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Travel Budget, Money Matters, Financial Talk Mom, can I borrow ten grand?! Gimme yo mastercard! How the heck can I pay for my trip?! Ideas for making money. How much dough do I need?

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Old 10-12-2008, 09:47 PM   #21
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If you get the chance buy some stocks... enjoy the cheap prices. I'm buying some Ford, Caterpillar, and a few others. Realty Income (stock symbol : O) is always a favorite as they provide a monthly dividend. I guess I can agree that my 401k is pooched right now... I'm down about 28% on the year... oh well... I got a few years to fix it right.

Remember, spending and investing keeps the economy going. Just don't overspend. Keep your finances in check. I'm one of those few people that is looking to buy a new car in a few months, take a vacation or two, and whatever else tickles my fancy. But in no means spend more than I can make.
I agree here - the best investors buy low sell high and now everything is very very LOW! Do your homework and get in the market if you can as most of the stocks won't stay this low forever, just make sure you can actually afford to do it otherwise you will end up worse off!
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Old 10-12-2008, 10:36 PM   #22
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Unfortunately, though it occurred during this current administration, the root of much of this is the Carter administration's Community Reinvestment Act. It was a piece of legislation designed to open up home ownership to disadvantaged Americans.
This is a popularly held belief but I don't think it is the cause of the financial mess. The number of mortgages that are going bad is still relatively minimal, there should be no problems. Only 1.2% of mortgages are in forclosure right now.

The problem is not the failed mortgages, it is the massive overleveraging based on these assets with no regard paid to risk. This comes in three parts:

1) The financial companies bundled a combination of low risk mortgages and higher risk mortgages into derivatives called CDOs to artificially make all of it appear to be AAA credit worthy despite all of the underlying risk.

2) The buyers of these CDOs weren't entirely stupid, so they decided to start insuring them. Insurance companies like AIG (which has now failed for reasons you'll see in a moment) began giving very cheap insurance on the failure of the CDOs.

3) Then, the insurance companies started allowing anyone to buy insurance on CDOs and on corporations even if you don't own them (Called credit default swaps). Essentially, people begin betting that companies will fail. Insurance companies were only too happy to sell insurance on companies like Lehman Brothers for a pittance, they thought there's no way these guys can fail. So they sold more insurance they they could possibly pay out if the insured event actually came to pass.

Imagine, for example, that various investors decided to take out millions of dollars of insurance on my house. Now my house burns down. Instead of owing the value of my house the insurance company owes many times the value of my house to all kinds of people. They can't afford to pay out all the claims, so everyone holding insurance on my house is out of luck.

Now imagine that everyone that had insurance on my house was using this as leverage for other investments. Suddenly the holder of the CDO is broke, the insurance company that insured the CDO is broke, and all the people that piled on taking out "naked" insurance are broke.

Instead of just the person who underwrote the mortgage losing their investment, the losses spiral through the entire financial system.

Ultimately the financial industry brought this on themselves by chasing profits and ignoring the true risk in their investments. Had they not been so highly leveraged based on these derivatives this would be barely a blip in the economy.

Warren Buffet called these derivatives "Weapons of Financial Mass Destruction" back in 2003. He predicted almost everything that is happening today. Read this article from 2003 and tell me what doesn't sound familiar:
http://news.bbc.co.uk/2/hi/business/2817995.stm

These problems fall squarely on the failures of the derivatives markets.
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Old 10-13-2008, 01:15 AM   #23
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Unscrupulous mortgage brokers (no offense to the Godfather),
Who me? What? I'm innocent....


Buy low, sell high, but only if the company fits the CANSLIM mold .
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Old 10-13-2008, 05:26 AM   #24
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This is a popularly held belief but I don't think it is the cause of the financial mess...
Agreed. More reading can be found here: http://caveatemptorblog.com/2008/09/...eclosure-mess/ and here: http://www.businessweek.com/investin...ity_reinv.html
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Old 10-13-2008, 07:57 AM   #25
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This is a popularly held belief but I don't think it is the cause of the financial mess. The number of mortgages that are going bad is still relatively minimal, there should be no problems. Only 1.2% of mortgages are in forclosure right now.

The problem is not the failed mortgages, it is the massive overleveraging based on these assets with no regard paid to risk. This comes in three parts:
I think we're both barking around the same tree - The mortgages are still the underlying price basis for those repackaged 'securities'. Though only 1.2% of those mortgages are in foreclosure (I'd read that up to about 6% were in default), it's the collapse of the real estate market values of those underlying assets that is making the paper worthless.

Because of the rampant speculation in the market, real estate prices rose at a rate that was some 400% of the rate of inflation.

The CRA is not the sole cause of this crisis, by far - particularly since it is more the lack of oversight on the part of the government and the greed of the companies issuing these credit default swaps. This crisis needed a trigger to start the downward spiral, however. I agree that it is the leveraging and creative financing of these securities that is causing the current problem, but like the savings and loan failures in the 80s, it still finds its roots in the rise in real estate prices well above the rate of inflation.

I personally believe that the American public should not be responsible for footing the bill of those companies losses! We don't share the profit, we shouldn't be on the hook for their losses.
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Old 10-13-2008, 09:23 AM   #26
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It's a chance to start anew for those of us young enough. As per usual I definitely hold the gov't and those that are greedy from the finance industry accountable. It's neither a democrat or republican thing, it's just a greed thing.

As with the mortgage brokers and such. I remember when my buddy was buying a house, about 6 years ago, they were trying to talk him into a $250k home because he could qualify, no matter that in his own budget he figured $100-$120k was about his range.

Hold tight y'all and enjoy the ride.

As far as mon, maracle, and mbo are concerned I think it's all very well related and it's a matter of each piece playing its part to help create the situation we are in now.
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Old 10-13-2008, 10:13 AM   #27
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Yes, I suppose that's true...there is plenty of blame to go around. I don't excuse anyone who took out a mortgage they had no chance of paying, people need to make good decisions on stuff like this. I don't know why personal finances aren't taught in high school or something, it sure seems like a skill we could all use more expertise in.

But I have a hard time personally not blaming the investment banks and insurance companies. These guys are supposed to be experts in risk management...investment banks have thousands of employees whose sole job is to measure and manage risk, as do insurance companies. It's one of the bread and butter functions of those types of companies, and it seems like they totally failed across the whole industry.
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Old 10-13-2008, 07:38 PM   #28
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I agree that these corporations should have known better, and they've made their own beds. As far as the people who got into a mortgage that was way over their heads - I agree that better education may have prevented some of this, but the information was available to me when I purchased my house, and I took the time to do some research - as well as calculating all the costs involved with home ownership, such as utilities, insurance and taxes.

There should be a bit more of this in school, but the fact remains that it's not for a lack of resources out there. People who got into a variable rate loan, or a interest only loan for far more than they can afford should have done some research. In the end, we're adults - nobody held a gun to anyone's heads and made them sign the papers.

I notice the Dow is up 900+ points today - not quite the doom and gloom that everyone predicted.

We'll probably see some equalization in the economy, and hopefully, home prices will continue to drop to the level they should be at, so that housing becomes affordable again.
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Old 10-14-2008, 10:06 AM   #29
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Our new budget is out today.

10 tax on all air travel. Booze stays the same price though so the country breaths a sigh of relief.
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Old 10-20-2008, 08:27 AM   #30
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Check out this blog, pretty much sums up the economic crisis.

Don't worry there's no reading involved.

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Old 10-20-2008, 10:54 AM   #31
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Wilmington seems to be in an anti recession...for the past two weekends the mall has been CRAZY. The carousel where I work has made 5 or 6 times its regular profit these past two weekends. Everyone seems to be out spending.
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Old 11-14-2008, 12:13 PM   #32
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Here's a question for you tpunks:

Would you rather go travelling now (and spend at least a good chunk of money) and risk having less money to fall back in during the economic crisis

OR

Would you rather save your money now for travelling another day (during better economic times) but risk having the world getting more fucked up before you get a chance to see it?
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Old 11-14-2008, 03:34 PM   #33
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Here's a question for you tpunks:
Would you rather go travelling now (and spend at least a good chunk of money) and risk having less money to fall back in during the economic crisis
I've always been a 'live for today' kinda gal, so I would rather go now. You never know whats going to happen in life, and if you play it safe you might have regrets......but then again i have a terrible shopping habit
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Old 11-14-2008, 05:01 PM   #34
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Originally Posted by Canadian Bacon View Post
Here's a question for you tpunks:

Would you rather go travelling now (and spend at least a good chunk of money) and risk having less money to fall back in during the economic crisis

OR

Would you rather save your money now for travelling another day (during better economic times) but risk having the world getting more fucked up before you get a chance to see it?
That's an interesting question that I'm constantly struggling with. Not necessarily just traveling related either. On the one hand, I'm the type of person that likes to play it safe and be practical. So I try to not spend money frivolously. However, I also firmly believe that the whole point of making money is to spend it doing something you like. I try to strike a balance between the two. I'll splurge for something that I really want (a month in Europe this summer, concert tickets, etc), but I try to not eat out at restaurants all the time so that I'm not obliterating my savings account.
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Old 11-15-2008, 05:41 PM   #35
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^ i'm the same - i tend to be a saver on the things that don't really matter that much and that will get me the things i really want - eg travel!

I guess ultimately I would rather wait and just do short trips - but then again if you have the cash and somewhere to crash when you get back in case it takes a while to find another job then extended travelling may be a nice escape from the current crap going on in the world.
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Old 12-04-2008, 04:10 AM   #36
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Check out this chart over at The Consumerist showing just how much the bailout has cost.

The number at the bottom of the page is probably the biggest one I've ever seen.
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Old 12-04-2008, 07:30 AM   #37
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I am actually planning to leave in january for ireland. And get a work visa for year. Think they'll be any jobs??

Or maybe I should go someplace real cheap? Like turkey, or india, philipines... Etc. or just stay put until it stabilizes? Or whatever, anythings possible, crazier things have been done.

Probably wait a couple of monthes and see how it unfolds.
Ireland's unemployment is double last year and going up every week. If America picks up Ireland might too. There's no hope of our government getting us out of this recession We're 8billiion in the red whereas this time last year we where 1 billion in surplus.

I think we just prefer being poor, did the money thing, didn't really like it, plus we turned into assholes overnight. Now we can go back to being poets and artists along with mass emigration. Sure we'll be laughing.
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