Posted: May 19th, 2008 | Author: Joe | Filed under: Investing | Tags: Gold, Investing, Scam | 32 Comments »
I’ve been hearing a radio ad for Gold American Eagle Coins from Blanchard and Company on my way home from work for the past 2 months now. Every time I hear it, I balk at their claims. They make their product sound perfect, especially for “these times of uncertainty.”
As someone who is fairly conversant on such things, I like to think that the only time “times” seem certain is when everyone is following the herd. Remember the “new economy” of the .com tech bubble? How about how the price of real estate can “only go up” during the recent housing bubble?
To be fair, I don’t know that Gold is experiencing a bubble, but the contrarian in me screams “RUN!” every time I hear this commercial, or one like it telling me that Gold is a certain thing. Here’s how the commercial goes:
“In a rapidly fluctuating economic environment, there’s one investment that’s rock solid: American Eagle Gold Bullion coins. “
Hmm… rock solid, eh?
Well, let’s look at the performance over the past 5 years:
That looks impressive. Seems like a nice investment during that time frame. However, let’s look at the price of Gold over the past 20 years:
Looks like Gold has been pretty hot for the past 5 years or so, but didn’t do that much for the 14 years prior. In fact, if you invested in Gold in the 80′s you would have lost value in the 90′s. It’s a good run over the past 5 years, but looking at the chart, I would call it “hot”, “inflated”, or “over bought” before I would call it “rock steady.”
“Many experts recommend diversifying by adding gold to your investment portfolio as a way of improving overall performance. “
Ah, now this claim is sneaky. It’s sneaky because it’s true! At least it is on the face of it. Natural resources, precious metals and other commodities, Gold included, do not tend to move in parallel with other investment types like paper assets. So, they do offer a form of asset diversification. However, Timing is everything and any expert who recommends buying Gold at this time may be following the herd. He may effectively be telling you to buy high, which is counter to how wealth is created in investing. Of course, gold may continue to go up for a while too. It’s just that the track record of gold isn’t that good when times are not so turbulent and full of unknowns.
But hey, if you’re worried about losing money don’t be – they make this claim:
“You can always feel confident with a Blanchard and Company, Inc. coin since we’ll buy back whatever we sell you.”
Well, sounds great, doesn’t it? I can invest in Gold coins, and if I start losing money they’ll just buy the coins back. There’s one piece of information they don’t tell you in the radio ad: “…we’ll buy back whatever we sell you at the then current market price.” (emphasis added by me for clarity)
I went to the website, and found they include the qualification “at the then current market price” but it is absent from the radio ad. Incidentally, the radio ad only refers to a phone number to call, nothing at all is mentioned about a website.
I don’t think Blanchard & Co. are running a scam, but I also don’t think they’re being completely upfront to the listeners and the radio ad is quite misleading.
So, are Gold coins a worthy investment? I don’t think they are, not at this time and not at these levels. Unless, the last piece of the ad strikes your fancy:
“Gold Eagles offer a tangible beauty. What other investment allows you to hold it in your hand and appreciate its artistry? “
It’s difficult to argue that a stock certificate has any artistry about it, so if you like to look at your shiny investment, they go for it – just don’t buy into the hype of superior returns.
Oh – and another thing to consider: Gold pays no dividends, so during periods of calm and tranquility (like the 1990′s) your investment in Gold tends to just sit there… gathering dust instead of income.
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Posted: May 17th, 2008 | Author: Joe | Filed under: Uncategorized | Tags: blogging, carnival, Giveaway | No Comments »
I don’t know about you, but I’ve been reading personal finance blogs for a couple of years now, and it has really improved my life. Seriously. Personal finance blogs are a gateway to free information from average people and industry insiders alike.
I got hooked early on by reading people who were writing about their experiences with things that I was also experiencing, things like digging out from credit card debt and car payments to making the most of my 401k.
Then came the great blog explosion. It seemed like 100 new blogs were born every day, and personal finance blogs were no different. I was in heaven for a time with so much to read and learn. Call this my golden age of pf blogs.
Then things changed.
Little by little, I started seeing an overall decline in the length and quality of the posts. Many posts began to be little more than 250 word quotes from other sites, often loaded with links. Then I started noticing things like “Carnivals of Personal Finance” seemingly everywhere I turned. At first, I mistook these as general laziness on the part of the blogger. But then things started to click. Remember that exponential growth I mentioned earlier that led to the golden age?
All of this growth meant increased competition for readers and attention. Then these carnivals began making sense. Giveaways too. Especially when I learned that search engines favor sites with numerous inbound (and outbound) links. What better way to get a large number if links then to offer a free book giveaway, and all you have to do to enter is leave a comment? Other bloggers leave comments so they can link your site to theirs, and it become a mutual link exchange.
I don’t begrudge bloggers who take part in carnivals, or roundups as their close cousins are sometimes called. It’s smart, effective marketing. I just think far too many treat them as simple link gathering exercises and don’t use them to offer any real value. I think giveaways are great and linking to other material on other sites is what makes the Internet the rich medium of information that it is. But this power is not always used for good. Some sites seem to be little more than thinly veiled link farms. Those sites disgust me enough to make me unsubscribe from their blog as they are providing no real content or insight.
Now that I have all of that off my chest, there are still some really good blogs out there that offer meaningful, insightful and interesting thoughts, critiques and opinion. One such blog is MoneyNing.
In the interest of full disclosure, MoneyNing is having a giveaway in which one can enter by mentioning his giveaway post in a post of their own. This is, of course, what I am doing here, but I don’t feel it’s compromising my beliefs as laid out above because MoneyNing is not like those other blogs.
MoneyNing is an insightful, motivational and engaging personal finance blog. And he has some pretty good giveaways too! 
Photo by: Andrzej Gdula
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Posted: May 15th, 2008 | Author: Joe | Filed under: spending | Tags: Car Repair, Economic Stimulus Check, Unexpected Expense | 2 Comments »
Regular readers of this blog will remember my plans for the Economic Stimulus Check I was to receive from the government.
Ah, it was a grand plan worthy of being recorded in an epic poem and passed down through the generations for eons to come. Well, maybe not. But I thought it was a fiscally sound idea nonetheless.
My wife and I were going to treat ourselves to something a little less than 15% of the check total, and bank the remainder to reach our emergency savings goal a couple of months early.
Well, the best laid plans of mice and men being what they are, my old nemesis had to make a 
reappearance. I am, of course, talking about car repair.
I hate cars.
Don’t get me wrong, I like them just fine when they get me from point A to point B. I like them even better when they do so in style and comfort, but I absolutely curse their very existence when they pilfer my hard earned money and squander the unexpected windfall I was about to receive.
Apparently, wheel bearings are damned expensive to replace, even more so when the hub needs to be replaced as well.
Factor into that the need to replace an exhaust pipe and new brakes (and rotors) on my other car and we are effectively kissing our little windfall good-bye.
Still, we did do our part to stimulate the auto repair sector of the economy and that should count for something I suppose.
On the up side, we didn’t have to dip into any of our savings to cover the cost, so we are still on target for our savings goal despite the unexpected expense. Also, we owe nothing on the cars and the one that just got new brakes is a 1999 Honda with little less than 140,000 miles on it so that should go for at least another 3 years or so with my commute being what it is.
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Posted: May 11th, 2008 | Author: Joe | Filed under: Debt, Lifestyle, Saving, spending | Tags: money, Saving, Single Income | 17 Comments »
Living on a single income is something a lot of families are having to do these days, and not through any choice of their own. Preparation and planning helps a lot, but that’s not always an option when living on a single income is forced by a job loss. In that case, it’s best to inform yourself of your options and examine the possibilities of reducing your costs. I hope this article will help.
I just read an article by Laura Rowley at Yahoo! finance, titled “Can You Live On One Income? It’s Worth a Try”
It’s a good article in which she examines the effect of woman entering the workforce, and the differences in working families from the 1970s through today. I felt the need to respond to some aspects of the article, because I happen to have some 1st hand experience on the topic.
“Is living on a single income possible for families with two incomes?”
Absolutely! My wife and I are living proof.
“You see lots of articles discussing ways to eliminate the second income — things like clipping coupons, buying second-hand clothes, and cutting out vacations and cable television.”
Yeah, we’ve done A LOT of simplifying and sacrificing. Just how much sacrificing a person is able to do has a lot to do with his standard of living and the cost of living. We made the conscious decision to start living on a single income because we feel that it’s more important that our kids have a solid home life -especially in their lives. We wanted our kids to have 1-on-1 time with their mom in formative years, not a stranger.
We’ve never actually done without cable television, but we have cut back on other non-essentials:
Cell phones. We used to have a costly $80 a month subscription to a big name provider. I realized that I really don’t like talking on the phone to begin with and the only reason I had a cell phone was in case I got stuck on my way too or from work. We canceled the service contract and went with a pay as you go service. We have the same cellular features we used with the other plan for $6 a month!
Vacations. We save up for vacation, and when we vacation, we go camping. It’s dirt cheap, gets us back to basics and out of the rat-race of modern life for a week. Plus it’s great for strengthening the family ties.
Buying second-hand clothes. We definitely have cut back on our clothing purchases. I’m down to 1 pair of jeans! I’ve only recently been wearing jeans to work, so for the most part I have other pants to wear but the fact remains – I haven’t purchased new clothes in 3 years! The clothes I have gotten in those years have been as gifts or purchased with gift cards.
Clipping coupons. My wife is the Queen of coupons, bless her soul. She saves boat loads of cash on groceries every week. It’s not easy, she spends a couple of hours every Sunday going through the various papers and planning meals based on what’s on sale that week, but it’s worth the effort. Trust me.
“But ultimately, paring those expenses isn’t going to cover the gap for most middle-class families living on a single income, because those aren’t the costs that drive them to the economic edge. The real problems are what Harvard Law professor Elizabeth Warren calls “the big five” — housing, health insurance, child care, a second automobile, and taxes. “
That’s true, but with some planning, forethought and financial literacy you can greatly minimize the impact of these.
Housing. Save up a sizable down payment to purchase the house, and don’t buy more than you can afford. My wife and I are currently in the process of buying a larger house. Despite the fact that it is a buyer’s market, we are have a very difficult time finding a house that we like in our price range. This is especially difficult because we see MANY houses that suit our desires and needs that are just out of our price range but we know they would be in our range if we had a 2 income household. It all goes back to priorities in life. Also, make sure your credit is in good shape before you apply for a home loan. This is a large part of your cost of living as well. We could never afford living on a single income if we lived in an urban area, so we moved away from the city and live in the country. I have a 50 minute commute, but it’s worth it.
Health Insurance. This is a tough one since so much of the cost is beyond our control. But even here, there are things that can be done. For instance, if your employer offers it, put aside money tax free in a flexible spending plan. If your employer doesn’t offer it, pester him until he does! And of course, exercise, eat healthy foods and generally take care of yourself.
Child Care. Well, this one goes away with a stay at home spouse. However, there is preschool to consider…
Second Automobile. Eliminate car payments. We have none. We realized that if we were going to be living on a single income, we had to pay off our car loans sooner, rather than later. So we made paying those off the 1st financial priority after we paid off our credit card debt. We also called around and found cheaper car insurance. I was able to shop around at 3 or 4 different insurers and cut my car insurance bill in half!
Taxes. We actually pay very little in taxes. No, it’s not because we evade taxes. This is because we studied up on taxes and got financially literate. I have 11% (plus another 5% employer match) of my income automatically put into my 401k. The effect is twofold. 1). I save for retirement, 2). It lowers my taxable income by 11%. We also get tax breaks on our mortgage interest (renters do not), and tax credits for each child. Also, that flexible spending plan I mentioned above is pre-tax dollars, so that lessons the taxable income as well.
“Despite the higher income, today’s families save less and carry more debt: In 1970, the one-income family saved 11 percent of its take-home pay and allocated 1.4 percent of its annual income to pay revolving debt, such as credit cards. In 2005, the two-income family saved nothing, and allocated 15 percent of its annual income to revolving debt, according to Warren.”
To me, this just re-enforces the fact that you have to pay down your debt, avoid accumulating debt (wherever possible) and save aggressively if you are living on a single income. Heck, these are sound financial principles whether you have 1 income or 2 or even if you don’t have kids!
“So is it possible to downscale to one income? It may be, for couples who are willing to make bold changes with their money and in their attitudes….”
Well this is it, isn’t it? “…willing to make bold changes…” That’s a significant obstacle in today’s society, given the sense of entitlement that abounds. It means you can no longer even entertain the thought of keeping up with the Joneses. It means saying no to a lot of things you never questioned when you had 2 incomes. But it also means a simpler, and more fulfilling life in many ways.
“…the stay-at-home parent takes on the additional job of planning ahead and investing the time to get the best deal. It’s going back to your true priorities, values and goals and saying ‘it’s the best choice for me, my family, and our future’ — not ‘we’ll be locked into a life of drudgery and we can’t do what we want to do.’”"
Exactly. Living on a single income isn’t always easy, but I think it’s worth the effort. It provides a more meaningful life for the entire family, and that’s a good thing in my book.
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