paid off a lump sum of about $3,000. in debt to Capital One (who contrary to what they claimed in their ads a couple of years ago) are a huge hassle. I also paid off about $700. in debt to Mastercard. While I was on track with Capital One and would have been finished paying off my debt by next year had I continued to pay $200./month at 9% interest, it is my Mastercard that stressed me out. This is a revolving account, my first credit card which I signed up for in front of the dining hall in college. Though I paid on time and always paid at least 5X more than the minimum, I had not seen a zero balance on this card in almost 4 years. The highest it ever reached was around $2300. in 2005 and finally last summer it was looking like it would be paid off by August. But low and behold I charged a couple more things on it and I could not get out of the $500. balance range for the last several months. Finally about 3 weeks ago I decided to pay them everything I owed which was $694.86. I am not a homeowner so I have no idea what having 6 figure debt feels like but this was stressful enough. My biggest challenge now is should I shred the Mastercard or not because I still feel like I may feel like I "need" to use it during my next trip to the gas station. When I called Mastercard today and heard the automated service say the words I have been longing to hear for so long "your balance is zero dollars" I also noticed they added $1,000. to my line of credit. Thanks for the temptation.

And in one last final financial victory, though I normally do not pay coupons any mind, I received one in the mail last week for a free sandwich at Potbelly and I put it to use today. One veggie sandwich on the house. I feel so liberated.

Recent articles on 20-somethings

These recently published articles on young people trying to make it in these times makes life look not so fun.
Starting Salaries but New York Tastes
Checking out Roommates
Toughest Summer Job This Year is Finding One

Downsizing

I have always admired people who have been able to get rid of all of their belongings and live somewhat stuff-free. I guess I am too attached to certain possessions to get rid of them though I have tried. I always regret letting go of those items later, whether it be clothing or books. Since I have realized that I am not strong enough to let go of my possessions I have pretty much stopped buying new stuff. At least I'm trying. I just gave away 6 pairs of jeans this weekend which were all in great shape and went to the mall on Monday and wanted to buy a new pair of jeans. While in the fitting room I realized I would just be keeping myself in the cycle of buying stuff which I barely use and then have a difficult time parting with, so I left the mall empty-handed. Keep in mind I still have about 10 more pairs of jeans to give away. Unless the item of clothing is a necessity ie: work clothes ( I barely even buy that) I try not to buy it. I have only purchased about 4 books this year (all used). I do not buy electronics (I just use other peoples'), CD's, gadgets, candles, and all the other stuff people spend on regularly. My biggest weakness is by far toiletries (make-up, hair care, lotions) however I justify this by saying that at least once I finish these products they will not take up space, of course the empty bottles will most likey end up in a landfill. Believe it or not I have not adopted this lifestyle to save money but rather because I am sick and tired of clutter. Anyone who has moved lately knows how shocked you become when packing by the amount of stuff you can acquire in a short period of time. I have no attic or garage to store my stuff so it is more obvious that I have too much stuff in my home since storage space is at a minimum. While I do not ever think I can take on the somewhat hippie-like minimalism of the couple mentioned in this article I do understand where they are coming from. Like the sociologist quoted in the article says "You have to care for it, store it. It becomes an appendage, I think. If it enhances your life and helps you do the things you want to do, great. If you are burdened by these things and they become the center of what you have to do to live, is that really positive?” If you do not believe me ask go ask someone who has recently moved. So if you know me and I will be buying you a present soon it will probably be something like dinner or a drink because I care about you and I want you to avoid clutter as well.

Carnival of Personal Finance #147

Thanks to MoneyNing.com for including me on the Carnival of Personal Finance #147. I'm honored.

Foreclosure

This year I decided to learn more about the foreclosure process and see if I can strike gold with a house that is in foreclosure. The problem is nobody could really teach me about the foreclosure process and people in the real estate industry did not want me to learn about it because that meant no money for them. A couple of people in the mortgage loan industry finally told me that my best bet would be to go down to the courthouse and look at the foreclosure records. Though this is free it is very time consuming and will require more than one trip to the central files room in your local courthouse. Upon finding a house you are interested in you have to go back to the court with the case docket number and ask to look at the file so that you can see exactly what the owner owes on the house and any other liens. Once the home goes to auction there is also the issue of securing a cash deposit for the day of auction just to be eligible to bid.

There was a house I was interested in and it was on the market for $435,000. though the house was assessed at closer to $390,000. The owners refinanced with an ARM loan in Jan. 2006 and now owe $455,000. (Yes I saw all this info in their files at the courthouse.) Nobody bought the house which is very small though in a convenient location. The starting bid at the auction on Wednesday was $400,000.!!? Did the bank (HSBC in case you were wondering) think anyone would really bid that high? The house is worth less than that!! Anyway I am curious to see how low this house will go because banks are not in the business of holding properties and they will not get it off their hands for $400K.

According to The Motley Fool, there is a magical age where you can invest for one year and be a millionaire at retirement...26!!! According to the article if a 26 year old maxes out their 401K with $15,500. and their IRA with $5,000 and leave it there for 41 years they will be a millionaire at retirement, that is assuming they will get 10% annual returns.

So what's the catch? Most 26 year olds today do not have $20,500. to invest in one year. That is a significant portion of your income when you are 26 but it's worth trying. In order for most 26-year-olds to save $20,500 in a single year, they'd either need to find a fabulously high-paying job or a rent-free room in their parents' basement. Either way, they'd probably be living on a strict diet of ramen noodles.

The point is compounding really does pay off if you start saving and investing young. This does not mean that everyone beyond their 20's should give up it just means that even young people should start investing for their retirement aggressively and not place it on the back burner.

So maybe you cannot max out your 401K with $15,500. this year but at least try to max out that IRA, it's only $5,000. Read more...

Who me??

Ok so I have had this blog for over a month now and really have not shared much about myself. So let me just tell you something I am not very proud of, it is March 31st and I still have not done my taxes. Yeah I know...

Anyway what I really would like to share with you is an experience I had with a financial advisor about a month ago which was disheartning to say the least. After asking around for quite some I finally got a good reference to someone from a colleague of mine who was referred by her husband's Business professor. The financial advisor is with a big, reputable company and my colleague seemed happy with her. My colleague even told me how much money they've invested with her which is less than what I would be starting out with.

The woman was very accessible and I went to her nice corner office in a nice part of town to meet with her. After commenting on how young I look and how smart I am to be concerned about saving for retirement she stunned me by whipping out a legal pad and asking for my address, income, and social security number!! Keep in mind she has told me nothing about herself, the funds she wanted me to invest in or anything else for that matter. I guess she figured my colleague already told me everything I need to know about her. WRONG! The rest of the meeting continued to go downhill with her telling me that "I clearly know a lot" implying she did not have to go over a lot of material. She never mentioned her fees, the fees of some of the products and failed to answer a lot of other questions I asked her. Now I am sure that this woman earned her nice office and I would have just figured that she was not bothering herself with answering my questions because I was young or was not investing as much as her other more wealthy clients. Thing is, my colleague invested way less than what I wanted to start with. So what could it be? I have more money to invest than my colleague, I am well read on investing, it seems like I would be a decent client. This made me think about it for a few days thereafter and the only thing I could think of is that my colleague who is a few years older than I am is a married woman and I am not. Do married people seem like more stable clients than single people? I don't know, but finding a good financial advisor sure is hard.

"How we spend money, save money and give away money say a lot about who we are"

A very good piece from The Wall Street Journal about the money habits our parents teach us and how that translates into our own decisions later on. While some of the parents in this article really get their children involved in finance by giving them money to invest at a very young age others can also show just how important financial wisdom is by showing the trials and discomfort bad financial management can bring into your life. While the adults in my life did not teach me to save and invest as a child, I could see that the ones who seemed to live life to the fullest usually ended up financially stressed while those who lived frugally were a bit more relaxed and not struggling to make ends meet. To each his own...

Richest Blacks

What's a blog about money and social issues that does not mention the Forbes' list of the world's wealthiest. Coming in at #97 overall and #1 richest Black person is Ethiopian born Mohammed Al Amoudi, with a net worth of $9 billion. Of course the usual suspects are on the list, Oprah, Bob Johnson (BET). It is good to see that Blacks in other countries are building wealth and investing in their communities and did not make their money in the entertainment industry. There are other ways to make money besides sports and music !! Not to sound mean but examples of wealth for Black Americans is always tied into entertainment not science, law, investing and that is scary. See who else is on the list.

"In Diversity We (Sorta) Trust"

A commentary by Yale law professor Peter Schuck, whose writing I always enjoy. Very interesting points he brings up especially in light of this Presidential election. In my opinion, diversity is a very touchy subject for people from around the world, and most people would rather ignore it. However Schuck's commentary shows the relevance of diversity to everything we do and sooner or later we all have to ponder the issues behind we work so hard to avoid the topid of diversity and it that's really working.

Read the commentary...

'High-powered law firms need women lawyers if they are to remain high-powered'

This article from The Wall Street Journal says a lot. A woman who never dreamed of being in Corporate America is a partner at a big firm.

"Lawyers need to have a broad focus to respond to complex challenges, so early specialization is not necessarily a good idea. The early years should have a wide-ranging focus, so that a lawyer can see a range of specialization choices. She may then discover a specialty that did not exist when she was in law school."

A child of the '60s turns corporate bankruptcy lawyer -- with a stop at Three Mile Island along the way.

Women and personal finance news

Everyone's favorite personal finance guru (well not everyone's), Suze Orman is being honored. Crittenton Women's Union, a nonprofit organization dedicated to helping low-income women attain economic independence, will present its 24th Amelia Earhart Award to Suze Orman, nationally acclaimed personal finance expert, best-selling author, and Emmy Award-winning television personality.

UN unveils plan on Investing in Women and Girls
Election 2008-Pocketbook Issues Loom Large

In honor of National Women's History Month

Women have made tremendous strides in the business world and there is no greater time than now to highlight women in the world of work, finance and business.

The median annual earnings of women ages 16 and older who work full time, year-round is $32,168, in 2005. Women earned 77 cents for every $1 earned by men.
- In the District of Columbia, women who worked year-round, full-time earned 91 cents for every $1 their male counterparts earned in 2005. Among all states or state equivalents, the district was where women were closest to earnings parity with men. Maryland and Connecticut were the only states where median earnings for women were above $40,000, as was the District of Columbia.
- The median earnings of women working in computer and mathematical jobs, $58,906, the highest for women among the 22 major occupational groups. Among these groups, community and social services was the only group where women's earnings as a percentage of men's earnings were higher than 90 percent.
- The estimated work-life earnings of women with a professional degree (i.e., medical, law, dental or veterinarian) who work full time, year-round is $2.9 million. For women, like men, more education means higher career earnings. It is estimated that women without a high school diploma would earn $700,000 during their work lives, increasing to $1 million if they had a high school diploma and $1.6 million if they had a bachelor's degree.
- The amount women, who worked full time, year-round, earned 77 cents for every $1 their male counterparts earned in 2004. This amount is up from 76 cents for every dollar in 2003.
- The revenue for women-owned businesses reaped more than $939 billion in 2002, up 15 percent from 1997. There were 116,985 women-owned firms with receipts of $1 million or more.
- The number of women-owned businesses climbed to nearly 6.5 million in 2002, up 20 percent from 1997. (The increase was twice the national average for all businesses.) Women owned 28 percent of all non-farm businesses.
- More than 7.1 million people were employed by women-owned businesses. There were 7,231 women-owned firms with 100 or more employees, generating $274 billion in gross receipts.
NOTE: Nearly one in three women-owned firms operated in health care and social assistance, and other services such as personal services, and repair and maintenance. Women owned 72 percent of social assistance businesses and just over half of nursing and residential care facilities. Wholesale and retail trade accounted for 38.2 percent of women-owned business revenue.
- The average rate of growth in women-owned firms in Nevada reached 43% between 1997 and 2002, which led the nation. Georgia (35 percent), Florida (29 percent) and New York (28 percent) followed.
- Women 16 or older who participated in the labor force in 2005 equalled 59%. This amounts to 69.3 million women, 35 million of which were full-time, year-round jobs. Men in this range amounted to a 73% rate of participation.
- In a management, professional or related occupations, women chipped in 37 percent of the work force, as compared to 31% of men.
- More women work in educational services, health care and social assistance industries than in any other, the total amounting to 21.1 million. Breaking it down further, 10.7 million work in the health care industry and 8 million in educational services.

“I have always thought of money as freedom”

An article titled "Frugality can be acquired, but it can't be bought" makes me wonder why it can't be bought. Currently U.S. residents have maxed out their credit and young people see graduating college with tons of educational and other debt as normal. So why can't we buy frugality, ie. teach the basics of good personal finance in high-school and college. Why are so many young people not familiar with the basics about credit scores and interest rates until they finally want to make a purchase such as a car or rent an apartment? Maybe if we start early by paying for this kind of education, we can "buy" frugality after all. Read entire article

Adwa- A Universal Victory

Though February is when Black History Month is celebrated in U.S., one of the greatest achievements in history for all people of color occured in March. On March 1, 1896, Ethiopia also then known as Abyssinia defeated Italy at the Battle of Adwa. Adwa, a city in northern Ethiopia became the site of the face-off between thousands of Ethiopian and Italian troops. The Ethiopian victory became a victory for all people of color. This victory was not only the first defeat for a European power but also the reason why Ethiopia maintainted its place as the only of the African continent's 54 nations to never be colonized. In 1904 when Japan went to war with Russia, the Japanese looked to Ethiopia for guidance as the first non-Caucasian power to defeat Europeans. While many historians have criticized Ethiopia's leadership for ceding parts of Northern Ethiopia (to be named Eritrea by the Italians), to Italy after the Battle of Adwa, others see the deal as the only way Ethiopia could have avoided further warfare. Learn more about at Adwa...

We're more alike than we want to believe...

Two leading scientific journals "Science" and "Nature" have both published studies last week on studies on human migration based on DNA. Both research groups relied on DNA from blood samples collected by anthropologists around the world as part of the Human Genome Diversity Project, a controversial effort from the mid-1990s to gather genetic specimens from thousands of populations, including many indigenous tribes. "Instead of saying a particular person's genome is from Africa, this kind of data allows us to say which part of Africa they were from," said Andrew Singleton, chief of the molecular genetics section at the National Institute on Aging in Bethesda, Md., and senior author of the Nature report. The pattern of genetic mutations offers evidence that an ancient band of explorers left what is now Ethiopia and went on to colonize most of the world. Read more...

Black History Month

In honor of this blog's inaugural month and Black History Month, why not highlight a notable figure in American history. Though Black History Month has its opponents there is nothing wrong with taking some time out to remember those who paved the way for us. In light of the fact that it is an election year I cannot think of anyone better than the first Black woman to be elected to the U.S. Congress and the first Black American to run for the Democratic nomination in the 1972 Presidential Election, the late Shirley Chisholm.

Born in Brooklyn, NY to immigrant parents from the Caribbean, Chisholm is the embodiment of the American dream. In 1969, she was the first black woman elected to the U.S. Congress and was re-elected six times until she retired from political office in 1983. During her first term in Congress, she hired an all-female staff. In Congress, she spoke out for civil rights and women's rights, advocated for the poor and opposed the Vietnam War. She ran for the Democratic Nomination for President in 1972. She was active in the NAACP and co-founder of Unity Democratic Club in Brooklyn (instrumental in mobilizing black and Hispanic voters), the National Women's Political Caucus, the National Political Congress of Black Women and one of the early members of the National Organization for Women. She was inducted into the National Women's Hall of Fame in 1993.
Chisholm wrote the autobiographical works Unbought and Unbossed (1970) and The Good Fight (1973).
Shirley Chisholm died in Florida at the age of 80 on January 1, 2005.

Market Revolution

Unless you have been under a rock for the past few months, you have been subjected to all of the dreary news regarding the financial markets. However The Wall Street Journal published an article in today's issue that provided somewhat of a breath of fresh air. While we talk about the stock market, trading and exchanges casually and without much fanfare, one of the world's most ancient nations, is inaguarating its commodities exchange next month. The Ethiopia Commodities Exchange set to open in March 2008 begins Ethiopia's era of modern trading. Though quite behind compared to the U.S. considering the Chicago Board of Trade opened it doors 160 years, my personal approach to investing it it's never too late and this groundbreaking occasion in Ethiopia is sure to change the lives of its millions of citizens forever.
Read more...

Free Thought Movement

Just a few words on this blog's namesake:

Freethought is a philosophical viewpoint that holds that beliefs should be formed on the basis of science and logic and not be influenced by emotion, authority, tradition, or any dogma. The cognitive application of freethought is known as freethinking, and practitioners of freethought are known as freethinkers. Freethought holds that individuals should neither accept nor reject ideas proposed as truth without recourse to knowledge and reason. Thus, freethinkers strive to build their beliefs on the basis of facts, scientific inquiry, and logical principles, independent of any factual/logical fallacies or intellectually-limiting effects of authority, cognitive bias, conventional wisdom, popular culture, prejudice, sectarianism, tradition, urban legend, and all other dogmatic or otherwise fallacious principles.

The aim of this blog is not to promote any particular school of thought thought being rational is always wise. However as an observer of social issues, politics, history, and money I have noticed that only your thoughts are free, so think freely!!