Tag Archives: finance

No Problems, Only Opportunities

What Millennials Can Learn From Gen X’s Money Mistakes

You can consider me a sucker for any article on generational warfare, especially one that involves mine.  So when an article immediately says I’m making mistakes with my money, I’m doubly interested.

I feel I’ve made this clear in other posts, but I really do feel sorry for generations after mine.  While the generation preceding me couldn’t care much about anything other than itself, I am embarrassed at what has been left for the younger ones to clean up, fix, or just try to survive through.  My whole generation is too small to have made any political impression or enact any meaningful change, but I’ve been waiting for the next major cohort to flex its muscle, and I expect we see things the same way.

Anyway…

This article says its a collection of advice from financial experts who want Gen Y to do things differently from Gen X – "Break the chains of financial norms that were enshrined as gospel in the last century."  Here’s the truth that overshadows the entire article: The financial norms are not norms anymore because the entire economy and financial markets got fucked.  But that’s not a problem.  Don’t focus on that problem.  Don’t bother trying to solve the problem (as if you could anyway).

The term "gaslight" is used way too frequently and usually inappropriately.  I’m not going to use it here, but it feels some would.  This article is more of the more traditional, "blowing smoke up your ass" flavor.

Point 1: Gen Y should focus on Roth accounts instead of traditional retirement accounts.  I’m not going to argue particulars, this advice can go either way.  I just want to point out that Roth IRA’s were created in 1997.  It’s not like there was a lot of information on the benefits of a Roth at the time.  And now, given time, experience, and income growth, I now contribute 100% to post-tax retirement accounts.  Because Gen X makes all the financial mistakes.

Point 2: Gen Y should give up on whatever used to be the idea of financial success.  Let me get that exact quote.

"…millennials need to reconsider the entire concept of wealth, success and financial freedom – particularly as it applies to standards that were set in a different time"

It shouldn’t take much cynicism to deduce that "a different time" means "a better time".  What example of change was provided?

"Are we sure we want a 30-year mortgage on the largest house we can possibly secure financing for to go along with our student loan debt and auto loan? … Maybe a used RV and a WiFi hotspot are more appealing than a 2,000-square-foot ranch."

And now I want to really punch someone.  I’ll give you this much.  Buying the biggest house you can get financing for is a financial mistake, worthy of the title of the article.  But to suggest that Gen Y should just literally give up on the concept of owning a house to live in a depreciating asset and have them consider that move financially savvy?  That is an even bigger financial mistake.  One that a future article will use comparing Gen Y and Gen Z.

And there’s a real trigger: "student loan debt".  Something my generation didn’t have to worry about, at least not to enslavement levels of debt like today.  Maybe a used RV is not so much "more appealing" as it is "the only option".  I’m not saying lower your expectations, I’m just saying to refine them.

Point 3: Accept that shit sucks.  Deal with it.  I would really have to copy the whole text of the two paragraphs to do justice to what is being bullshitted.  Remember, the problem the article is hiding is that the economy absolutely sucks.  Gen Y started a revolution by creating "the gig economy".  You know what the gig economy has done?  It has resulted in workers being exploited and cheapened, with no redeeming benefits.  And no benefits at all.  For every success story on a gig worker, you have a thousand who are working themselves to the bone just to get by. 

The Gen X life story? "Get a college degree. Land a job. Buy a house. Invest for retirement someday."  Their take on these universal desires?  "It’s a flawed model."  IT’S A FUCKING FLAWED MODEL.  I got my job with a Associates degree in an unrelated field.  Gen Y (and Z now) have to have Bachelors degrees to get entry level jobs.  They can’t get any job paying well enough to buy a house or to invest for retirement someday.  WHOSE MODEL IS FUCKING FLAWED HERE?

So the explanation for being flawed is that it doesn’t align with Gen Y’s priorities: "experiences over possessions, and prioritizing purpose, innovation, and flexibility".  And I’m going to say again, these priorities are due to the fact the world is garbage.  They are compensation for having nothing else.  When your world is so dead that you simply want to experience as much happiness as possible as soon as possible because you don’t expect things to be getting better in your lifetime, that’s a problem.  When you demand flexibility because you know you can’t trust any institution for stability, that’s a problem.  As far as purpose and innovation, Gen X had that as well, only it wasn’t something we had to demand, it was simply allowed.  That’s a problem.

This romanticizing of renting for life and RVing and being mobile and nomadic, that’s a symptom of the times.  It’s a necessity to survival.  You really don’t think that if circumstances were the same now as they were 20 years ago that a whole generation would behave so differently?  If anything the nomadic lifestyle would be taken up for pleasure.  If the promise of technology had not been stolen by a few obscenely rich, powerful people, we’d all be living a utopian life.

For the boomers who were flower children until the end and look around with sadness at what they were unable to sustain, I will be a nerd who will die lamenting how the Internet was supposed to bring enlightenment and knowledge and was reduced to conspiracies and trolls.  Gen Y, ponder well what legacy you wish to leave unfulfilled to the world.

All Good Things Must

be made more difficult.

To be honest, T-Mobile has been an excellent company for me.  I’ve always had decent service and they’ve never really let me down.  Some of their promotional offers have been really interesting as well.  It was a long time ago that they offered one share of T-Mobile stock for free to all subscribers.  I regret not taking the time to claim that offer now.  "Free is free" and I didn’t take it.  Shame on me.

One of their other excellent offers was a checking account with 4% interest.  Absolutely unheard of when it came out and is still unbelievable today.  Granted, it’s only 4% on the first $3k in the account and 1% on everything over that.  But even so, 1%?  How sad is it that their base rate is still higher than everyone else?  When I signed up, I had no idea how they could afford to do it and all these years later, I still don’t know how they can keep it up.

Well, that time has come.  I’m sure there are a lot of money-wise people out there that are stocking $3k in that account and nothing more.  In order to qualify for that 4% max rate, you have to have a $200 deposit every month into the account.  Of course, people are going to people, so you can be absolutely assured that lots of people keep $3k in the account, then have an automated $200 deposit in each month and a corresponding $200 withdrawal every month as well.  Totally worth it for 4% interest on $3k, I’m sure.

A bank isn’t going to make any money that way, I understand that.  And so, it’s come to this.  A new change in the way you qualify for the max interest rate.  Again, I get it.  The alternative is they just stop the offer altogether and then it’s just another nice thing ruined by people.

So anyway, what’s the change?  Instead of having the $200/mo required deposit, you now have to make 10 purchases with the check card each month.  This is logical as the bank would get a transaction fee for each purchase and those fees would pay for the bonus interest.  Makes sense to me.  The thing I don’t like is the way they are selling it to their customers.  They say:

We understand making a monthly deposit may be tough and we want T‑Mobile MONEY to work for you. So, eligible customers will soon earn 4.00% APY* by using your T‑Mobile MONEY card for daily purchases like groceries, gas, or shopping online.

They understand making a monthly deposit may be tough.  But it’s easier to make 10 transactions in a month.  If you’re making 10 transactions in a month and not making any deposits, now that’s tough.  But that’s where we’re at, I guess.  Also, it’s a little irksome that to qualify for a higher interest rate, you have to lower your balance with 10 purchases.  But, it’s their game and their rules. 

I just wish they would have been honest with the reasons.  I thought TMo used to have a slogan, "Straight talk", but it seems that’s another company.  Why can’t they just explain it in reality and not need to spin it?

So that’s that.  Now, what does this change cost the users?  Here’s my plan.  I normally get a drink from RaceTrac when I get takeout from certain restaurants.  It’s $1.07 each time.  So, RaceTrac now gets my TMo transactions.  It’ll cost me a little over $10 to earn… wait, what?  $18 in interest?  Well, it’s not like that, exactly.  I would be spending the $10 on another card regardless, so the math actually comes out that I would be losing interest on that $10, or 10 cents.  Ugh, wait, not 10 cents.  It’s 1%/12 months, so actually .0833%… 0.8 cents a month.  I fucking hate math.

Now, if you were below the $3k balance and earning 4% on your whole balance, the numbers are a little worse.  So to maximize your money here, you need to keep $3k in your account, plus whatever monthly fluctuations you have to keep you over that threshold.  And for the people who automated $200 in and $200 out, now it would be a modification of maybe $20 in and $20 out via purchases each month.  Same game, new rules.

Banks Still Gonna Bank

I’m personally sitting pretty well when it comes to my financial house.  I’ve mentioned changes I’ve made here and there and for quite some time, I’ve been satisfied with what I’ve got.  In summary, where I’m at right now is: Ally handles all my savings accounts needs.  They pay 1.6% interest (right now.  It’s been slowly dropping again.)  T-Mobile (through Customers Bank) handles my checking.  They pay 4% interest on up to $3k in my account and 1% on the rest.  That’s a pretty nice deal, especially as rates keep dropping elsewhere.  Looking at the interest rate history, we’re back where we were two years ago, after peaking in December, 2018.

So, it’s always good to be vigilant and keep an eye open for what may be better for you in your current situation.  Although this hasn’t affected me, it’s still an irrational issue for me that I don’t have a presence at a physical bank.  To repeat, I haven’t needed the services of a physical bank in many, many, years, but I still feel like I should have an account at one.  So every once in a while, I give it consideration.

An offer came in the mail from TD Bank, which opened a branch nearby me recently.  Recently – in bank years – is like in the last decade.  I’ve always been intrigued by them, and I do have a IRA account with TD Ameritrade (although I’m not sure they’re actually related), so when I saw the offer, I figured I’d investigate.  After all, they’re offering a signing bonus of $150 or $300, and who doesn’t want free money?

Let’s start with their top-tier account and see if I can get in.  No minimum deposit to open an account (I don’t even know what that means – how do you open an account with no funds?).  Monthly maintenance fee: $25.  in the old days,  that actually meant something, but now it just means you need to see if you can meet the criteria to get it waived.  It’s almost a pointless charge.  If you don’t meet the waiver criteria, you don’t get that account.  Duh.

So, to waive the fee, I need either: $5k in direct deposits a month.  Oh.  Well, that’s quite a number.  What else you got?  Keep a $2,500 daily balance.  Well, you know I had that at my last bank and it is doable, but are you going to pay me 4% interest on it like T-Mobile is?  Not likely.  Finally, I can have $25k in accounts with TD.  They didn’t mention TD Ameritrade, only loans and deposit accounts, so that could be my ticket in, if that’s the case.

I visited their "Contact" section and their immediate response options were limited to social media or calling.  I wasn’t going to call for a 5 second question, so I sucked it up and used Facebook Messenger to ping them for an answer.

While I wait, let’s see what benefits I get for my account.  No ATM fees, free money orders, cashiers checks, blah, blah.  It looks like I could have a free account…  And now "Marie" has messaged me back, with essentially a copy/paste of the text I already read.  So I have to be more specific in my question.  Is a brokerage account with TD Ameritrade considered a "deposit account"?  And the answer is: no.  TD Bank and TD Ameritrade are separate and their accounts don’t count towards each other.  So TD Bank is not for me.  And it didn’t offer anything compelling anyway.

But, let me jump back just a little bit.  When the TD Bank first opened in my area, I remember being impressed with their choice to have banking independent from investment.  I thought it was the proper thing to do, unlike what, say, Wells Fargo does (as if WF does anything properly).  I still do think that.  But, after looking into their service offerings, I’m just not their target audience.  There are better deals from online banks and the benefits of being physical just aren’t there.  And maybe, maybe… I could be convinced that having my banking under the same umbrella as my retirement investment account is a good thing, then maybe things would be different.  But right now, I think keeping things apart is best, especially in the growing swell of deregulation and financial insanity.

Class Action Pennies

A couple of years ago, I wrote about a class action lawsuit in which I was a participant.  The end result of that was me dropping out because I had to provide proof of my involvement, which I could have, but it was more effort than I wanted to expend for my “up to $900”, but realistically more like $5 award.

And now today, I get an email about the Yahoo security breach class action lawsuit.  Oh boy, this should be expensive.  Scanning the email quickly for numbers, I find that the settlement is for $117 million.  Nice.  Now, how many potential claimants?  Oh… 3 billion.

Quick, what’s the math on this?  About four cents per claimant.  Well, I guess that’s something.  And what, perchance, are the lawyers fees for the case?  $30 million, plus an extra $2.5 million for expenses (postage for 3 billion $.04 checks=$900 million, FYI).  Oh, and the expenses.  Some people endured a greater hardship to prove the culpability of Yahoo, and those people will get awards of $2,500, $5,000, or $7.500.  I did not see in a quick scan of the online documents how many people this award pertains to, but there are six plaintiffs.  When talking in millions of dollars, 4-figure awards are a rounding error.

So, let’s round down to the nearest million for the post-lawyer-payday settlement pool, which is now $84 million.  And now, each claimant is due at least 2.8 cents.  I would round that up to 3 cents, but that’s $6 million of rounding that we just don’t have the funds for.  Sorry about that.

Ok, Boomer

https://www.bloomberg.com/opinion/articles/2019-11-04/millennials-should-be-happy-they-are-stuck-renting

“Millennials spend a lot of time bemoaning their inability to buy a home, forcing them to keep renting. They should want to stay renters, if they know what’s good for them financially.”

You son of a bitch.

This fucking article, written by an economist, is trying to sell the idea that people are better off renting than owning a house.  And specifically, millennials are better off doing it.  You wonder why young people hate the boomer generation?  Well, this is a pretty good piece of evidence.  Take away the condescending tone and you actually are left with malicious advice.

It’s amazing to me the slight of hand that is performed in order to make the pitch in this article.  The author actually says that buying a house is a losing proposition.  “…it has cost the homeowner 3% per year to own a house before taxes, maintenance, utilities and insurance.  That’s a real negative return.”  A goddamn economist, who manages investing funds, is selling this shit.

Then this paragraph:

“Some millennials were caught up in the subprime mortgage boom and collapse, and remain scarred by it. They believed they could buy houses with no money down and never shell out a dime because continuing rapid appreciation would allow for continual refinancings. So the bursting of the subprime mortgage bubble and subsequent one-third decline in house prices was a rude awakening, especially since it was the first nationwide drop in values since the 1930s.”

This needs some unpacking.  First, not just millennials were caught up in this shit.  Everyone was.  But who was most vulnerable to it?  And that snark about what millennials believed?  You fuckers sold them that belief.  You convinced them.  They had no prior experience in real estate investing and falsely trusted you.  So then we get the first housing crash since the 1930’s.  Thanks for that.

Look, I’m no economist.  I’m just a former renter who became a homeowner.  When I went to purchase my new house, my simple criteria was, “is the same cost as what I’m paying in rent?”  That was my budget and that’s where I went.  I completely understand the issue of house prices being insane, but I also see what rent costs and it’s not much better.  So, I encourage anyone to buy when they can.  If you have to start small, do that.  Don’t hold out and wait until you can afford big.  And don’t listen to this bullshit that you shouldn’t buy at all.

Here’s the truth that the author is not telling you.  It’s very simple.  When you rent, you get nothing for your money.  You get lodging and that’s it.  When you own, you keep what you spend.  People want to argue that housing doesn’t have a high rate of return on investment?  Fuck them.  It’s not supposed to.  They say, what if you own a house for 10 years and sell it for what you paid for it, not gaining a cent?  You fucking assholes, you gain all the equity in the property.  All the money you paid into the loan (minus interest of course) is equity.  You get that back.  If you’re renting, what happens when you end your lease?  What equity do you get from that? That’s “not gaining a cent”.

Then they can argue that property values can fall.  Yes, this has happened once.  Do I think it will happen again?  Probably, but not as extreme as last time.  But here’s the thing.  You don’t lose money until you sell.  I was underwater over $30k at one point.  I kept making my mortgage payments and the property value eventually came back.  And all the payments I made while it was underwater?  Guess what?  They still counted!  Just like every other payment.  It’s all equity.  Stay the course!

So, you want to know why this fucking boomer wants you to keep renting?  He’ll tell you right at the end of the article.

“The trend toward renting over owning should persist and may even increase. I continue to favor investments in rental apartments—assuming, of course, they meet the location, location, location test.”

So you better keep renting, if you know what’s good for you.  And what’s good for you is very good for me.

Losing For Winning

There are some people who are professional sweepstakes players, believe it or not.  They spend an unnatural amount of time researching and entering sweepstakes.  And they can actually make money at this, too.  Or at least get a lot of stuff.  You might wonder how you can actually “win” at this.  It would just seem to be a numbers game where you enter as many sweepstakes as you can and eventually you’re bound to win something.  But there’s actually a somewhat unknown rule that the pros use to get an advantage. (one weird trick!)

Most sweepstakes have some sort of condition for getting an entry.  Buy a bottle of this, visit such and such place, every order you place on this website, etc.  But, in all sweepstakes, there is a way to get an entry without making a purchase or performing some action – it’s legally required.  If you read the rules, they will tell you how to get a free entry.  Always read the rules.  In most cases, you have to send a 3×5 card with your name and address printed on it and they will return you an “entry”.  Some sweepstakes limit the number of entries an individual may make, most don’t.

I’ve attempted this technique once a few years ago.  A local charity was selling tickets for your choice of two cars.  The tickets were expensive, like $150, and the total number of entries was limited – a rare situation and very valuable because you knew your maximum odds of winning.  And like all sweepstakes, you could get free entries if you read and followed the rules.

I bought two tickets, to keep up appearances, but I then deluged them with something like 100 requests for entry tickets.  They did fulfill my requests, sending thick bundles of tickets in the mail with their drawing receipts torn off.  In the end, I estimated I had a 20-25% chance of winning.  Does that sound bad?  Does it sound better than a 1:2000 chance? (these numbers are all estimated, BTW, don’t try to math them out)

Well, I didn’t win, even with my extraordinary chances.  Whatever, it was kind of a fun exercise.  The local charity has never tried a car sweepstakes since, so I think I really pissed them off.

So anyway, I got a flyer for another car raffle.  $20 tickets, and the rules do say no purchase necessary (as they must), however, they don’t specify how to get those entries.  You have to mail the administrator for information.  This sounds pretty good, too, because that extra step might turn off casual players.  But when I look at the effort vs reward, I’m going to pass on it.  Would you pass on a elevated chance to win a $60k truck?

So, first of all, it’s a truck.  It’s a stupid, jacked-up, fully customized pickup truck.  Not my style, at all.  So what!  Sell it!  Ok, let’s consider that.  First, winning the prize is a taxable event.  The IRS is going to want their share of your $60k windfall.  Let’s generalize at a 30% bracket.  So that’s $18k out of pocket right away.  You need to have that to claim the truck.  Then there’s tax and title.  That’s about another $5k.  Probably you need to insure it for at least a month until you can sell it.  Maybe that’s $100 at most.  So in order to get the $60k truck, you need to spend $23k. 

So then, your new $60k truck rolls off the dealer lot and immediately becomes a used truck.  And it’s worthwhile to note that this is a 2019 model and the drawing is in 2020, making it last year’s model.  Everyone knows a vehicle loses an immediate percentage of its value when it leaves the dealer lot.  Considering this is also last year’s model, shall we say 25%?  Now your truck is worth $45k and you’ve spent $23k to acquire it.

Your truck is worth $45k, but that is not exactly what it would sell for.  You’re in a hurry to sell this so you don’t have to keep paying for insurance on it.  Will it sell for $40k?  Let’s say yes, so we can wrap this up.  So you’ve now made a $17k profit on a $60k vehicle.  That’s quite a discrepancy.

“You suck.  I’d be more than happy with an extra $17k!”  Maybe you would.  But you also need to consider that you added $60k to your gross income this year with that win.  That might push you into a higher tax bracket.  That means the money you earn this year is going to be taxed at a higher rate, more than it would have been had you not won.  17k worth of higher taxes?  Probably not, but your withholding from your paycheck is probably not going to compensate for that extra, so you better save some of that $17k to cover your tax bill next year.

There’s something to be said for thinking things fully through.  In the case of the first drawing for the car, I would have kept and driven that car (not a $60k car, either) and could have absorbed the taxes easily.  This $60k truck has a lot of BS accessories on it that are inflating the value that would never make back their cost if it were to be sold.  It’s a bad deal all around.

Making It More Difficult, For The Better

A little while ago, I saw a post online that was like a little PSA on financial security, which, of course, I am rather big on.  It was warning that PayPal and Venmo were not to be trusted because they were not held to the same security standards as banks.  Both of these sites claim to have “bank-grade” security, but what does that actually mean?

To be honest, I really do trust PayPal.  I haven’t ever had a problem with them or their security.  Then again, I do the maximum I can, enabling 2-factor authentication and having a strong, unique password.  Venmo, I don’t have any history with them, but they are owned by PayPal and from what I can see, they do a lot of the same things.  They also have 2FA, and are very happy to send you email notifications when things happen on their site.

I read this PSA post about distrusting online payment processors with a grain of salt.  The one thing that did strike a nerve with me is the advice: “never link your primary checking account”.  I agree with that.  I follow that pretty religiously with my online bills.  If a payee wants to do an autopay, I’ll allow it only if they allow payment on a credit card.  If they only allow payment by checking account, I use my bank’s bill pay.  Simply defined, I’ll push cash out of my checking account, but no one has the ability to pull cash from the account. 

It sounds convenient to set up my mortgage company to just withdraw my mortgage payment from my checking account monthly, but what if, just what if, they got a bug up their ass, or something went weird, or all hell breaks loose and they decide, we’re going to make your loan payable in full immediately.  And to satisfy this loan, we’re going to make a payment for as much of your balance as possible.  Now, I don’t have $90k sitting in my checking account, but, if they pulled everything they could, it would put a damper on my liquidity.  It’s just not a situation I would like to have happen.  So instead, I schedule a payment from my bank to them once a month.  It ends up working exactly the same.

Of course with online processors, the big fear is getting hacked.  And if your primary account is linked, the hackers can pull all your money just as easily as my mortgage company could.  Even if you have fraud protection, you’re still talking about a big hassle and lost money for a period of time.

The PSA had a poor suggestion to not link your bank account at all, but also had a good suggestion to link a secondary bank account instead.  So that’s what I did.  In PayPal, I had three banking accounts linked, so I removed two.  In Venmo’s website, I began the link to the same account I left active in PayPal.

This is a good thing.  That secondary account only has $15 dollars in it, which becomes my maximum monetary risk in case of being hacked.  But what are the limitations of this?  Well, right now, I couldn’t pay anymore more than $15 unless I transfer more money into the account.  Fortunately for me, like a lot of online banks provide, I have multiple accounts with that bank and I can instantly transfer money between them.  So, there’s no significant time delay on when I can make funds available for payment.  There’s only the delay in having to log in to the bank and transfer the needed money from my main account to my designated “PayPal/Venmo account”.

Still, though, security is always at odds with convenience.  I’m a little more secure now (even more), but I have to do a little more work now.  And note that this inconvenience is only for cash transactions.  Credit card stuff is always protected, so I’ll use that whenever I don’t have to pay the transaction fee.  The PSA also had the questionable advice that paying the 3% fee was worth it for the fraud protection.  Maybe.  But if you can save that fee and still be secure, that’s the best way.

Maybe it’s time to audit all your account links and make sure you don’t have any weak entry points.

Opening The Worm Can

You know what’s really weird?  There’s a shitload of people in the world and yet, every business fights tooth and nail and scrambles over each other to get you as a customer.  You’d think there would be enough for everyone, but when you slow down and consider it, there really is never enough money for some.

So, here we go.  I’m opening myself up to attack.  I’m going to purchase a new car.  You can visualize a million people leaping to their feet with offers and pleas and vague promises.  Hold on, guys.  I know exactly which car I want already.  Now there’s about 2/3 of the people standing, even more excited that they made the first cut.  And as I work further in the process, the number of potential winners decreases and their manic attitude intensifies.

Some of the people clamoring for attention right from the start have never sat down at all.  Those people are the money people.  Buying a new car in cash is a rare occurrence, for those with excellent foresight and planning.  The majority of people are going to finance a car at varying levels of, shall we say, danger.  The more dangerous the loan, the more money for those that get and keep your attention.  So, the money people are relentless right from the start.

I’m currently at the point that I have a car chosen and secured and now it’s time to begin the finance dance.  I consider myself in pretty good shape financially, on many fronts.  I have a top-tier credit score and I keep all my credit reports frozen.  But now I have to unfreeze my accounts – let down the drawbridge – in order to get approval for this new loan.

When I froze my accounts, I had to pay to do so.  Now all of that is free.  So unfreezing the accounts was surprisingly easy and quick.  Maybe it wouldn’t have been if I wasn’t such a stickler on data and didn’t have my unfreeze PINs immediately handy.  Or maybe if I moved around a lot and had different verification data points.  But in the end, I have my accounts unfrozen for a few days now.  Come at me, bro.

Since this is like a solar eclipse-type of moment for me, I decided to take advantage of it.  I went to Credit Karma and checked out what sort of auto loans I could be eligible for.  I was pitched Capital One and Bank Of America – both of which I already had credit cards with.  The broker that was assisting me with the car purchase said the best I could get a loan for was 3.5%.  Credit Karma told me BoA could get me a loan for 3.29%.  Ok, let’s try it.  So I went to Bank of America’s site (affiliate linked from Credit Karma, so they get a spiff) and filled out the application.  It was pretty easy since they pulled a lot of my info from my existing account.  And sure enough, I was now pre-approved for a loan at 3.29%.

Well, that was easy.  Addictingly easy.  I tried the Capital One offer from Credit Karma and was highly disappointed.  CapOne said, yeah, sure, you’re approved for a loan up to $60k (WTF!), but there was no mention of rate or term.  That’s absolutely useless to me.

While still in eclipse mode, I made the poor decision to try out LendingTree.  You’d figure that a company with so much name recognition would be fully on the up-and-up.  Well, no.  I did their “quick and easy” application, which asked enough questions to be a full credit application.  And let me tell you.  It was BULLSHIT that they structured the questions in a way that made it look like it would be a non-intrusive questionnaire, but as it went on, it got more and more personal and you’re like, “I’ve already gone this far, this should be the last question.  It can’t get more invasive that this.”  But, you see it to the end and you’ve essentially given them everything to fill in a complete credit app.

So LendingTree then sends that information to their partners and gives you results.  I got something like three offers with rates of 5-7%, which was infuriating and insulting.  Then, below the firm offers, were a few that said, “we need more information – click to complete the application”  And being pissed about the shitty offers I initially got, I wanted to see if this shittiness was universal.  So I clicked one named Autobytel.

To be honest, I don’t remember the results of that, and since I don’t remember, it couldn’t have been anything worthy of mention.  But here’s what is worth mentioning.  I’m now in spam hell.  I’m getting emails and texts from lenders and dealers.  They still think I’m car shopping, so they all have people ready to help me find my next car.  All of you – fuck off!  If there is a positive to any of this, at least all of the places LendingTree sold me out to all use the same unique email address I provided in my application, so I can shut them all down at my mail server in one go.  The text messages and (probably soon coming) phone calls, I will just have to block as they come in.

So now, what did that whole exercise get me?  Well, on the plus side, I do have a competitive loan rate that I can use to bargain with the dealership.  On the negative side, I have a bunch of new email and phone buddies I’m not thrilled about.  And a little later, I can see what kind of change to my credit score all this experimentation caused.  I am curious about that because supposedly multiple inquiries of a certain type (auto loan in this case) shouldn’t have the same effect as if they were multiple inquiries of multiple types.

You All Fail Economics

https://www.ibtimes.com/nasa-asteroid-tracker-eyes-giant-golden-asteroid-could-make-all-humans-billionaires-2803286

Have you seen the headlines for this news story?

NASA Asteroid Tracker Eyes Giant Golden Asteroid, Could Make All Humans Billionaires
NASA to explore heavy metal asteroid 16 Psyche that could make everyone rich
Golden Asteroid Could Make Everyone on Earth Wealthy

Who?  Who believes this?  First of all, who thinks that anyone, corporate or government entity, is going to spend the money to capture a distant asteroid, haul it back to Earth, then distribute the asteroid’s contents to all people on the planet, making everyone rich instantly?  Like they will do it out of the kindness of their hearts?  Just trying to make everyone’s life better, you know.

Then there’s the simple economic reality that gets in the way.  Let’s say that this crazy idea is implemented.  Is everyone rich now?  Of course not.  Everyone is exactly where they were before, because all that happened was the floor was raised.  Your net worth increased by two billion dollars – you’re rich, bitch!  But your neighbor’s increased by the same amount.  Are you both rich?  You’re richer than everyone you were richer than before.  Good job!

The sad reality is that the one(s) that will be rich beyond comprehension will be those in possession of the asteroid.  And even then, will they be rich?  Kind of.  Because wealth is really just an illusion.  Maybe you’ve read some fringe articles that express disbelief that our world economy even functions.  How does it function?  It’s all on faith.  We all agree a dollar is worth so much.  What makes it worth that much?  Agreement.  That’s it.

Value is determined by scarcity.  If there is less of something and with the assumption that demand for that something remains equal, the value rises.  If supply increases or demand falls, the value falls.  It’s simple supply and demand equations we all should have learned in school.  Now, take a mega-millionaire like Bezos, Gates, or Zuck.  They are mega rich because they have tons and tons of stock in their respective companies.  Yeah, they’re rich, but what if they wanted it all in cash, right now?  If they sold all their stock, the supply of stock for the company would explode and because it’s not scarce anymore, the value falls.  They aren’t as rich as they are on paper, when they control the supply.

And that’s what would happen to the golden asteroid owner.  They can’t cash all the gold in right away, because the price of gold would plummet.  Even if they dole out the gold over a period of time, it’s still going to affect the quantity available, reducing scarcity, reducing value.  Just like a company owner, it’s a stockpile of wealth that can’t really be utilized directly.

I could go on about this, but my only real point was the stupidity of the headline suggesting that everyone on Earth could be made a billionaire.  While it may technically be true, it doesn’t mean that anyone would be wealthy as a result.

How To Save Money When You Have Too Much Money

https://www.msn.com/en-us/money/realestate/how-mortgage-recasting-works-and-how-it-can-save-you-money/ar-BBPNazf

I read this article the other day.  It taught me a new financial term: mortgage recasting.  This particular action is taken when you want to reduce your monthly mortgage payment… only.  The term stays the same and the interest rate stays the same.  Contrast this with a mortgage refinance, when you are changing either the term length or the interest rate in order to get a lower monthly payment.  If recasting sounds like a solution in search of a problem, you’re right there with me.

Some people may not have whatever it takes to go through a refinance.  Maybe a hit to the credit score for a hard inquiry, the closing costs, the appraisal costs, the additional fees, the potential negative change in interest rate to get a longer term.  There’s plenty of reasons.  But a recast is simple.  It’s a lower fee and doesn’t even involve any other invasive actions.  Everything is simplified because all you are doing is lowering your payment.

Here’s the concept of recasting in a nutshell.  You make a very large payment on your mortgage, then the bank recalculates your monthly payment on the new principal balance until the end of your loan term.  It will be lower.

If you feel confused by this, let me reiterate the example in the article and see how that helps.  You have a $200k mortgage balance and your mortgage payments are $1200/mo.  You make a $50k payment on your mortgage, then recast it and your monthly payment drops to $900/mo. and you’ll save $35k in interest.

Maybe you’re still with me on this.  But, I can’t wrap my head around the idea of lowering your payment when you have surplus funds.  As if your thinking is, “I have 50,000 dollars in emergency savings.  I should use it all at once to save some money later.”  You’re saving $300/mo.  $50k is almost 14 years of $300 monthly savings.  And if you put all that money into your house, and you need it later, you’re looking at a HELOC or refinance to get it back out, both have a lot of fees to go with them.

I can understand how the concept works, I just can’t see why anyone would want to use it.  Why not just throw the $50k as an extra payment and shorten the loan term dramatically?  Because you can’t afford the $1200/mo and need it to be $900/mo?  You have $50k!  Why can’t you afford $1200/mo and still have almost 14 years of the difference on-hand? 

Crying poor with a stack of Benjamin’s in each hand.