10 Reasons To Rent

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Don't you sometimes get sick of all the maintenance you have to do when you own a house? Starting with the most annoying thing, mowing the lawn and trimming the bushes or trees. Then there is painting to do and leaky faucet. What about that remodeling job your wife wants you to do. It's always something breaking. The American dream becomes the American pain in the butt. 
 
Over on CBS' Moneywatch.com they had a top ten list of the advantages of renting. 
 
1.Fancier Living: You may not ever be able to afford to own it, but with renting, you can enjoy that luxury condo overlooking the ocean. 
 
2.Perks!: A lot of apartments come with community pools and gyms. My favorite thing about the apartment complex that I lived in during college was the massive swimming pool they had. 
 
3.Water/Heat Included: Oftentimes, apartments come with water and heat included, so that's less bills that you have to keep up with. And the world is better with less bills to pay. 
 
4.No Need For Weeding: I've never mowed a lawn when I've rented. You don't have to do any yard work. 
 
5.When The Move Bug Bites....: While renting, the worst case scenario is waiting a year to move. Bad landlord? Move out. Annoying neighbor? Good-Bye. With a 
Home it's much more complicated. 
 
6.No Maintenance Background Needed: As mentioned before when a pipe bursts or any other maintenance issue pops up, just make a call to the landlord and sit back and relax. 
 
7.Momentarily Cheaper: there's a lot of us financially struggling thanks to the economy and when it may be money down the drain, I am not spending nearly as much as a mortgage. 
 
8.Home Prices Fluctuate: Its a buyers market or is it a sellers market? I have no idea, because I don't have to know, I rent. 
 
9.No Risks: if you do try to sell your home during a bad economic time, your at risk for losing money. But with renting, you hopefully get your deposit check back. 
 
10.Property Tax and Insurance: No taxes for renting and renters insurance is way cheaper than homeowners insurance. 

Michael Douglas & Life

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Michael Douglas revealed this week that he has throat cancer. He is going through a regiment of radiation and chemotherapy. Fortunately his doctor found it in time to start treatment. Doctors say that the cause of the tumor was probably Douglas' smoking and drinking habits. Although the cancer has spread to his lymph nodes, it remains in his neck giving him a 80 percent chance at recovery. It's still unknown how this will effect his acting career. 
 
This news is of great interest to all of us especially to us over 50 years old. At this time of our lives we have to be on the look out for many different kind of illnesses, especially cancer. It starts in our late forty's with checking of the prostate. In the 50's, 60's and 70's we also must look out for skin and other related cancers. Mr. Douglas is 65 years old and still very active. If his doctors have caught the cancer early enough he can remain acting and speaking. 
 
Every few years a high profile person is in the news with a health crisis. Last time it was Farrah Fawcett and her cancer battle. Do we ever learn anything from their tragedy's. Do we change our health care habits? Do we get check-ups and cancer screenings. I hope some of us do. 
 
At 65 years of age Mr. Douglas is at a time he can relax and enjoy his success. His lovely wife and two small children are there to make his years even more precious. His life reminds me of what our lives could be at 65. Are we enjoying the life we prepared for, are we prepared. In a financial way are we ready. 
 
It's seems that preparation and planning are paramount for our successful retirement years. Our health also must be prepared for our older years. Do we exercise and eat healthy. Do we get regular check-ups? Maybe Michael Douglas was prepared in all these ways, yet he still got sick. It's something to think about and prepare for.

Investing 101: Index Funds

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If your thinking about getting into investing and want an easy way to get your feet wet why not try Index Funds. We all have the common problem of which of the 3000 plus mutual funds do we put are money in. You can search for the hot fund or the fund with the great long term track record. But when you purchased it, it tanked. What to do? I would just like to pick a fund that will let me get some sleep at night!

The answer for you is Index Funds. Jack Bogle founder of Vanguard Funds and pioneer of index funds says," Why look for a needle in a haystack when you can buy the whole haystack." Get great diversification by buying everything. You will ride the markets ups and downs like a roller coaster. But always with a upward trend. You will be at ease in your choice of index funds because you won't have second thoughts. How can you? You own everything, you don't have to believe you have the wrong stock or fund, you own them all. Another plus for your index portfolio is, by not buying and selling a lot you'll save all those transaction fees. Also buying from Vanguard, there will be none if you buy their mutual funds directly.

Now what do you do to get started? What funds to buy? Start with the basic three with percentage allocations:

• Total Stock Market Index Fund. 60%
• Total International Market Index Fund. 30%
• Total Bond Market Index Fund. 10%

This is a good place to start. Your allocations can be adjusted based on years till retirement. There are many other index funds to add to this list for further diversification. There are TIPS, Small-Cap,Specialty Foreign, REITs and others. As your portfolio increases new money can be put here. To get some good advice study the work of John Bogle. He's the main source to go to. Others like Paul Merriman on his web site Fundadvice.com. He offers his own proprietary work on index funds including his "Ultimate Buy an Hold Strategy". He offers sample index fund portfolios. He also produces many educational videos on investing. His active web site keeps you going back for more good advice. Also Paul Farrel over at Marketwatch.com keeps a scoreboard of the top eight index fund portfolios. He has there performance over the last 10 years and its updated daily. You'll also enjoy his "Andy Rooney" style commentary's. He is many years experience in the equity markets and writes a thoughtful column. Here's a list of the Index Fund Portfolios Courtesy of Paul Farrel's column at Marketwatch.com.

Take the strain and worry of investing away with index funds. Open an account Or if you have one see if you can purchase them there. If you go to Vanguard Funds there is a minimum investment of $3000. At Schwab their index funds have a minimum of $100. You can start there and latter move to the mother ship Vanguard. To be sure you will be saving money because a nice feature of these index funds is the low expense fees. Vanguards Total Stock Market Index Fund has an expense ratio of  0.18%. One of the lowest. But be careful because I have seen some expense fees as high as 1.5%. There is no reason for these high fees.

Blockbuster Blunder

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According to an article in the latimes.com movie rental mainstay Blockbuster will file for Chapter 11 around the middle of September. This is because of their growing competition from Netflix and other online streaming companies. Also the heavy load of their $920 million dollar debt. 
 
Blockbuster opened their first store in Dallas, Texas on October 26, 1985. The idea blossomed and became a real success. In stepped, millionaire Wayne Huizenga, the company then enjoyed blockbuster growth. When it was all said and done they sold the company to Viacom for a cool 8.4 billion dollars. After that the troubles began. 
 
Viacom influence on the company never really kept it flying. They were late in embracing the new technology's inspired by Netflix, their closest competitor. Online streaming of movie rentals never was on the drawing board. They were left in the dust by the new upstarts. 
 
The bankruptcy is trying to accomplish many things. Primarily they need to dump 500 to 800 store leases. Last year alone they closed 1000 stores. They need to become a lean company. Probably to many years of the corporation trying to milk a good thing till they drove it into the ground. 
 
With consumers demanding more 21st century ways of delivering video content, blockbuster was to much old tech. People wanted the kiosk convenience of their Redbox in the Wallmart to get their movies. Paying $1 dollar to Blockbusters $5 dollar rental fee was clearly the better choice. Already, Blockbusters only store front competitor, "Hollywood Video" closed up shop in April of this year. 
 
There is always something to learn from watching the big boys crash and burn. Blockbuster was late in adapting to the new business model of a subscription fee with at home rentals Ala, Netflix. They never saw the trend of online purchases, rentals and streaming of content Ala, Itunes and others. These two mistakes alone will push back the company so far it may never catch up. Blockbuster became complacent and stagnant in their business practices. 
 
Our we, in our own businesses and jobs, becoming complacent and stagnating. Our we, diversified and growing like Netflix and Itunes. I can see in my own business if your not paying attention to new ways and ideas' you may someday be out of business. The recession has shone the light on a lot of our old school ways of doing things. Telling us if we want to stay alive in our business, we have to constantly be innovating. 

Graph by Finance.Yahoo.Com

More and More Debt

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The United Kingdom owes $90 billion dollars in credit card debt. They have a population is 51 million people. The United States owes $850 billion dollars in credit card debt. It has a population of 305 million people. According to Consumers Reports Magazine and Whatsthecost.com.

In England they pay, just in interest on credit cards, $652,445,625. It's incredible this occurs every month. This is not principle, it's just the interest. That's not including interest on loans, mortgage or other types of debt.

The United States government has a total debt, at the present time, of $13.3 trillion dollars. The yearly interest payment for this debt is $383 billion dollars. According to the United States Department of the Treasury.

In a capitalistic economy like ours we are free to chose to go into debt for whatever reason we like. Some of us do by choice and some in desperation. The banks that provide the easy credit happily extend it to us. It's a service that's mutually desired. The essence of capitalism is the free exchange of goods and services for profit. 

The wisdom of the banks to extend unsecured debt in such a great amount, if defaulted on in great numbers, could bankrupt the company. Also the people taking the large amounts of credit are taking a risk and it could also be their downfall when they can't pay it back. But the risk to both parties is apparent and understood hopefully.

The difference between debt in the private sector and the government is that the private sector it's capitalism and the government it's not. The government goes into debt and has no function to pay it back, only by taxation, taking our money. We must earn our money in the economy to pay back our debt. The government is outside the give and take of capitalism. It's a thorn in the side of capitalism. It holds back the economy and hurts general business functions.

It's bad enough we are tax so heavily and our money is wasted by a government which has a foundation and history of incompetence. This is another reason for smaller government. No place could you find the mishandling of money on such a great scale.

The world has never seen this level of debt. We really don't know for sure what the ramifications will be. For the common man living with high debt payments it's a detriment. When all your money goes out for debt payments, isn't your standard of living lower? Isn't your quality of life much lower. Don't you just go paycheck to paycheck with no end in site, until the day you can't make anymore payments and go bankrupt.

We can agree that in the real world, in our individual lives this is not sustainable. There is a day of reckoning. So doesn't it make sense that there will be a day of reckoning for our government. Doesn't the common sense we all live by apply in Washington DC?

The Bush Tax Cuts

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There is alot of rumbling about the Bush Tax Cuts coming to an end this year. President Obama has been saying he wants the tax cuts to end for the rich but stay for the middle class. 
 
Senate Democrats don't have the votes to pass the Obama tax increases, according to the web site money.cnn.com. Even Democrats know it's a bad time to raise taxes in a faltering economy. 
 
They claim they'd favor a temporary extension for a year or 18 months. Some democrats even want to make the tax cuts permanant. Their theory is that second quarter GDP expanded at only 1.6 percent annual rate for the second quarter. So its not the right time yet.
 
In the Senate the votes are just not there to pass the Obama tax increase. But in the House Obama has the votes to pass his bill. September 13 the Senates recess is over and debate will start over the Obama tax bill. The senate has more deficit hawks than the House and with the Republicans it will be hard to make any quick progress. 
 
Senate Budget Chairman Kent Conrad, D-N.D. said last month he would be reluctant to let anyone's tax cuts expire just yet. He went on to say,"In a perfect world, I would not be cutting spending or raising taxes for the next 18 months to two years. " also that "The downturn is still very much with us". 
 
I disagree with the raising of taxes. Our representatives still don't have a clue how their spending and over taxation is one of our greatest problems. Having stability of the tax rates is important to business and personal planning. Also the Estate tax being brought back is unfair to family's. A lifetime of work has to be double taxed and family wealth has to be stolen from heirs is a disgrace. 
 
Further, I would like to see an across the board 10% reduction in the Federal budget. Just like my budget spending has been reduced in these recessionary times. I have had to increase my work extra to fill some income shortfalls. The government should be run like we run our home finances.