It’s definitely worth taking a look to see where your bank or credit union falls.

I read an article today that talks about a recent Slate commentary from Charlie Munger titled “Basically, It’s Over”.  If you aren’t familiar with Charlie Munger, he’s been the sidekick of Warren Buffet for decades and I consider him to be pretty damn smart.  While you can always find gloom and doom articles out there about the end of America etc etc, I’ve always been impressed with both Warren Buffet and Charlie Munger.  They have always seemed incredibly honest and they have a great way of putting things.  So, when I read the article, I have to admit, it put a bit of fear in me.  I’ve often wondered how long we can sustain the massive debt levels that we’ve seen over the last decade (and beyond).  There is not a limitless supply of money or resources in this world and sooner or later all the excess spending at the government and personal level is going to come back to haunt us.  It appears that it might be sooner than later.  I found the comments about “blind optimism” to be very interesting.  While I haven’t studied history as much as I should have, I do know that we’ve seen many societies rise and fall.  It’s fairly likely that eventually the US will fall from world dominance and now seems like as good a time as any.  With trillion dollar deficit spending, the rise of a global economy and educated global workforce, rising unemployment and consumer debt levels that have never been seen before, it’s not a tough case to make for a rather gloomy future.

On the plus side, I just saved a ton of money on my car insurance……

Anyway, go check out the Yahoo article and the original Charlie Munger article as well.  Definitely worth reading.

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Bob has turned down a number of buyout offers over the years and the business continues to grow steadily.  A company news release shows that they are growing over 20% annually.

In order to qualify for a stake in the ownership, an employee needs to be vested over a three year period.

I’ve been down to their retail store in Oregon and was very impressed with the operation.  I have purchased a number of their gluten free products and have never been disappointed.  It’s a great company!

Anyway, I just love reading stories like this.  It seems to blur out many of the other negative stories out there about “profit at all cost”.  I bet Bob sleeps pretty darned good at night!

The report, Forrester’s annual Customer Advocacy rankings, ranks nearly 50 financial services firms in the United States by the percentage of each firm’s customers who agree with the statement: "My financial provider does what’s best for me, not just its own bottom line." The results are based on a survey of about 4,500 consumers.

The bottom seven of this year’s rankings, first to last, are Bank of America, Chase, Capital One, TD/Commerce, Fifth Third, Citibank, and in last place, HSBC.

Among Bank of America customers, 33 percent agreed with the statement above, while 31 percent of Chase customers agreed, 29 percent of Capital One customers agreed, 28 percent of TD/Commerce Bank customers agreed, 27 percent of Fifth Third Bank customers agreed and 26 percent of Citibank customers agreed.

A full 33% of Bank of America’s customers believe that their bank is looking out for them.  That means 67% do NOT.  Wow.

Have I mentioned I’m a big fan of credit unions?  The number one reason that I like doing business with a credit union is that they aren’t trying to make a profit from me.  That results in higher rates on deposits, lower rates on loans and lower fees.

Anyway, go check out the article.  It’s worth reading

The house sits on about 1 acre of land, is about 3600 square feet (way too big for us, frankly), has a 3 car attached garage and a separate 40 X 50 shop with a large bonus room above it.  What really caught my eye was the massive shop and the 1 acre+ lot.  We certainly don’t need a house that big and we aren’t really interested in moving but I was intrigued by it and decided to drive over and take a look at it.

When I arrived, I saw the telltale signs of a bank owned property.  The yard, which you could tell was well kept previously, was showing signs of abandonment.  There were papers taped to the inside of the window that said “Winterized” which is a sure sign that a bank has hired a property management company to drain the pipes and turn off the water.  Since it was vacant and obviously bank owned, I decided to walk around it and peek in the windows.

As I peered in the first window I could see a kitchen with granite counters, hardwood floors, and beautiful cabinets.  What I did not see were any appliances.  The people that lost the house took every single appliance, including the oven, (leaving a large hole in the wall), the range, (leaving a gaping hole in the island), the dishwasher and the refrigerator.  Surprisingly the sink and faucet were still there.  I also noticed that they took various switches off the walls and I believe they took a few of the light fixtures.

When I peeked in the second window, I could see the first few stairs before the staircase turned right and out of sight.  It was obvious that they weren’t too careful as they moved out because there were large gouges in the sheetrock and about a 14” hole punched in the sheetrock on the landing.

As I looked around outside a bit, it became clear to me that the people that owned this house played a large part in building it as well.  It may have even been built by the owner.  There were just subtle hints that some of the work was not done by a contractor.  The reason I say this is that, while the work was done fairly well, I don’t believe someone would have accepted the quality of the work on a few things.  I wandered over to the side of the large shop and noticed that there were large piles of decking and various types of lumber that was obviously used in the construction of the house and outside decks.

As I was leaving, it occurred to me that this was most likely the former owner’s dream house.  It looks like they put a lot of blood, sweat and tears in to the construction and were probably very happy to be there.  What isn’t clear is what went wrong.  Why did they end up losing the house?  Where did they go?  I can only imagine the stress, sadness and anger that they felt as they had to walk away from their dream.  What struck me even further was the thought that this same scenario has probably been played out thousands of times across the country.

From what I hear, the lines at Denny’s were crazy today.  I know Lazy Man went by but didn’t stop when he saw the line stretching around the block.  Did you stand in line to get a free breakfast?

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Here is the information:
http://www.dennys.com/superbowl/splash2.html

This weekend we had lots of errands to run.  Normally I do most of the driving but this weekend my wife wanted to drive so I sat back in the passenger seat and just admired the landscape.  (Okay, not exactly “admired” because it wasn’t much to look at, but you get the idea).

Anyway, since I had the time to really look around as we made our way around the city, I started noticing a lot of “For Lease” signs.  I decided to start looking for them as we drove along and was honestly surprised to find that EVERY commercial complex, whether it be retail, office or warehouse space, had “For Lease” signs up.  Literally, on one street that was about 10 blocks long, every single complex had vacancies.

I can only imagine the various scenarios that the building owners are facing from building to building.  Certainly there are some complexes that are doing just fine.  I’m sure that some of them have more equity in the buildings and less loans so that they could probably get by with 50% occupancy, while others are so leveraged that they need close to 100% occupancy in order to cover their expenses.  Regardless of the scenario, it’s doubtful that I’ll ever see any more signs of the commercial real estate struggle than just the “For Lease” signs out front, or a small blurb in the local paper when a building changes hands.

Maybe I should have looked in to buying stock in sign companies.  With all the “For Lease” signs and all the “For Sale” signs out there, the sign companies must be doing pretty well!

Rather than just sitting around worrying about what might happen, I’ve been mapping out our strategy for weathering any financial storm. I have done this previously but it’s always a good idea to periodically look at options. Most of it has to do with validating what we’ve been doing all along and then asking whether we can do more.

Here are the scenarios that we plan for:

Scenario 1:
My wife loses her job

Nothing really changes at our house because we can very comfortably live on my income. We’ll certainly take a harder look at our spending and do our best to boost our emergency fund further but we’ll be relatively unscathed by the job loss. This is possible because we spend less than we earn. Our total fixed bills each month total about 50% of our after tax income. Spending less than we earn is a key part of our overall financial strategy.

Scenario 2:
I lose my job

This is a much more significant issue for us. If I lose my job, we will have to immediately start reducing luxuries and stick to a very strict budget. With unemployment we would still have an excess of cash left over at the end of each month but we will definitely need to minimize spending to make that last. Once unemployment runs out, we’ll have to start dipping in to our emergency fund. Currently our emergency fund could keep us going for almost two years if my wife was working and I wasn’t. That two year clock starts AFTER unemployment runs out so we really have a pretty good buffer. The ability to last this long goes back to that core part of our financial strategy: spend less than you earn. By spending less than we earn, we are able to continually increase our savings and cover any emergencies that come up in day to day life. If we do face a financial setback, like a job loss, we are able to live comfortably much longer because we maintain a more modest lifestyle. Spending less than you earn is really a double impact concept! It gives you the ability to save more when you are working and spend less when you aren’t without feeling much of an impact.

Scenario 3:
We both lose our jobs

This isn’t a very likely scenario but it’s worth thinking about. If we were to both lose our jobs we would have to get very aggressive in our cost cutting. While we could get by if we were both getting unemployment, in the current state of the economy, we would immediately consider selling our house and moving to our vacation house that is paid for. Certainly it wouldn’t be a crisis because we could live off of our emergency fund for about 9 months once the unemployment runs out but it would be silly to try to hang on to two houses while we were indefinitely out of work. By selling one house, we would be able to keep our heads above the financial water line for a much longer period of time.

So, those are the doomsday scenarios that we think about being prepared for. We are fortunate that we haven’t been hit by a setback yet but we feel pretty confident that even if we do experience job losses, we can still weather the storm for a reasonable amount of time. As I mentioned in an earlier post, we’ll be focusing on increasing our savings this year to give us additional wiggle room for any financial setback.

Do you think about what you will do if you have a financial setback? How do you prepare?

As we look past Thanksgiving, it’s shaping up to be another Christmas season that is squarely focused on retail sales and how much stuff people buy. For us, it will be another season of trying to minimize the focus on “stuff” while we try to enjoy our families and friends. Of course, we’ll have our weak points and spend a bit more than we should as we get swept up in the frenzy but I think we’ll do okay.

In order to try to set ourselves up for success this season, my wife, daughter and I sat down and listed all the people that we plan to buy presents for and then listed the dollar amount we want to stick to for each. By doing this we will have a clear budget to work from which should help us control our spending and keep our bank account in good shape. As usual, we will not be using ANY credit to buy gifts. We will charge the presents on our Costco American Express but will pay the balance off at the end of the month so that we don’t pay any interest charges and still get to take advantage of the cash back that they offer.

Will we be participating in the after Thanksgiving sales? While I’ve seen a few deals that are rather tempting, I won’t be getting up early to go stand in line anywhere. One example of a tempting deal is LCD tv’s. The prices on Black Friday are rather shocking. We are still using the same old 32″ tube TV that came with our house. Frankly, I’m kind of hoping it will die soon so that we can justify finally getting a new flat screen tv. I guess it’s a good thing that the tv has continued to work because prices have come down so much, we’ve saved a ton of money by not buying one until the last possible moment. So, unless the tv decides to blow up in the next day or so, we’ll probably keep our focus on buying just the gifts that are on our list.

Anyway, I hope that you have a Happy Thanksgiving and don’t get too sucked in to the Black Friday feeding frenzy.