Posted: August 5th, 2008 | Author: Joe | Filed under: Reviews | No Comments »
Here’s a nifty financial health quiz you might want to check out, it’s called “bills iQ”
Bills iQ is a set of multiple choice questions that are broken down into different sections. The sections include: Credit, Debt, Budget, Wealth, and Life Plan. They essentially start you thinking about taking stock of where your overall financial health is now, and lead you through to setting goals and planning various aspects of your life.
They score you as you go through each section and provide an overall “Bills IQ” on a scale of 0 to 100%. The great thing is not the score, but the overall report it gives you at the end. For each question you answer, it provides a response to your answer as well as any tips or hints for improving that various aspect of your financial health.
For instance, a question about the most important factor in determining your credit score will include steps you can take to improve your credit score.
Bills IQ is provided by Bills.com, which offers financial information and services like Debt consolidation, in case you’ve found yourself with too much debt to dig out from under by yourself.
I found myself $16,020 in debt one night and seriously contemplated such services. Of course, it didn’t happen over night – that was just when I realized what had happened. Debt accumulation typically happens in a slow bleed sort of way. Many relatively small purchases that snowball into 5 figure debt before you know what happened. That was my financial tipping point. That was when I finally woke up and decided to take control over my money, for I had unwittingly let money gain control over me.
For a while, I considered pursuing debt consolidation avenues. I thought about taking out a HELOC (Home Equity Line of Credit) or a personal loan to consolidate my credit card debt. In the end, I received a 0% interest offer from one of my credit cards and opted for that instead. It worked well because I stopped accumulating more debt, and I paid off the balance before the interest reset.
Not everyone can be so lucky and 0% offers are harder to come by since the credit crunch has caused the banking industry to slow down their lending.
If you’re lucky enough to have home equity, but unlucky enough to have found yourself in debt despair as I was, then a HELOC might be useful. You can often consolidate credit debt, which can run as high as 27%, into a second mortgage as low as 6% and the interest is tax deductible.
What ever path you take, just be sure you resolve yourself to doing what it takes to pay down your debt. Also, become financially literate and change your behavior to avoid finding yourself in the same place in the future. That’s what I did and I have absolutely loved sleeping well at night ever since.
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Posted: August 5th, 2008 | Author: Joe | Filed under: Investing | 13 Comments »
There has been a lot of buzz over the last year or so about alternative energy. Rightfully so, given oil’s ever upward march in price. You can find many reasons to invest in green companies, but many seem to be rooted in emotion, rather than any analytic thought process.
Often times the reasons presented take the guise of “being green” or “saving the planet.” Being green is all well and good, I for one would choose a cleaner source of energy if all other things were equal. Herein lies the problem. All other things are not equal.
Alternative energy is just that – alternative.
Wind, solar and ethanol sound great, but they just aren’t practical on a large scale.
As such, I consider investing in alternative energy companies to be a bad idea for the general investor for two basic reasons:
- Alternative energy is not (yet) profitable.
- Once alternative energy is profitable, it will likely be the big fish in the pond that capitalize.
Before I cover point #1, I’d also like to add that the alternative energy companies themselves are often small and very speculative. If you want to speculate on that next home run, that’s one thing. But that’s speculating and not investing.
Here’s an excellent article titled: Why Exxon Mobil doesn’t care about alternative fuels that details some of the problems.
On Ethanol:
“Take out the 51-cents-a-gallon federal subsidy, and the true cost of U.S.-produced ethanol is equivalent to paying $6 a gallon for the same energy as gasoline, calculates Michael B. McElroy, Harvard professor of environmental studies.“
While gas prices have gone up considerably over the past two years, we’re still not at the $6 mark. As I write this we’re hovering a little below $4 per gallon for regular. It’s also possible that by the time we reach $6 a gallon, inflationary pressures will have also raised the $6 target to something like $8 or $10 per gallon for ethanol.
That’s also not factoring in the increase in food costs caused by using food for energy, so I think the true cost of ethanol is much higher as an impact on the cost of living.
On Solar and Wind:
“Solar-generated electricity is still way costlier than juice from traditional coal- and gas-fueled plants. Wind power is narrowing the gap but is difficult to scale up.“
Solar and wind power are great ideas – in theory. Unfortunately we just don’t have the technology to scale these source out to a point where they are feasible replacements for fossil fuels.
On Peak Oil:
We’ve also heard a lot about peak oil. I reviewed a book about the coming economic collapse that peak oil is prophesied to bring about. Much of the speculation on peak oil is predicated on the “fact” that we are already experiencing a decline in available oil and we will need to find a viable alternative in the next 5-10 years or we will experience the horrible calamities foretold in that particular book.
I don’t buy into the idea that western civilization as we know it is going to come to a crashing halt over night, as many peak oil enthusiasts like to portray. It’s a nice plot for a “sci-fi channel original” movie on apocalypse Fridays, but I think the truth lies some where between endless oil for eternity, and a sudden halt to oil extraction.
I guess I’m not alone:
“Exxon is certain that oil, gas and coal will remain the world’s dominant energy sources for decades to come.
That belief drives the company’s critics crazy. But Exxon’s projections are not radical. A forthcoming report from the U.S. Climate Change Science Program cites three of the most widely used models for climate change analysis: one from MIT, another developed jointly by the Pacific Northwest National Laboratory and the University of Maryland, and a third created by Stanford University and the Electric Power Research Institute. The studies do not agree on everything but they do agree on this: Fossil fuels will remain the planet’s No. 1 energy source through the 21st century, supplying 70% to 80% of the total by 2100, vs. about 90% today. Exxon forecasts only as far as 2030; in that year, it projects, primary energy sources such as coal, oil and gas will account for 81% of global demand. “
“Beyond Petroleum”:
Once upon a time BP stood for “British Petroleum.” It was only once green became a good marketing scheme that it suddenly stood for “beyond petroleum.” But this belies another economic truth, beyond the importance of marketing. Namely, that once a product or service becomes profitable, it is the big fish in the pond who tend to capitalize most.
We saw this in the mid to late 90′s with Internet technology. Once the Internet was recognized as the market-changing force that it was, Microsoft no longer viewed web browsers as a toy technology of startup Netscape. Bill Gate’s realized the importance of browser technology and acted quickly to usurp Netscape’s market share, ultimately surpassing them and using their Internet Explorer technology as an extension to their popular Windows Operating System.
This is just one example, but you see it happening in BP’s green strategy. Once wind or solar power becomes economically viable (and profitable), the big guys like BP will have either perfected the technology themselves or acquired the smaller companies that have perfected the technology.
Some will argue that this is precisely why you should buy the small to micro cap alternative energy stocks – to profit when they are acquired by the big fish.
While this is true, it is also true that most of those companies will end up as little more than a failed experiment and that finding the right needle out of this haystack requires much diligence and effort. And that’s assuming the underlying business model of alternative energy is viable.
Long term investors are probably better off researching BP plc, (formerly British Petroleum) (BP), Chevron Corp. (CVX), Exxon Mobil Corp. (XOM), Conoco Phillips (COP).
Technorati Tags: Alternative Energy, Green Energy, Investing, Oil, Peak Oil,
Oil Rig by Dawn Allynn
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Posted: August 4th, 2008 | Author: Joe | Filed under: Economy | Tags: Economy, news, Opinion, Rant, Recession | 3 Comments »
Of course it’s the AP, so we need to hack our way through the misdirections, doom-and-gloom adjectives and distractions to get the real point:
“Last year the economy grew by 2 percent, the weakest showing since 2002.”
They can’t resist throwing in ” weakest showing since 2002″, thus sidestepping the real fact that a 2% growth is NOT possible in a recession! In other words, what they’re saying is: “forget that we’ve been (purposely?) misleading you on the economy for the past 9-12 months, last year was the worst since 2002!”
Pay no attention to the man behind the curtain.
The headline should have been the same as the title of this post, but instead the AP falls back on pessimism:
“Growth weaker than hoped; economy shrinks in Q4″
The real story is this:
“The Commerce Department reported Thursday that gross domestic product, or GDP, increased at an annual rate of 1.9 percent in the April-to-June period.”
Increased.
A recession is a contraction for at least 2 consecutive quarters.
“That marked an improvement over the feeble 0.9 percent growth logged in the first quarter of this year and the outright contraction in the economy during the final quarter of last year.”
I guess good news doesn’t sell, otherwise they’d have titled the article correctly.
So what caused this “unexpected pause” in the recession?
“…sales of U.S. exports grew at a 9.2 percent pace in the second quarter, up from a 5.1 percent growth rate in the first quarter. The weak dollar has made U.S. goods cheaper to foreign buyers, helping to bolster exports.”
This is another aspect of economic reporting that irks me. We’ve been hearing for months how the value of the dollar has plummeted relative to the Euro. But, as with most things, this is not entirely bad. As the quote above illustrates – it makes our goods cheaper in foreign markets, so much so that U.S. Exports grew 80% !
And what about inflation?
“…prices rose at a pace of 2.1 percent, down from a 2.3 percent rise in the first quarter. Still, the second-quarter’s core inflation reading is outside the Fed’s comfort zone.”
I can appreciate that it’s “outside the Fed’s comfort zone.” It’s outside my comfort zone as well, but it’s a far cry from 70′s style, double-digit stagflation that many people seem to think we are experiencing.
Towards the end of the article, the AP does acknowledge:
“There’s been a lot of debate about whether the economy is on the brink of, or has fallen into, its first recession since 2001.”
Maybe we will fall into recession in the coming months. Maybe future analysis will show that we’re in one now. But I’m starting to see more and more analysis acknowledge the “debate” about a recession. This is in stark contrast to the almost clairvoyant-like predictions of the “impending recession” from a few months ago. Personally, I think we will either narrowly avoid a true recession, or it will be a mild one. But who am I to speak on such things? 
Technorati Tags: recession, econonomy
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