Archive for January, 2008

Think You’re So Smart? Try Running the Fed

Tuesday, January 15th, 2008

The San Fransisco Federal Reserve Bank has posted a neat little simulation of what it’s like for the Fed to try to set correct monetary policy.

In the game, you get the opportunity to change the federal funds rate every three months.  You react to ‘news’ and try to keep the economy on an even keel.  I’ve tried it a couple of times and even though there’s only one variable it’s surprisingly hard to do.

You’ve always wanted to be the Fed chairman. Now’s your chance.

Priorities

Tuesday, January 15th, 2008

I had an insight into my own motivation this past weekend that surprised me for its simplicity. It was about priorities in my life. My dad helped me define them, though that’s quite the opposite of what he had in mind. Let me explain.

Very recently, I quit a well-paying but not very interesting job to take one that pays somewhat less but affords me greater freedom. Specifically, I can work from a home office and have a somewhat flexible schedule. Because of the job change, we’re selling our house and buying a new one in a lower cost of living area. As a result, my wife will again stay home to raise our younger child for a couple of years, just as she did for our daughter.

This past weekend at a family event, my father asked about the new job. I hadn’t discussed it with him (or many other people for that matter) at all before quitting my former job and starting this one. He was understandably interested and asked the usual questions. But one in particular surprised me; I was even more surprised by my answer.

Father: “So, what will you be doing?”

Me: Blah, blah, blah

Father: “What’s the next step up?”

Me: “What do you mean?”

Father: “The career path. How do you move up? What are the steps to become the next CEO?”

Me: “I don’t know. I don’t really care, either.”

That brought the conversation to a screeching halt. I think I was as surprised as my father by my answer.

It was one of those times when my unconscious came out without me analyzing everything. Work, for me, is a means to an end. That’s why I found myself agreeing with a recent post by Meg at All Financial Matters about how finding personal fulfillment through vocation is overrated.

My priorities are my family and my marriage. Everything else is a distant second. As hard as it evidently is for my father (and many other people, I’m sure) to understand, I’m living my life according to that priority.

I’ll take that over being the CEO any day of the week. And twice on the weekends. Or as they’re known to my little girl, “Mommy-Daddy days.”

We Bought the House

Monday, January 14th, 2008

The search is over and we’ve bought the house. We found out a couple of days ago that the seller accepted the offer, so it looks like it’s full steam ahead. Thank goodness, too, because my wife and I were not enjoying our search.

It’s funny how it seems the more you spend on something, the less you enjoy the search for it. I know this has been true for us both times we’ve looked for a house and every time we’ve bought a car that I can think of. I guess it’s because there’s so much at stake. In the case of a house, and to a lesser extent when buying a car, you know you’re stuck with whatever your decision since transaction fees are so high. In other words, the costs of screwing up are extremely high.

Speaking of extremely high, despite the ‘buyer’s market’ we did end up spending more for the house than we’d initially planned. Reality has a way of colliding spectacularly with plans, though. We just couldn’t buy the house we wanted for the amount we wanted to spend. So we went up a little bit - about 15% higher than we’d planned.

Even so, we’re really pleased and excited about the house. It’s a new house (as in, new construction), something novel for us as a family. It’s bigger than our current house by about 35% to accommodate not one, but two home offices (I haven’t written about it, but I took a new job recently and it’s work-at-home). It has a nice, big, flat yard for playing. Oh, yeah, and it has granite counter tops. For some reason you have to have that today. Don’t ask me why.

BoA Buys Countrywide - You Get the Bill

Friday, January 11th, 2008

Today’s announcement that Bank of America will buy Countrywide Mortgage takes the recent housing bubble/sub-prime loan mess and elevates it from bad to absolutely obscene.

As JLP at All Financial Matters reports here, Countrywide’s CEO will be paid $110M as a result of the sale.  Here’s another CEO being rewarded for destroying his shareholders’ company.  It’s a scene now so common that people don’t even react anymore.

Guess what?  You’re going to pay him.

That’s right.  You.

It doesn’t matter if you’re a shareholder in either company.  If you are a taxpayer in the U.S., you get to foot the bill.  How’s that, you ask?  Taxes.

See, companies can carry forward losses for tax purposes.  It’s similar to how people are told to sell losing stocks and mutual funds to lock in the capital loss.  It’s part of what makes Countrywide attractive to Bank of America.  BoA now gets to reduce its tax bill by hundreds of millions of dollars.

Congratulations.  You get to pay the bill for Bank of America’s purchase of Countrywide.  Or more correctly, your children and grandchildren will.

Get some of your money back if you bought a diamond

Friday, January 11th, 2008

Whilst reading the WSJ, I saw one of those class action lawsuit announcements. This one was actually useful to me, though, and I thought I’d pass it on.

If you bought a diamond (in jewelry form or as a loose stone) from January 1, 1994 to March 31, 2006, you can join a class action settlement to recover some of your money. Here’s the link. I won’t give the full details about it here. If this applies to you and you’re interested, go check it out.


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