Everybody Loves Your Money

You know how you always hear about the latest lottery winner that has spent all of their winnings in a matter of months?  They decided that they’d build a rocket ship with the money, or buy a car for each day of the week.  Maybe they buy their mother a house, or buy cars for all their friends and family.  I’ve read stories about some pretty extravagant vacations too.  It seems like their newfound wealth is too hot to hold.  It’s like they are afraid that if they don’t spend it in record time that someone will come take it from them.

Well, I’m happy to highlight an article about a 34 year old guy that has broken all the lottery squandering rules.  Meet Brad Duke.  He pocketed a lump sum of $85 million in 2005 and guess how much he has left: Between $128 to $130 million.  He completely gets it.  Check out what he did with the money:

• $45 million: Safe, low-risk investments such as municipal bonds
• $35 million: Aggressive investments like oil and gas and real estate
• $1.3 million: A family foundation
• $63,000: A trip to Tahiti with 17 friends
• $125,000: Mortgage retired on his 1,400-square-foot house
• $18,000: Student-loan repayment
• $65,000: New bicycles, including a $12,000 BMC road bike
• $14,500: A used black VW Jetta
• $12,000: Annual gift to each family member

See how he bought a used VW Jetta?  Yeah, it’s a 2002.  He bought that after he gave away his 2005 Jetta.  No I didn’t mix up the dates.  He actually bought an older car.  He recognized that the best thing he could do with the money is use a little but save a lot and get that money working for him.  Now that he’s amassed $130M, he can generate over $6.5M a year at 5% interest.  I’m sure he can figure out how to live on that.  SMART GUY.

Check it out: http://money.cnn.com/2007/02/20/magazines/fortune/…

I just love reading articles like this.  Basically this woman rants about how people focus on all their small purchases and then proceed to get royally screwed on the big ones.  As I read it, it became apparent that she’s definitely had an ugly experience with the home buying process. 

Check it out: http://www.violentacres.com/archives/122/when-it-c…

I’ve mentioned before how much I love Costco.  In the land of retail, I don’t think there is another company that can claim such a loyal following from both it’s customers and employees.  What’s interesting is that their formula doesn’t require a college degree to understand.  Stick to a core set of priniciples that put the customers first, and employees second and the market will love you.  Sure, they’ve had their share of whiners on Wall Street, but the bottom line is that they’ve delivered great financial results for a LONG time and have given a solid value to investors.

This article talks at length about this.  I’d recommend reading it.  The $50 annual membership feels a little steep, but I pay it because I know that I get far more than $50 in value by shopping there each year.  It’s refreshing to do business with a company that I can trust to deliver solid values to me every time I shop there.  Knowing that they aren’t taking any more than a 15% profit on any items in their store helps too.  I was surprised to see that they generate $1.2 billion in membership fees each year and that translates in to a significant percentage of their profit.

http://articles.moneycentral.msn.com/Investing/Ext…

“A Los Angeles man who was once a regular sperm donor has begun connecting with some of the untold number of children he fathered in the 1980s.”

“Harrison’s profile at California Cryobank in the 1980s made him one of the most requested donors, as it described him as 6-feet tall, blue-eyed with interests in philosophy, music and drama, he said.”

I think my favorite sentence in the article is this:

“He lives in a recreational vehicle with four dogs and said he makes a living doing odd jobs, the Times said.”

Apparently the sperm was a tad bit overrated.  And since this isn’t the kind of thing you can get a refund on, I guess everyone just has to be happy with the outcome.  I wonder if they get to see a picture of the person when they choose the little swimmers……

http://www.earthtimes.org/articles/show/30660.html

Well, these have certainly been some of the most trying weeks of my life.  Things are slowly getting back to normal, whatever that is.  I am taking on some large projects at work and am also spending a fair amount of time dealing with contractors and insurance adjusters from my parent’s fire.  The good news is that we are getting closer to actually seeing real progress on the house.  I expect that we’ll award the construction contract in the next week or so and then we should see some demolition happening.

We are pleasantly surprised on the contents claim.  This is the part of the fire claim that pays us for what was lost in both the shop and damaged items in the house (from smoke).  So far, all the refrigerators and freezers are being replaced in the house, as well as the TV’s and some other misc items.  The shop is where the large part of the claim is.  Our insurance company offered to pay a company to come in to the fire damaged shop to go through everything and make a list.  This has turned out to be a very positive thing for us because they identified much more of it than we ever could have.  The guy spent a total of about two full days in there and compiled a list of over 500 items.  (I’m sure there was more in there, but we are pretty happy with his list at this point).  The good news is that my mom won’t be going over her total insurance limits for either the contents or the construction.

I’ve learned a lot of valuable lessons so far.  One thing is that it really matters who your insurance company is.  I’m not going to do any bashing at this point, but I can tell you that I’ve heard some fairly negative things about my own insurance company so I’ll probably switch to the company that my mom is with.  Another thing is that it pays to have a “replacement rider” on your policy.  This basically states that you can go out and buy a new item if it is destroyed in the fire and the insurance company will pay the total cost of it.  If you don’t have the replacement rider you can expect the insurance company to pay you a depreciated actual cash value for the item.  Believe me, that won’t cover the cost of replacing it if it is more than a couple years old.  And yet another thing I’ve learned is that, as a whole, most people are underinsured.  If the entire house had burned down my mom would be SCREWED.  Her policy wasn’t large enough to pay to rebuild both the house and shop.  As soon as this is over, I’ll be helping her “up” her policy limits.  I would highly recommend checking your homeowners policy to make sure that the limits are high enough to cover both the demolition and debris removal (which can be quite expensive) and also have enough left to completely rebuild the entire structure from the ground up.  So, I’d recommend checking out some different insurance companies and look further than just who is cheapest.  You should also be looking at how they are rated for handling claims.  If anyone knows of a good site that has ratings for insurance companies, please leave it in the comments and then I’ll post it up here.

Okay, well I’m not really “with” stupid, but apparently they are everywhere.  For the 21st consecutive month, my fellow Americans have spent more money than they’ve made.  The national savings rate has hit a negative 1%.  The only other time that we’ve seen this is during the great depression but there is a difference.  During the great depression, people were dipping in to their savings to pay for basic necessities.  Fast forward to 2007 and people are dipping in to their savings, or tapping their credit to buy flat panel tv’s, new cars, the latest electronics etc.  I just can’t see how we aren’t headed for a nasty fall.  Unfortunately, we all fall with these people to some extent.

Disclaimer: Certainly there are people that are spending more than they make to meet their basic needs.  (and I mean BASIC needs).  These people aren’t doing something wrong, rather, they are simply trying to survive in the rat race and the minimum wage levels that our govt has passed aren’t getting them there.  Sure, some would tell them to pick themselves up by their boot straps and better themselves.  Tell that to a single mom raising two kids in an impoverished area of the country.  I’m sure she’d be really receptive to that input.

http://seattlepi.nwsource.com/business/1311AP_Econ…