Tagmoney

The poverty line for a family of three is $20,090 a year. The median household income in America is $53,657. Politicians draw $250,000 as the line between the middle and upper classes. And the true starting point of real wealth remains a cool $1,000,000. We asked four more or less typical men, each of whom earns one of these incomes, to tell us about the lives they can afford.

Source: Esquire Magazine. So enlightening. We monitor and log our expenses conscientiously too so it’s always good to compare yourself with people with differing incomes to see how good you have it.

Fixing Mint’s Wrong Budget Counts

I have been using Mint for compiling and analyzing my financial history for the past couple of years. It is an amazing product and completely online. It syncs to your bank accounts, credit cards, and even PayPal accounts and gives you a quick snapshot of your spending history. One of its trumpeted features is Planning and Budgets which allows you to set a budget for certain categories and it tracks the progress over the month. For the past couple of months, this budget feature on your Mint Dashboard was wildly off the mark. At the beginning of the month, some categories would go all apeshit and display over-budget amounts by hundreds of dollars. If you click on the category, it would display the correct amounts in the Transactions list for the month which obviously was much lower.

Mint Budget Problem

This was misleading and I pointed it out to Mint Customer Service via email and even posted it on their help forums. Mint even acknowledged the problem and promised me that their engineers are working hard to resolve the problem as soon as possible. Also, I wasn’t the only one with the problem. So far in spite of being a major issue, Mint hadn’t yet resolved the issue when one of the users who had a similar problem posted a possible solution.

Mint Budget Problem Resolution

He simply went to the Planning tab and clicked on the Edit Details of the category that was displaying the wrong amounts and unchecked the ‘Make this budget roll over’ option. The issue resolved immediately. So my question is, does Mint or its engineers know that the fix is so simple and that the roll over option is more confusing than helpful? Perhaps the explanation is so simple that the Mint engineers missed the obvious. Or are they simply fixing the basic problem? Mint could have easily pointed out that the rollover budgets are causing the anomaly after which 90% of the users with the problem would have been satisfied. But does Mint know it was that easy?

Top Grossing Movies of 2000s and Us

If you made a top-20 grossing movie in the 2000s [via Kottke], it either was an animation, action heroes, or fantasy/scifi movie. It holds true if you go down till #33. Other genres with the exception of Lord of the Rings and Dark Knight (or rather Heath Ledger did) won awards. What the public wants and what the critics like can be so different. On other thoughts, you can imagine how rich J.K. Rowling and Peter Jackson are and how much we love our pirates and action heroes.

I wonder how does the list for Indian movies look like. At least it won’t have a wedding movie with 14 songs at the top this decade.

Railing Against Earmarks

While I agree on the concept of earmark reform, I don’t see it happening anytime soon in spite of either candidates promises in the previous elections. Why? Simply because earmarks are the cornerstone of political hankering and form a big portion of compromises over political deals in Washington, DC in the spirit of “I’ll vote for the project in your constituency if you vote for mine.” Politically also, it makes sense for elected representatives to obtain as much federal dollars as possible so that they can go home and claim credit in the next election. So why the brouhaha?

John McCain, one of the fiercest proponent against earmarks calls such spending ‘wasteful’. But are all earmarks wasteful? According to McCain probably yes but plenty of his colleagues in the Congress disagree. In fact most of the spending that McCain has been deriding as wasteful has been proven to be justified upon close examination. But even if you consider all spending is wasteful then Republican earmarks constitute about 40% of the total which given their representation in this Congress is proportional. Irrespective of party affiliation, every member has his finger in the pie. If you check the list of all members [Excel spreadsheet] requesting these earmarks, you will note that “Republican Sen. Thad Cochran of Mississippi tops the list, with $470 million in earmarks for himself and his colleagues. Next up is Cochran’s seatmate — Republican Roger Wicker, hitting the scales at $390 million” [source]. Talk about rich blue states funding a poor red state. So much for the abhorence for wealth redistribution, eh?

So how do they justify these earmarks? Lindsey Graham (R-SC) when reminded of his earmarks said, his spending proposals had merit, and were therefore worthwhile: “I think I should have the ability as a United States senator to direct money back to my state as long as it’s transparent and it makes sense.” So basically spending that Graham appropriates is ‘worthwhile’ whereas any other spending is ‘wasteful’? It reminds me of that classic line we used to use in school – tera khoon khoon aur mera khoon Coca-Cola? In fact, the cherry on the top is that these Republicans are urging Obama to veto the bill when in fact, it is a legislation drafted by the Congress. Asking Obama to veto a bill filled with your members pork barrel spending when you failed to do the same to a Republican president not more than six months ago is plain hypocritical.

I see a simple solution for Republicans if they want any moral standing to criticize earmark spending. Drop all your earmark requests for this year and then challenge Obama to veto the bill. Heck, I’ll support you if you do that. Otherwise it is plain demagoguery and scoring cheap political points.

Not really rejecting the stimulus

As Jon Stewart pointed out yesterday, I love the fact that Bobby Jindal is strutting around claiming to reject federal stimulus when in fact he is accepting $4.7bn from the $4.8bn offered to Louisiana. Regarding his oft-cited concern of stimulus creating long-term programs the state can’t finance later, I suppose he has never heard of sunset provisions. Jindal 2012 obviously.

Deficits are larger than they appear

Why our deficits today will be much bigger than deficits reported at the end of the Bush Administration? Because it will now include spending on the wars in Iraq and Afghanistan, Medicare reimbursements to physicians and the cost of disaster responses. Aren’t you surprised that these were not included in the first place? They were after all costs to the nation, right?

Accounting tricks and gimmicks were used by the Bush Administration, almost in the spirit of corrupt business practices like Enron or more recently Satyam, to give an illusion of lower deficits in order to prevent criticism of high spending. So when we pull our hair out in anguish regarding our huge deficits, just remember that they aren’t shown to be as huge as they actually are. Hopefully, this reality check although difficult to swallow should put things in perspective and give an idea of the deep hole we’ve dug ourselves into. Now we at least we can start climbing out.

Campaign Contributions from the Russians

Obama raised an astounding $150 million in September from 632,000 new donors among others; an average of $86 per donor. The public financing provision in the United States is a joke since soft money is not excluded and the respective National Committees of the two parties can run ads for the Presidential candidates as long as they mention a congressional person or issue. This loophole allows McCain & Palin to host a $7 million fundraiser in New York with the same Wall Street fat cats that he criticizes on the campaign trail. McCain received $84 million in public financing and the RNC raised nearly $77 million in September. McCain purportedly still has $47 million for October. So although the difference in coffers between the Obama and McCain campaign is significant, it really isn’t the case of a pauper running against a king.

The McCain campaign is still crying foul over Obama’s broken promise to consider public financing. But that’s not it. They are raising questions on the infusion of such large sums of money into an election. Of course, it remains to be seen how a maximum contribution from an individual ($2300) can influence a candidate who has raised hundreds of millions. Remember the average is only $86. The Internet has made it easier to donate money so obviously more people have and significant higher enthusiasm among the Democratic base has helped. You would imagine this wide dispersion of direct financial support from the public would be a better alternative and the Republicans would’ve hardly complained if they had managed to leverage the power of the Internet for fund raising. And lets get real…even if it is easier to donate online, is the Republican base really enthused enough to donate for McCain? The Republican base got involved mostly through chanting of racist slogans only after the Palin pick.

Another complaint is that Obama is getting money from suspicious sources. McCain has been demanding to see the list of donors to the Obama campaign when in fact, it is not legally required to do so if the amount is less than $100. But to label a large swath of American people who have donated less than $100 as suspicious is cowardly. And now it turns out that the McCain campaign sent a fundraising letter to the Russian Mission to the United States. Eliciting campaign funds directly from a foreign source is illegal. Now isn’t that more suspicious?

It might be attributed to a mistake but if we choose to adhere strictly to the election laws, this ‘mistake’ might be enough to disqualify McCain’s nomination. I’m sure Democrats will not push this story but trust me, the Republicans would have made a big fuss if it was Obama’s letter to the Russians. If McCain goes down to defeat, it will simply be due to an inept campaign more than anything else. As any Maharashtrian would say, svatacha ghar sambhalo shakat nahi, nighalaya jag jinkayla (can’t keep his own house in order and he sets out to conquer the world) or khud ka campaign nahi chala sakta, desh kya chalayga.

Top Recipients of Federal Spending

In top 100 recipients of federal assistance populated mostly by universities, University of Phoenix, Inc. tops the list at 2.8 billion. Strangely Air India and Jet Airways (India), and Air India Charters also make an appearance at #11, #34, & #53 respectively. They are listed as payments for FEMA; probably disaster relief. But is international disaster relief handled by FEMA or Department of State and if it isn’t international relief then why Air India or Jet Airways (Air Canada #27 and Emirates Airlines at #86)? Anyone more aware of these grants care to shed some light?

Investment Advice

Last month we achieved an important milestone. We cleared our credit card debt. Living in the U.S. for nearly 8 years (will be 8 in couple of days) most of that time as a student eventually lands you up in credit card debt courtesy either necessary items like laptops, mandatory semester fees, or luxuries like traveling around the U.S. Somehow I landed in the U.S. with only $4200 in my pocket and although I was funded throughout my graduate school, you still have other incidental expenses, right? To be fair, my parents did pitch in at time when the need was dire.

At one point in time, I was nearly 12K in debt but that lead to a timely wakeup call for better financial management. Moving to Texas, one of the cheaper states to live in the United States, a generous assistantship stipend, and cutting back on luxuries helped in a speedy recovery. Ash had her share of debts thanks to the in-state tuition she was paying for grad school and the car she bought after a year in Texas to commute from Houston. But clearing her debts became lot easier when she started working full-time so she achieved her debt-free status much earlier.

Clearing your debts while being a student is no easy task so I’m quite proud of my achievement although I’ll admit that taking advantage of those 0% APR schemes did play a part. I wouldn’t recommend it to those who are flimsy with their financial management because one slip up and you screw up your credit history for a long time. I never missed a payment on my credit cards and always paid more than the minimum. Tackling the cards with the highest APR first or moving the balances to a low APR and paying them off with a vengeance is just one way to go about controlling your finances.

While I was paying off my debt, I still kept adding albeit a little to a savings account. ING Direct provides great rates although WAMU has been looking good recently. The size of my savings from couple of years back was evident when my annual interest was a measly $12 but it is safe to say that I earn much more than that in a month now from my savings. But as any financial guru worth his salt will attest that putting your savings in a savings account is like giving the bank a cheap loan. So that’s where you come in, dear readers – I would like some investment advice.

I am what you would call a conservative investor. I am definitely not the guy who would take chances in risky stocks and am definitely don’t aspire to be Harshad Mehta or whoever the current stock market king is. My dad never invested in the stock market saying, he doesn’t have the luck and instead choose to invest in real estate which did pay off handsomely. But even he will admit that in times of need, real estate is extremely difficult to liquidate. So naturally investment and financial management other than that in real estate wasn’t something I learned from my dad.

I’ve been reading up on some basic investment advice but the amount of stuff that is out there is enough to make your head spin especially for a newbie investor. Also, with the economy tanking in the U.S., I’m not even sure if it is the right time to invest. I lean more toward money market accounts or mutual fund index funds but they may not be the best bets today. I’m slightly aware of Vanguard’s Online Personal Fund Manager and even ING Direct has a Sharebuilder option.

Do you recommend any must-reads? What investment advice would you consider paramount to a newbie conservative investor? What options/funds are the best for investing in today’s market and how will they change if and when the economy improves?

No More Mao

China has dropped the image of Chairman Mao Zedong from its new currency possibly signaling an end of Communist economic policies; political freedom still remains a dream though.

Becoming a Blogging Celebrity

How to become a blogging celebrity? Earn a six-figure blogging income and then announce it to the world. No word on how to earn that kinda income first. Digital Inspiration‘s quality content notwithstanding, I’m sure Amit Agarwal too owes his fame partly to the fact that being a full-time professional blogger in India is a widely-known fact in blogospheric circles.

The Ulimate Personal Finance Advice

Only borrow money to pay for things that increase in value.” Seth Godin offers this excellent one-liner financial advice that is applicable to almost anyone.

NBA Athletes Going Broke

Nearly 60% of NBA athletes go broke five years after retiring. No wonder it makes sense to first graduate from college before embarking on that get-rich-quick NBA career. I hope LeBron James finds time to go back to college soon.

Blame it on the Purple Money

When your economy is in trouble, blame the design of your currency. I can’t believe this moron blogs for the National Review.

Money makes you selfish?

Just the mere thought of money can turn a person selfish, so that he helps others less often and prefers to play alone, a new study shows. In a series of nine experiments, researchers found that money enhanced people’s motivation to achieve their own goals and degraded their behavior toward others. The concept of money, they suggest, makes a person feel more self-sufficient and thus more apt to stand alone [source].

Before you exclaim, “told you so!” and begin a rant on the evils of money or profit as some of our socialist overlords would like us to, let me tell you that these findings are nothing astounding. The question is, whether it is as harmful as the reporting of this finding is made out to be. Selfishness is not necessarily a bad thing because it drives self-interest. Although man is a social animal, self-interest has always been a core characteristic. Adam Smith explained it best when he elaborated on his concept of “the invisible hand” i.e. people acting individually to promote their self-interest tends to promote the good of their community. Money is merely an instrument to promote your self-interest.

If people think that cooperating with others will promote their self-interest in a better manner then they will do so. This can be extrapolated to imply that all altruistic acts are selfish to some extent. Doing a favor generally carries the weight of its expected return either in equal or greater measure. We would like to believe that people are inherently charitable but they will not be unless it promotes some self-interest. And that is not a bad thing.

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