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Commentary

May 01
0

WSJ: “Treasury to Pay Down Debt For First Time in Six Years”

By | Commentary
If you haven’t seen it yet, the WSJ put out:
WSJ: “Treasury to Pay Down Debt For First Time in Six Years”
“The Treasury Department said that it expects to retire a net $35 billion in bonds, notes and bills from April to the end of June.”
Yawn…. It is technically true though. Strong April surpluses will likely be large enough to pull the quarter positive deficit wise, and with $152B cash… in the short run, Treasury can play whatever games they want with the debt. They could pay down the debt $152B today…then re-issue the $152 tomorrow….would it make a difference in anything? No!! All I am saying is that for anyone who understands the deficit and the monthly fluctuations,this is really a nonevent.
We get our final April 2013 DTS today, and when all is said and done, April 2013 will no doubt go down as one hell of a month with YOY revenues surging 20-25%…handily beating my forecast of about 12% growth. However…it is yet to be seen whether this blowout is a turning point, or a last hurrah. I’ll be keeping a very close eye on May-June revenues…if we fall back under 10% YOY growth, it will be a pretty clear indicator that April was just a blip. If, on the other hand we see sustained growth in the 15% range, it very well could be a sign that the trend really is shifting.
Apr 24
0

How To Save 47% On Gas Using Kroger Fuel Rewards Program

By | Commentary
I’ve been using this trick to save about $100 a month for a few years now…thought I’d share the tip with my readers. I know Kroger isn’t national, but they are plentiful here in Texas, and they have been running a lucrative fuel promotion for about 2 years now. It is more or less matched by other stores, including Randalls, but Kroger is more convenient for me, so that’s who I use.
It works like this… For every dollar you spend, you get a point…which can be redeemed for gasoline discounts. If you spend $100 on food, you are eligible for $0.10 off up too 35 gallons of fuel. Who cares you may be thinking…that’s a lot of trouble to save $3.50, plus, Kroger’s prices are probably 10%-20% higher than HEB and Wal-Mart….the math just doesn’t work out.
$3.50 may not be worth your time, but what about the $35 you can save if you have accumulated 1000 points?? Even if you run a daycare, dropping $1000 at Kroger a month is going to be a stretch, but fortunately, they have a special….you can buy gift cards, and earn double points…all the time, and usually every couple months you can get quadruple points. This changes the equation considerably. With double points, you buy a $500 gift card, and you save 35 on your next fuel purchase. Not too shabby. If you hold out for quadruple points….a $250 gift card purchase gets you 1000 points, and $35 off your next gasoline purchase.
Now I can already hear it….”What the heck am I going to do with a $250 gift card? It turns out, Kroger has a crap load of different cards to choose from. I buy cards from places I am planning to spend money anyway. Amazon, Virgin Mobile(my cell provider), and assorted restaurants are what I usually get, but I recently bought $750 of Southwest Airlines for an upcoming trip. You can even buy Target or Shell gas cards, so it’s not really hard to find a card for a place you were going to spend money at anyway. That said, it obviously doesn’t make sense to buy gift cards for something you weren’t going to buy anyway…so don’t get silly.
Let’s run through the math on a best case scenario. Say you have an upcoming trip, and are about to book a $250 ticket on Southwest Airlines with a credit card. Instead, you run to Kroger and buy a $250 Southwest gift card during their 4X points promotion. On the way out, you purchase 35 gallons of gasoline for your truck. Here in Houston, the going price is about $3.30, but you save $1 per gallon. You end up paying $80.50 for your 35 gallons, saving $35, or 30%. Then you go home and book your flight…all in with $35 extra in your pocket.
That’s nice right…but the title clearly says 47%…how do I get to there? Getting to 47% requires a bit more effort on your part. The trick is to use a rewards card that gives you extra cash back at grocery stores. I use the American Express Blue Cash Preferred. It gives you 6% back at grocery stores on up to $6000 per year. (used to be unlimited…boo!!) It has an annual fee, but if you use it like I do, the math works out. There are a ton of other cards out there….every extra % you get is money in your pocket.
So let’s run through the math one more time with a rewards credit card. This time, I show up to the register and in addition to my $250 Southwest gift card, I also purchase a Kroger gift card for $80.50. Why?…I use the card to purchase the gasoline I am about to buy, and thus save 6% on this as well. At the end of the day, I save the $35 I did before, plus 6% of $330.50 ($250+$80.5), an additional $19.83. You should get a credit for this amount on your next billing statement. In this example, I have paid $60.67 (80.50-19.83) for 35 gallons of gasoline that retails for $115.50 (3.3*35). Run the math, and you have saved $54.83, good for 47% savings on your gasoline.
Before you run off to stick it to the man…here are some very important notes:

First and foremost…the $1 discount applies to up to a 35 gallon fuel purchase. If you don’t get 35 gallons, you are leaving money on the table and you will never make it to 47%. That said…unless you drive a V10 Ford Excursion, you probably don’t have a 35 gallon tank. There are two ways to get around this. First is to simply fill up two cars. I have a Suburban with a 31 gallon tank and a Ford Escape Hybrid that I’ve never managed to squeeze more than 13 in. Technically, the fine print says one vehicle, but I’ve never had anyone say anything in over two years and dozens of fillups. This option takes some coordination and drives my wife nuts….but the saving is worth it (to me). The second option is to bring some gas jugs along with you. This option is even more annoying. First, unless you have a truck, you are going to stink up your car, and it’s probably not terribly safe either. Then, when you get close to empty, you have to sit in your driveway for 10 minutes dumping fuel from a jug into your tank. It’s a huge pain, but that hasn’t stopped me yet. Fortunately, I am usually able to make option #1 work.
Another note is timing. Points have to be used in the month earned, or the following month, or you lose them. Their latest 4X offer ended 4/2, which is when I purchased the $750 of Southwest Gift Cards…so I have through 5/31 to use the 3000 points I “earned”. If you let your fuel points expire…you have left $ on the table….so plan accordingly.
Allocation of savings: At the end of the day you have saved $54.83. Was that saved on $115 of gas, $250 of gift cards, or on your credit card as a whole…or some combination of all of the above? The $ stays the same….but the % really depends on how you think about it. Honestly, the % is not that important. What really matters is if going through the hassle of purchasing gift cards and maybe even hauling around jugs of gasoline is worth $54.83 to you.
Finally… and this advice really is not limited to this scenario…putting things on a reward card, and not paying that card off in full every month will significantly reduce your true savings as interest will wipe it out in no time.

 

Apr 17
0

4/15/2013 Daily US Cash Deficit

By | Commentary
The US Daily Cash Surplus for 4/15/2013 was $48.9B… a huge day by any measure, and a $32B improvement over 4/16 day 2012  which rang up an $17B surplus. Needless to say, $48.9B far exceeded my expectations…I double checked twice to make sure I had it right. A little googling sheds some light…tax day last year was actually 4/17, due to the 15th being on a Sunday and Emancipation Day on the 16th. (Now I remember!!) The two day surplus for the 16th and 17th last year was $56B…It does seem likely that 2013 will exceed that, but because of this timing issue, we are probably going to have to wait a few extra days for the dust to settle. Bottom line, it appears to be a very good start to this phase of the Tax season (deficit wise…not so much for taxpayers)…let’s sit tight and see how it finishes. We should continue to see healthy tax revenues for the next few weeks before we fall off the wagon again in May.

2013-04-15 USDD

Apr 16
0

Social Security: Crappy Deal…Getting Worse

By | Commentary
CNN MONEY reports
“Up until now, Social Security has been a windfall for many retirees: They collected far more in benefits than they shelled out in taxes.
That’s changing. Many of those retiring will have paid more into the coveted entitlement program than they will get back.”

and

“The imbalance will get more pronounced for future generations of retirees. Couples now in their early 40s will have forked over $808,000 in Social Security taxes by the time they retire, but get back only $703,000 in benefits.”
Let me translate this…basically, the Ponzi scheme that is Social Security, now 78 years old, is now in its death throws. I’m not predicting it will actually end anytime soon, but this is definitely the beginning of the end. Someday, the young will begin questioning why they are paying so much and getting so little and revolt…or, maybe they won’t and it will simply go bust because the math dictates that it will.
Just a quick thought before I forget…what does it say about our society…that rather than taking personal responsibility for our own retirement, and as a backup depending on our family units..(kids, grandkids, nieces nephews siblings ect..). we have instead chosen to entrust our livelihood in old age to universally despised politicians who usually poll somewhere around 20% or so. That’s pretty messed up….just sayin. What the hell are we thinking?
Moving on to the numbers…I’m pretty sure it is actually way worse than what this report suggests because they more or less ignore the opportunity cost of holding on to your own money. So let’s look at a person who makes $50k per year He pays 6.2% as does his employer….don’t be fooled by Uncle Sam’s accounting funhouse.. you pay for both in the form of lower wages. So our average wage earner pays $6200 per year in Social Security Taxes, from 22 until he retires at 67. For simplicity, let’s ignore inflation…in his wages, and in his payout…they should more or less wipe each other out anyway.
So over this persons 45 year career, he pays a total of $279k into the program. When he hits 67, he is now eligible for ~14k per year….for the rest of his life. If he dies at 70….obviously this was a really crappy deal. If he makes it to 87, he more or less breaks even…that is…he could have literally put $6200 under the mattress (or maybe in a non-Cypress bank account) for 45 years and done just about as well as social security. If you happen to live longer than 87…still ignoring any other investment options you could have done with that $6200/year…maybe you start to get more than you paid in.
Yes…the math is terrible idea for just about everybody…which of course is why they have to force you to participate. Now, imagine if our worker, rather than stuffing that money in a mattress, decided to instead use that money to pay off his mortgage early. So, at 22, he decides to purchase a house for $125k(2.5x his annual income) with a 5% 30 year mortgage. His monthly payment is $671, which he makes, plus $6200 per year of extra payments. By the middle of year 12, his house is paid for…completely. He saves about $80k in interest, has a paid off house at 33, and now, has ($671*12+6200) over $14k per year…which he can now start stuffing under his mattress. If he does this for the next 18.5 years (when his mortgage would have ended), then proceeds to only save the 6200 per year until he is 67, he will have about 360k under his mattress, which would fund him at social security level payments until he was almost 93.
And remember, this is assuming all he ever did was pay off his mortgage early, and stuff the rest of the money under his mattress. No stocks, bonds, or even cd’s and saving accounts in this portfolio. So one wonders why this program exists at all. I touched on that a bit in Uncle Madoff Sam’s Trust Fund. Basically, I believe the program was created as an excuse to create a new source of government revenue. It gave them the ability to tax a broad base at a relatively low rate…in exchange for the promise to take care of you when you got old. Of course, back then, you were probably dead before you hit 60…and if you did happen to make it to 60, you were lucky to have a few years left. So of course government pocketed the taxes, and was happy to pay out a few $ here and there to those who managed to live long enough to “retire.” Social Security became a huge cash cow…and continued to be until just recently. By the end of this decade, it will instead be a huge cash drain.
This huge sham of a program simply needs to be scrapped, perhaps in a phased manner, and responsibility for retirement needs to be shifted back to individuals and their families. Problem Solved. In the meantime…the only thing for certain is that there will be pain.
Apr 14
0

Kindle Fire HD 8.9 Review – Great If You’re 6 And Happen To Love SpongeBob Squarepants

By | Commentary
So If you read my last post, you know this isn’t a complete coincidence, but I thought today would be a good time to review a product I picked up about a month ago…the Kindle Fire HD 8.9. I have an original Kindle Fire from when they were first released, and I have to admit, I have yet to read a whole book on it yet….most of them I simply gave up around 6% or so. After about 15 months, I have no real complaints about the original Kindle, which has been used primarily as a child’s toy. My older kids (4&6) use it primarily to watch Netflix and play games (some learning…some not so much). For that, it works fine.  Occasionally I will use it for light web browsing, but honestly prefer a laptop, or better yet, a laptop plugged unto a couple 27” monitors. But in a pinch, it will work.
I had been thinking about getting another Kindle for a few months…sharing was becoming a chore as the kids get older, but was having a hard time justifying dropping $300 on a kids toy. After all, that was more than the Windows 8 laptop I am writing this on cost, which has a way bigger screen, a real keyboard, and it can run excel pivot tables linked to an access database with millions of records….none of which the Kindle was going to be able to do.
Two things changed my mind. First, they dropped the price to $269. Second, and more influential, a co-worker told me about Kindle FreeTime Unlimited. For $3 a month, if you are a prime member, you get unlimited access to a ton of kid friendly books and movies, plus a handful of kid friendly aps. Books was the biggest thing that interested me. Every night, I read the kids books, and after 6 years, I have become sick of reading the same books over and over (and over). New books are expensive…easily $5-$10 a pop…no thanks!! The library is like 10 miles from the house, through town, which makes it a couple hour round trip, and at least a couple bucks of gas. Late fees and lost books are always a possibility. So for $3 a month (plus a $269 Kindle), there are at least hundreds of new books to read, I’d guess around a thousand,  though half of them seem to be Sponge Bob Squarepants 🙂
The other good thing about Freetime is that once you put it on Freetime “mode”, the kids are locked into the freetime selection of Books/aps/movies and can’t get out without a password. On the original Kindle Fire, some of the games always end up sending them to a web page to buy more things….they can’t without a password, and they aren’t old enough to get into anything on the internet they shouldn’t (yet) but Freetime provides a mechanism to essentially lock them out of everything they don’t need access too anyway, while maintaining access to everything they want.
I had originally planned to get either the regular Fire (159) or the Fire HD (199), both with 7” screens. I am glad I spent the extra $70…it makes the 7” screen look puny, and makes reading books easier on my aging eyes. Sound is definitely improved….I am constantly having the kids turn it down because I can hear it loud and clear from across the house.
There are a few quirks I should mention. When I am done reading a book for the kids, to get out of the book and back to freetime, you need to touch the screen, which brings up the menu button. Unfortunately, over half the time, it just changes the page for me. Maybe there is a magic swipe pattern I haven’t mastered?? Oddly, my son does not have this problem…he tells me “it only works for kids”. Hmmm.
Finally, some petty complaints. It does kind of suck that Freetime unlimited is somehow not compatible with the original Kindle Fire.. “How Convenient…. riight” Oh well…hard to increase GDP without a little planned obsolescence. Second, it didn’t come with a wall charger, just a USB charger…as if you had time to plug it into your computer to charge? Of course, for $10-20 they will send you one. No thanks. It so happens that between phones and the old Kindle I have about a half dozen compatable chargers…come on Amazon….you are already losing money on every sale…what’s another $0.43?
So in conclusion, if you are sick of reading your kids the same 50 year old books your parents read to you when you were a kid, and you don’t live close to the library, and your kids aren’t starving, and you don’t think it is utterly ridiculous to spend $269 for a children’s toy, then the Kindle Fire HD 8.9 might just be what you are looking for.  For what it’s worth, and these may be famous last words of a curmudgeon/accountant, but in my opinion, no tablet will ever be capable of doing “real work”…. though I am fully aware that plenty of people don’t consider accounting or blogging real work anyway…they are probably right. Whether I am crunching numbers, pivoting tables, or writing a blog post about how I think bicycling is the stupidest form of exercise known to man, I want two 27” monitors, a keyboard that I can bang on without breaking, and a mouse with the precision to perform open heart surgery…on a real mouse. Also, I want it all to be cheap (so no apple products please).
Just one warning…my 4 year old daughter stumbled upon the original Power Ranger’s series (mid 90’s???) in the Freetime video library and quickly became hooked. Now she wants to be a pink Power Ranger when she grows up and has a hard time resisting the urge to practice karate on her big brother….who isn’t all that amused… Don’t say I didn’t warn you!!