Kiva is a great organization I have mentioned before (e.g. microfinancing for entrepreneurs). They let people to loan money directly to entrepreneurs around the world through their web site. Loan can be as small as $25. As the business produces income from the capital loaned the loan is paid back. Kiva is setup as a charity, so those making the loans do not make a profit. In actuality the capital is provided through a Kiva partner (intermediary) that often does change interest to the entrepreneur (many are non-profits themselves that use the interest to fund operating expenses – and I think some are for profit, though I may be wrong on that).
I loaned an additional $300 to 6 entrepreneurs today and donated $50 to Kiva. The entrepreneurs I helped fund are located in: Togo, Dominican Republic, Senegal, Nicaragua, Bolivia and Uganda. One of the things Kiva does very well is take advantage of the internet to connect to these people. You can see short profiles and photos of them on my Kiva profile.
I hope some of you readers will join and provide loans. If so I would love to add a link to your profile from the Curious Cat Kiva supporters page.
Related: Using Capitalism to Make the World Better – Kiva: Internet based Microfinancing – Make the World Better
I bought some more Google yesterday. Google has fallen from almost $750 a share to $450 a share. Now before some people get excited about how bad that is: until about 18 months ago Google had never been as high as $450 a share. Anyway, I think at this price it is a great long term buy. Time will tell whether I was wise or foolish. FYI, $450 is over 100% above my original purchase price a few years ago. I am happy it has fallen and given me this opportunity to purchase more.
Related: 12 Stocks for 10 Years Update (Feb 2008) – Is Google Overpriced? – Great Google Earnings (April 2007) – Stop Picking Stocks – post on our management blog on Google
Great advice from Warren Buffett. He spoke to students at UTexas at Austin business school and one of the students, Dang Le, posted notes of the discussion online. The internet is great.
On diversification:
Great advice. Warren Buffett uses great concentration (little diversification) but you are not Warren Buffett.
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Getting turned down by HBS [Harvard Business School] was one of the best things that could have happened to me, bad luck can turn out to be good.
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We did an informal office survey by looking at the total tax footprint versus the total income. I earned 46 million and paid a tax rate of 17.5%. My rate was the lowest, the average was 33%, and my cleaning lady paid 40%. The system is tilted towards the rich. The Forbes 400 total net worth has gone from 220 billion to 1.54 trillion, an increase of 7-to-1. You see in legislature that there is lobbying carried on by the powerful over issues such as the estate tax and carried interest for private equity investments. We need to flatten income and payroll taxes, and those making under $30,000 shouldn’t be bothered.
It is hard to beat reading Warren Buffet’s ideas on investing and economics.
Related: Buffett on Taxes – The Berkshire Hathaway Meeting 2007 – Buffett’s 2006 Letter to Shareholders – Warren Buffett’s 2004 Annual Report – books on investing
The story is a bit boring. People spend money they don’t have. But it is hard to ignore the story when it is so important. And so many people are foolishly ruining their financial future. When credit cards put you in jeopardy
Please stop. Don’t spend money you don’t have. Don’t think those political “leaders” that practice the same spending money they don’t have financial management are worthy of respect and don’t follow the bad example they continue to set.
The article gives some tips. I would suggest the tips for using your credit cards I have blogged about earlier. But the main thing is really simple: don’t use your credit card for loans – pay off your full balance every month. Save money for things you want. When you have the money saved, then buy them. This is not rocket science it is pretty darn easy. Don’t spend what you don’t have.
Related: Too Much Stuff – Financial Illiteracy Credit Trap – Poor Customer Service from Discover Card – Trying to Keep up with the Jones – Raising Taxes on Future Generations
I recently started reading A Bull in China: Investing Profitably in the World’s Greatest Market and am enjoying it.
From the Curious Cat Management blog, Decemeber, 2004:
Adventure Capitalist by Jim Rogers tracked his trip around the world by car. Previously he had documented his around the world motorcycle journey in Investment Biker. His views offer a worthwhile perspective that is often missed, in my opinion. That said I wouldn’t accept his views as the final truth they are valuable as one perspective to shed light on areas that are often overlooked.
China Wakes, by Nicholas Kristof and Sheryl Wudunn documents their time as Journalists in China (1988-1993) and again offers valuable insight into China. Obviously even gaining an incredibly oversimplified view of China would take a great deal more than one, or even ten books. Still the authors provide viewpoints that I found added, in a small way, to a picture of what China, was, is and may become. I plan to read their book: Thunder from the East: Portrait of a Rising Asia.
Related: Rodgers on the US and Chinese Economies – Chinese economy and investment articles
Gift cards are a bad tool. They are essentially a poor version of money. They are more restrictive than money. They incur fees not incurred when using money. The only redeeming value seems to be they are less socially unacceptable than just giving cash. We should change that attitude. If you are giving cash – just give actually cash not the less useful for of cash that is a gift card.
The Sharper Image Suspends Acceptance Of Gift Cards Due To Bankruptcy
Related: Customer Hostility from Discover Card – Too Much Stuff – Sneaky Fees
Predatory Lenders’ Partner in Crime by Eliot Spitzer
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
It is unfortunate when the federal government chooses to strip states of the ability to protect citizens.
Related: Credit Freeze Stops Identity Theft Cold – Investor Protection Needed
The title of a recent article asks: Are you a sucker to invest in a 401(k)? The answer is an emphatic: No.
But what if instead you had bought that tax-efficient stock fund outside your plan? Wouldn’t your tax bill be lower? Yes, but that’s the wrong way to look at it. If you skip your 401(k) in favor of a taxable account, you must first shell out taxes on that $10,000, which leaves you with just $7,200 to invest (assuming the same 28% bracket).
Plus, over the next 20 years, you’ll have taxes on any dividends and gains the fund pays out. Even though you will get a lower 15% rate on your gains when you sell, you end up with $28,950, or about $4,600 less than with the 401(k). A tinier final tax bill can’t make up for having to pay taxes all along.
This is a very good short simple personal finance article. It explains an issue that might be tricky for some to understand. Those that read it can learn more about personal finance. And it has several points – some of which, I can imagine, might be hard for some to understand. But it does a good job of explaining things simply. And a few points, made well in the article, are often overlooked or under-appreciated:
tax rates will go up – we are passing higher taxes onto the future by not paying our bills now
the tax deferral is a huge benefit – often minimized when people discuss the benefits of IRAs
401(k) employer matches are another huge benefit
As I have said before, learning about personal finance is a long term effort. If you don’t understand everything in an article that is fine, over the years you want to learn more and more. Hopefully this is a useful step on that journey.
Related:
Roth IRAs a Smart bet for Younger Set – Saving for Retirement
Example 30 year mortgage rates (from myfico.com – see site for current rate estimates). We have posted twice on this previously – August 2007 – May 2007. Since then rates have decreased on 30 year fixed mortgages but jumbo rates have increased significantly.
| FICO score | APR May 2007 | APR Feb 2008 – regular | APR Feb 2008 – jumbo | payment/mo May 2007 | payment/mo Feb 2008 – regular | payment/mo Feb 2008 – jumbo |
|---|---|---|---|---|---|---|
| 760-850 | 5.86% | 5.53% | 6.61% | $2,362 | $2,278 | $4,476 |
| 700-759 | 6.08% | 5.75% | 6.83% | $2,419 | $2,525 | $4,579 |
| 660-699 | 6.37% | 6.04% | 7.12% | $2,493 | $2,335 | $4,713 |
| 620-659 | 7.18% | 6.85% | 7.93% | $2,709 | $2,620 | $4,373 |
| 580-619 | 8.82% | 9.22% | 9.40% | $3,167 | $3,282 | $5,834 |
| 500-579 | 9.68% | 10.20% | 10.37% | $3,416 | $3,568 | $6,336 |
Amounts shown for borrowing $400,000 and rates as of Feb 18th (and May 2007). Jumbo payments are based on $700,000. Previously I could see the assumptions on the site which were (but I see no details on the calculated amounts as of Feb 2008): For scores above 620, the APRs above assume a mortgage with 1.0 points and 80% Loan-to-Value Ratio. For scores below 620, these APRs assume a mortgage with 0 points and 60 to 80% Loan-to-Value Ratio.
Read more
The use of sneaky fees by service companies is growing
In early February, United Airlines began to charge customers $25 for an extra bag. Some rental car companies charge an airport concession fee if the lot is conveniently located near the airport. A hotel in Las Vegas now bills customers for any item they take out of the minibar for more than 60 seconds, even if it is not consumed. Some bank gift cards lose part of their value if not used by a certain date.
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banks collect up to a 3 percent processing fee for third-party credit transactions. Most of that 3 percent is called the “interchange fee.” That fee has outraged merchants in continental Europe, where credit card use is sparse and consumers are accustomed to debit cards. In December the European Commission won a case against Mastercard that requires it to eliminate interchange fees within the next six months.
As I have mentioned before the problems of bad practices by financial companies and the unfortunate truth that they force you to be on guard against them tricking you and taking your money. The Curious Cat credit card tips page provides advice on how not to get tricked by credit card companies into paying big fees along with some other tips.
It a shame financial companies don’t seem to believe in providing an honest service and making a profit as part of provide good value. Instead you have to watch them with the belief they will take you money if they can trick you (through hidden fees, misleading ads…). And it is sad other companies are expanding such anti-customer methods to other markets.
Related: Credit Card Currency Conversion Costs – Bad Practice: .05% Interest – Customer Hostility from Discover Card – Challenge Those Credit Fees