February 5, 2012

Escaping the Credit Card Debt Prison

Paying Off Credit Card Debt to Escape Financial Prison

When you find yourself in credit card debt it can feel like a financial prison.  Suddenly, you can't go out to eat, pick up a new shirt, or even go to a movie without worrying about the fact that you are increasing your debt or using cash that could have gone to paying down your credit card balances. Before you can figure out how to get out of credit card debt, you have to understand the reason you are in your current position.  As most financial articles and planners can tell you, there … [Read more...]

Understanding Credit Card Debt and Negative Amortization

Credit Card Debt with Negative Amortization

Credit card debt can be difficult to pay off because of one incredible powerful financial force: negative amortization.  Put simply, negative amortization means that your credit card debt balance is increasing over time because your payments are not enough to offset the interest expense that is being charged to your account. Negative amortization is the opposite of compounding.  Properly harnessed, the power of compounding is what makes people grow rich over time; you earn interest on … [Read more...]

Contemplations Over a Cup of 2 a.m. Tea

Wegmans Fruit Tart

It is just past 2 a.m. and I finished brewing a cup of Darjeeling tea.  I'm sitting here enjoying the fragrance of the leaves in the cup and it made me remember something ... During college, Aaron and I did our grocery shopping at the Wegmans on Route 1 in New Jersey.  Of course, living in the dorms for most of those years before we got an apartment off campus meant grocery shopping was more like picking up cereal, milk, coffee and snacks to eat at night or between meals in the dining … [Read more...]

Think Like a Spider Web, Not an Organizational Chart

Life Is Like 3D Chess

Here is the best thing I heard all day ... Life is not an organization chart. Life is more like a spider's web. Things happen in strange ways. - Ross Perot There is a lot of truth in this. You cannot think lineally about your life or business. You need to think in three-dimensions. This is one of the reasons people are successful. Take my parents and their company, Chenille Appeal. How is it they were able to grow, fund significant expansion and make major technology upgrades … [Read more...]

Where Do Millionaires Invest Their Cash to Keep It Safe?

Where do millionaires invest their cash?

I've been having a conversion about investing and money with the reader "Frat Man" in the comments section of another post.  He asked: I also had one other question I have always wondered. Where do millionaires keep their money? In the sense that FDIC insurance only covers $250,000 at the bank and SIPC only covers $500,000 at the brokerage. I mean, I can't see Bill Gates putting $250,000 at thousands of banks across the country, nor can I imagine Lou Simpson's net worth getting wiped down to … [Read more...]

“Dreams Become Reality One Choice at a Time” – A Lesson on Life, Business, and Money

Country Club Plaza in Kansas City

Isn't that a fantastic quote?  I got it from Tara Beth Workman a few days ago and I've been thinking about it since.  I realize that it is entirely true and that my life is a reflection of that.  All of our lives are reflections of that.  Let me explain. This afternoon, Aaron and I decided to take an impromptu trip to Hall's department store because we were restless and wanted to get out of the office.  Turns out, we hit a major financial milestone so rewarded ourselves by spending just … [Read more...]

A Change in the BP Situation Regarding the Dividend Yield Support

This morning, BP was trading between $30 and $31 per share, down more than 50% since the oil spill in the gulf began.  My "stupidly cheap" valuation was based at $33 per share but there is a slight monkey wrench thrown into the equation: The United States Government is exerting as much pressure as possible on the Board of Directors to stop future dividend payments. One of the valuation assumptions built into the model was something known as "dividend yield support".  If a dividend is … [Read more...]

People Who Are Drowning in Student Loan Debt

Student Loan Debt information

Victims of the Student Loan Industry or Irresponsible Borrowers? I was reading a site called Student Loan Justice as well as a piece at the Huffington Post where people are talking about their "overwhelming" student loan debt that is - wait for it - $15,000 or $30,000.  Basically, less than the value of a car.  Or a couple both of whom smoke a pack of cigarettes each day for five to ten years. Or 4 to 8 months of pre-tax income for the average American household. Rational, full-grown legal … [Read more...]

Misconceptions About Wealth

Pinot Grigio White Wine

How The Marketing Industry Continues to Convince Average Americans They Know What a Millionaire Looks Like A few days ago, I quoted something from one of Dr. Thomas J. Stanley's books: "In the United States, there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more." For the past few days, I've been studying more about average household income in the United States and, specifically, the … [Read more...]

DeLong Sportswear Files for Chapter 7 Bankruptcy

DeLong was the nation's largest privately owned manufacturer of award jackets and team uniforms.

If you are involved in the sporting goods industry, you probably know that there are only a handful of companies that manufacture letterman jackets in the United States.  Among the biggest was a company called DeLong Sportswear, headquartered in Grinnell, Iowa.  A few months ago, rumors are that DeLong went into Chapter 7 bankruptcy and was scheduled for a liquidation of assets (although some sources say DeLong merely closed its doors and didn't actually file).  The town in which the firm … [Read more...]