A Road Rage Quiz for the Holiday Traveler!

March 21, 2008 – 10:13 pm

Good Friday!

As we go into this Easter Weekend I was driving home and noticed all the road rage out there. If you are traveling anywhere this weekend I am sure you will see what I mean.

With that said, I thought up a little quiz so that you can check for yourself if you are a causing heart burn and turmoil to your fellow drivers!

Here you go:

A. When driving in the left lane of the freeway you are:

1. Passing other drivers.
2. Staying away from everyone merging onto the freeway in the right lane.
3. Driving the exact same speed as the person one lane over so that you can admire there beautiful car detailing.

B. When one lane of the freeway is going away by merging into the other lanes and you are driving in that lane you:

1. Plan ahead and get over at the speed of the new lane when there is sufficient space before cars before the end of the lane.
2. Plan ahead and get over to the next lane driving 20MPH less than all traffic.
3. Smile at all the fools in the other lane as you increase speed to double the moving traffic and merge into the next lane only after you have reached the final two feet of the lane of which you are traveling.

C. You are leaving the office early but have to finish up a call, so you:

1. Use your blue tooth device with your mobile phone and finish your call.
2. Use you mobile phone with one hand and use the other to drive.
3. User one hand for your mobile phone with your laptop on your lap and checking your files with the other hand all while steering with your left knee.

D. You are approaching an accident on one of the lanes on the freeway you:

1. Slow down to a safe speed and pass the accident.
2. Slow down to a safe speed and make sure to slow down even more so that you can get a good look at the crushed cars.
3. Completely stop when you reach the accident, roll down the window, pull out your mobile phone and take a picture to send to your friends.

E. A cop is approaching from behind you:

1. Stop speeding but maintain the speed limit.
2. Slow down below the speed limit in case the officers radar is not reading correctly.
3. Slam on your brakes, drop your speed to at least 15mph below the speed limit, and move into the fast lane.

That’s it, for each answer you selected, simply add the number next to the response.

5 points you cause no road rage.
5-10 points, ok not perfect maybe some one called you name in the next car over.
10-14 points, you got some angry folks after you.
15 points, you cause 90% of all the road rage in the US. I would advise you not to leave your car with out protection.

Happy Easter Weekend. Lots of traffic out there, be patient and allow for extra time and most importantly, don’t let the road rage get the best of you!

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All of CA’s budget cuts……The truth

March 9, 2008 – 10:39 pm

Here they are.

http://www.ebudget.ca.gov/pdf/GovernorsBudget/8000/9944.pdf

In this sheet you can see every cut the governor plans to make and to what department. Truly across the board cuts.

Is the right thing to do? What are your thoughts?

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CA New Budget impact to education…..

March 9, 2008 – 10:20 pm

Lots of debate going on about the cuts proposed to schools. Some headlines estimates say 100K lost jobs? Really, did they check the facts? Read for yourself to see how you think the cuts will pan out. More to come on this topic when I do a bit more research. Please comment.

From the California Budget Project: http://www.cbp.org/pdfs/2008/080116_govbudget.pdf

Here are the education reduction plans taken from the report above:

“K-12 Education
The Governor’s Proposed Budget reflects a total 2008-09 funding level of $55.6 billion for K-14 education programs covered by the Proposition 98 school funding guarantee, 2.5 percent below the funding level of $57.1 billion assumed by the 2007-08 Budget when it was enacted in August of 2007. The Governor’s Proposed Budget estimates that Proposition 98 would require a total of $59.7 billion in combined state and local spending in 2008-09. However, the Governor proposes to suspend the 2008-09 Proposition 98 guarantee and reduce funding for K-14 education by $4 billion. The Governor’s Proposed Budget allocates $39.6 billion as the state’s share of 2008-09 Proposition 98 funding, 9.2 percent less than would be required by the Proposition 98 guarantee. The Governor’s proposal translates into K-12 Proposition 98 per pupil spending of $8,458 in 2008-09, down from $8,558 in 2007-08, a 1.2 percent decrease.
The Governor proposes to seek legislation to reduce 2007-08 Proposition 98 spending by $400 million. The Governor’s proposal is motivated by the fact that current fund allocations from combined state and local sources exceed the level required by the Proposition 98 guarantee. This reflects the fact that, because of changing economic conditions, the Proposition 98 guarantee is now estimated to be lower than the level assumed by the 2007-08 Budget. The Governor also proposes to delay $1.3 billion in payments to K-14 education from July 2008 to September 2008.
To achieve the $4.4 billion in proposed 2008-09 General Fund reductions to K-12 education, the Governor proposes to:
•
Reduce general purpose funds for school districts and county offices of education by $142.4 million due to a projected enrollment decline of 0.52 percent.
•
Reduce revenue limit funding by $2.6 billion by eliminating the 4.94 percent COLA for school district and county offices of education. In addition, the Governor proposes to change the formula used to calculate the COLA for K-
7
12 education programs. The Governor’s proposal would reduce the 2008-09 COLA from 4.94 percent to 3.65 percent. Revenue limits provide general purpose funding for schools.
•
Reduce the state’s contribution to the STRS for retiree purchasing power protection from 2.5 percent to 2.2 percent of teacher payroll, for savings of $80 million, based on an actuarial study which found the benefit to be adequately funded. The Governor proposed – and the Legislature rejected – a similar change in 2007, which the Legislative Analyst notes “may violate active and retired teachers’ contractual rights and, therefore, be legally unworkable.”
•
Reduce funding for a number of categorical programs by $1.1 billion. In order to achieve these savings, the Governor proposes to eliminate COLAs and reduce rate allocations. Categorical programs include class size reduction, instructional materials, home-to-school transportation, and various career technical education programs.
•
Reduce special education funding by $357.9 million. The Governor proposes to eliminate COLAs and reduce existing state funding for special education. The Governor’s Proposed Budget states that schools may have to “backfill” these reductions since special education programs are federally mandated.”

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Housing Slump and bad loans! Who is to blame?……Tips to finding a new loan!

February 12, 2008 – 6:04 am

Who is really at fault? The housing pull-back (or as others refer to it “crash”) has had a substantial impact on the financial health of this country. Most news and TV correspondence have painted this as the end of the world. I agree it is a bad situation, but not one that is a surprise or the end of the world.

While I don’t like seeing a decrease in the housing sector, it is necessary for a healthy market to have pull backs. This pull back is larger than others only because housing was artificially inflated by high demand as a result of low interest rates and easy to obtain loans. How can one complain that the market is in a dive bomb when it was substantially over inflated in the first place based largely on demand from individuals that could not afford the house they bought? Really is this a surprise? A simple calculation can tell you that a family making under 70K per year can not afford a 500K house no matter how good their credit is with little down, but with the loan products out there they were able to buy one. Or how about the real-estate investor who bought 3-5 units that were break even on a 5 year or less ARM. I hope these people had reserves to account for the change in payment after the initial period. Even to this day, I hear advertisements for investment properties that “cash flow $500 per month for the first year with only 10% down!”. Yeah right. What happens after year one? Negative cash flow of $1,000? These are crap loans designed to lure people into an investment that don’t understand all the details. If you buy investment property on a variable loan, you are just asking for a bad situation.

I read several articles that blamed mortgage brokers. I don’t really understand this argument. Yes there are many unscrupulous ones, but in most cases, as a consumer you can compare rates from any bank, online service, or other mortgage broker to make sure you are not getting a bad deal. You also have the ability to read the papers you are signing. For this reason, I can not lay blame on the mortgage brokers, even if they did practice bad lending policies.

I believe that a majority of the problems start at the banks themselves. Lowering lending standards, allowing no documentation loans, and allowing ARMs to families that could barely afford the lower introductory rates. There was almost no checks and balances. It did not matter how bad your debt to income looked as long as your income could support the low fixed interest only payment (in some cases income did not even matter).

However, they should not bear all the responsibility. The buyer should take responsibility as well. If you do not understand the loan, if you have not shopped around, if you have not read all the terms, and if you have not taken the time to figure out what happens at every point in your loan’s life, you should not have signed the papers. To many buyers were under the illusion that housing prices would stay level or increase in value every year which would always allow them to refinance their loan after the fixed period ended. This is absurd. It may continue for a long time, but what if? The problem today is that we have reached that what if and buyers can not refi a house that is upside down in value. I hate to say it, but unfortunately this frenzy made a lot of people money that probably did not need it and bankrupted a lot of honest people trying to provide a decent life for their family.

This mess is causing a lot of pain right now, but on the positive side, it is bringing housing back in line with where it should be. Double digit gains year over year are not sustainable and are unhealthy in any market. While there may not be an easy or immediate solution, housing over the long term will come back. Buying a house may or may not be a good idea now, but with low interest rates and a 20% haircut off most markets it may not be a bad idea to begin a new strategy.

If you are looking for a new loan, here are a few tips to take into consideration:

1. Always read everything! I don’t care if it takes two entire days, read it, understand it, and if you don’t ask questions. The terms are not always set in stone and can often be modified if you find something that is unreasonable.

2. Pick the right loan for the right reason! Don’t pick the interest only because that is what you can afford. If that is the case, then the house is to expensive for you. Picking a lower interest ARM is really only good for one thing, lowering your principle loan balance faster than a traditional loan can. However, it is a gamble because you do not know what interest rates are going to do. If you take this strategy take the time to model out how the reduction in principle offsets the increase in interest. With some reasonable assumptions, you should be able to figure out a good break even point depending on what you anticipate interest to be. If you don’t know how to model out a payment schedule, find someone that knows how or look at some of my previous posts.

3. Shop around! There are a wealth of sites and places you can go to apply for loans. If you are using a broker, call a different one and see if they can meet or beat the current loan offer you have. The more bids you get out, the easier time you will have finding out what a fair loan is based on your situation.

4. Be smart and check BBB and consumer reports! If using a broker, take the time to research for any negative comments. Odds are, you will find some and see what the complaints were. Depending on what you find, you can ask how the broker how they resolved the issue or not do business at all with them.

5. Know your facts! That is, know you credit score, know what you can afford, know your back up plan if things get tough, and most importantly know your habits. If you can not stick to a budget don’t get a house that requires a loan that will put you in a situation that requires tight money management. A nice big house is great, but if you don’t have any flexibility for travel, entertainment, or living, what is the point of having the nice house?

These are just a few tips, but I hope that you find them useful on your next home purchase.

What are your thoughts on the current housing problems? Who is at fault? What is a good solution? Should the tax payers bail people out? Should the CEOs with big bonuses pay?

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Auto Buying Stinks, That is just the way we want it!

November 6, 2007 – 7:03 pm

If you have searched the internet for auto sales and car buying tips, you no doubt have seen the hundreds of sites dedicated to help consumers buy and lease automobiles. On one side you have a vast majority of people thinking that every car dealer and salesman is out to rip them off, on the other side, you have a large group that claims consumers are unfair and hold the auto industry to a higher standard then any other product they buy.

I think both sides are correct, but in ways you might not expect. Lets take the argument that all car salesman and auto dealers are liars and thieves.

This perception could easily be justified given the following:

-You can go to 10 different auto dealers and get 10 different offers for the same car.
-The car buying process is complex.
-Car leasing has many moving factors that can work to the dealers advantage.
-Car prices are not consistent.

With a complex process and moving prices, it is no wonder the perception is rarely a positive one. However, it is important to understand why this exists.

Given today’s research tools, it seems odd that the auto industry in large continues these practices. If the consumer truly wanted an easy, no haggle, no fuss process, wouldn’t one exist? The truth is that consumers don’t really want that. A car is usually the first or second most expensive purchase an average consumer will make. On a purchase of this size, consumers want something to negotiate. If you don’t think this is the case, take a look at GM’s attempt to sell Saturn’s under a different philosophy. GM’s attempt failed horribly and today Saturn’s follow the same process as any other GM car.

We as consumer’s want to feel like we got the best price and as a result, we keep the complicated process alive.

The upside to this is that we can argue better deals, the downside is, uniformed buyers will pay more and the door is wide open for lies from a small percentage of dirty car salesman.

Lets look at the second argument: Consumers are unfair and hold the auto industry to a higher standard then any other product they buy.

Well this is true, and it should be. This is a large purchase with a lot of moving parts and one that has a direct impact on consumer’s pocket book if not done right. However, I don’t think that most consumers expect the auto dealers to make no money as they imply, they just want a fair deal that they understand. What really drives this negative perception about auto buyers is the un-informed buyers. See my post on how to be a bad customer. Many auto buyers come in to buy a car un-prepared and expect the best deal with un-reasonable terms. They forgot the rules of negotiation. Unfortunately, these buyers are often the ones that get the worse deals and create the strong negativity about auto buyers in general.

I think with some simple safeguards and some preparation, you can purchase your next car without the common hassles and turmoil.

What are your thoughts?

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