Are you changing your behavior in response to current events? - Page 2

Re: Are you changing your behavior in response to current events?

One of the problems, as i see it, is people dont make enough to buy a 1,200 sq ft home for $800,000 in CA or NV, or any other place that has a rash of foreclosures, with insane home prices.
I know some places are so beautiful, and have great views of mountains or the ocean, and that is special! But its not like that everywhere!
You get caught in an interest only loan, for something you cant afford, and your done if it cant sell, so you start all over again, and buy a better house you still cant afford.
I saw that writing on the wall 3 years ago, when we bought our new house. They told us about those loans, and i said why the hell would you do that!
My house in CA would be worth several million! Who could buy it! I couldnt, and most people i know couldnt, so you fall into the interest only thing. Now its time to pay. People in those areas think they have a million dollar home...and they might, but now its time to pay.
I have family in the Bay Area in CA who dont make much more than me, and they have 1,000 sq ft homes that cost $700,000 or so. You van buy a nice 2,000 sq ft home in the mid west for around $200,000, give or take.
So how did the insane price thing start? NYC, San Diego, Las Vegas, they all have had higher prices than we do here, but in the last 10 or 15 years it got insane!
A house is only worth what people will pay for it.

Re: Are you changing your behavior in response to current events?

Does that take into account the cost of repairs to the power systems including replacing the blown transformers that didn't even last a day?

Re: Are you changing your behavior in response to current events?

Besides that, the colliders would only create more black holes that would suck up our tax dollars. They fired up the one we have for just one day & a big black hole opened up on Wall St with in just a week.


I thought, that if a buyer didn't have 18% of the cost of the house for a down payment, he was forced to buy Mortgage Protection Insurance. This insurance was supposed to help protect mortgage companies from much of the risk. The insurance would cover the difference in case of a foreclosure and/or short sale.

Re: Are you changing your behavior in response to current events?

There ware ways around it. When we bought our house, we did 80/15/5, which means 80% mortgage, 15% home equity line of credit and 5% down payment. No PMI needed. Two years later, we got the house re-appraised and refinanced into a single loan worth 72% of the appraised value.

Of course, we bought before the housing boom went into full swing in our area, and we didn't buy more than we could afford.

The nice thing is our house is still worth about what it was at the time of the refinance (although it went up and back down in between), so we'll be able to continue with our plan to upgrade to a larger house in the near future.

Re: Are you changing your behavior in response to current events?

Thanks Christopher.

She doesn't look like my sig anymore. Even with no radiation treatments, late Nov will be 2 years since the symptoms appeared and she's still hanging on pretty good. She surpassed the prognosis that said she would not live a year without those treatments. The prognosis WITH radiation and surgery (which was impossible because the bone cancer was in her nose) was 2 years. I'm really happy about that.

Re: Are you changing your behavior in response to current events?

But look on the bright side....the dollar has declined in purchasing power about 33% over that time plus, if the securities were held in a taxable account, you got to pay taxes on those massive gains.

Mort

Re: Are you changing your behavior in response to current events?

Index funds are not infallible...for example, some funds were managed under investment mandates designed to replicate indices that included Lehman as a component. Yes, expense ratios are low, but it still comes down to picking the right sectors.

Re: Are you changing your behavior in response to current events?

That's not really where I was going with my statement, and I don't want to drift too far off topic, but I would like to...

1) Further clarify my original statement.
I was simply stating that until it affects us, most people have only passing concern when they hear of economic woes.

2) Comment on what you said.
I too love Mom and Pop stores and can see some validity in what you are saying, however, isn't that same retailer creating jobs for the local economy? I'm not understanding how profits are being "funneled away." Service, yes, but not so much profit.

John

Re: Are you changing your behavior in response to current events?

There's a difference between creating jobs and creating jobs that have purchasing power above and beyod the cost of living. These big companies pay their employees small amounts while cutting hours so they can't get group health care and retirement benefits through their company, meaning they can't afford health care bills or to retire. Which means they need to keep working, which means there is a higher demand for jobs, with some people having to work 2 to make a living. Which means competition for minimum wage jobs between people already with low incomes, people of retirement age who can't afford to retire and high school and college students hoping for some extra income.

As for profits being funneled away, think about these corporations. Where do their profits go? Not back into the local economy, as they would with a locally owned business. They get funnelled to the corporate higher-ups in the form of higher pay and bonuses in the location where their headquarters are. Some of them making so much money that the couldn't spend enough to put it back into the economy if they tried, and certainly not in the local area where the money originally came from.

Since this money doesn't go back into the local economy, it becomes harder to start up and maintain a local business (even in another product/service category) that can pay their employees a reasonable living wage, because the market can't support it.


And that is all without throwing outsourcing into the picture.

I hope I explained that well enough.

Re: Are you changing your behavior in response to current events?

You know the news about this stuff really isn't that new. Here's a story from 30 September 1999:

Fannie Mae Eases Credit To Aid Mortgage Lending - New York Times


People have known for a decade that sooner or later the spagetti would hit the fan.....

Re: Are you changing your behavior in response to current events?

Personally I got cold feet about the skyrocketing house prices in San Jose in early 2005, figuring what goes up must later come down. A crash was imminent in my mind. So I quit my good-paying job in June 2005 and spent the next few months planning a relocation and performing 25 years of deferred maintenance on my little 1,040 square foot stucco house.

My paid-off place sold in a week in May 2006 for $670K. The buyer got a no-down 102% mortgage.

I bought a cheap new nice house with cash here in Boise. Right now my liquid assets are about 1/3 stock and 2/3 cash. Shouldda had more cash. I was real smart about the real estate crash, but I failed to foresee that the real estate crash would provoke a stock market crash.

My former San Jose home is now in foreclosure and it looks like the market says it will sell for less than 400K.

Re: Are you changing your behavior in response to current events?

We have some differing views, but I do agree with some of what you are saying. Obviously, the big box stores will not direct their overall profits back into the local community. They have, however, become savvy enough to know that they do need to make some sort of token contribution.

Where jobs are concerned, I can't agree. Since Wal-Mart is the largest retailer, let's pick on them. You're right that they create a lot of lower wage jobs, but they do have managers of varying levels too, some of whom must earn 6-figure salaries. Given their relative size compared to the Mom and Pops, I think they probably create more overall income than would otherwise be possible. And by the way, even Mom and Pops need minimum wage earning cashiers.

There are many reasons a person might choose to work at a retailer such as Wal-Mart, [so it is not my intent to disparage that choice] but if they are there because their skill-set won't afford them better opportunities, that is not the fault of the large retailer.

Just my opinion...

John

Re: Are you changing your behavior in response to current events?

Since you brought up Wal-Mart, they are the worst, IMO. They hire people part time, so they dont have to pay benefits, but then they turn around and work some of them 60 hours. Dont they have lawsuits out, regarding how they have treated employees?
They keep prices low, just long enough to drive mom and pop out of business, then they raise prices!
Also, they are horrible about closing older stores, cause they are to small, and just abandoning the site. They wont sell it, or lease it to possible competition. That will cause other shops attached to fail, because they are anchored to a dead Wal-Mart. It also causes property values to fall in the area. Who wants to look at a Wal-Mart? Much less one that has weeds 3 feet tall in the empty parking lot.
Sure, lots of businesses fail, but only Wal-mart lets them sit and rot! Some towns/cities dont want them, for that reason alone.

Re: Are you changing your behavior in response to current events?

Using Wal-Mart as an example...

Take a look at the number of different product lines they carry. How many different types of stores can they put out of business because of their lower prices? And how many of each type can they put out of business in a given community? Can they really replace all those jobs at similar wage levels?

As for managers, would a big store really replace all the managerial jobs of all those businesses that they replace? Not a chance. Because of the larger volume of product they move out of a single retail location, they don't need as many people to actually do the managing. Sure, an individual manager might make a lot more, but if you divide that among multiple small retail shops, you'll probably have more managers. 2-3 people with a mid-level income are going to contribute more to the local economy than 1 person with an upper-middle income, if only because 2 people need twice as much stuff as 1 person.

In addition, because of their large size, they can force their suppliers to sell them goods at lower prices, just to get their product on the shelves of the world's largest retailer. That reduces the margins for these manufacturers, forcing them to stagnate wages or even to move the manufacturing overseas, eliminating jobs.

Re: Are you changing your behavior in response to current events?

How would you define the "average market-timer?" Most people, myself included, suck at picking a reasonable bottom and top. In hindsight, it's always easy to throw out "well, I could have gapped down that 20% slide there," but I don't know many who are any good at consistently making that decision.

Re: Are you changing your behavior in response to current events?

I have a similar story to Dennis. In 2005 we sold our 1200sq ft California home for twice what we paid for it four years earlier and moved to a Chicago outer suburb to a house three times the size (if you count the basement, which CA homes don't have) and paid 90% cash. We still owe about $30k but will have that paid off in five years.

The people who bought our old house financed 100% and didn't exactly have high paying jobs. It went into foreclosure and is now listed at about $120k less than what they paid for it.

Our 2004 cars are paid for, and we pay off our credit cards every month. My wife works from home and I live 10 miles from work so gas prices haven't really hit us.

There's a few foreclosures in our neighborhood (which was all new construction), and some of our neighbors also have nearly 100% mortgages. So we're a little concerned about our neighborhood rather than ourselves. While I don't think we'll get to the point of ours being an empty subdivision with mostly empty houses, I'm afraid that some might be. Fortunately I don't think prices in our neighborhood have dropped all that much, but few homes are actually selling.

Re WalMart - they bought a huge empty lot on our main strip several years ago claiming they were going to build a Super WalMart there. I read an article recently that they have no current plans to actually build one, and don't plan on selling the land either. So there's just this huge weed field in the middle of this growing shopping district. We already have three WalMarts within a 7 mile circle of our house.

Re: Are you changing your behavior in response to current events?

Oh, I couldn't agree more. I was certainly not singing the praises of Wal-Mart. I only used them as an example because they are the current 800 pound gorilla in retail.



Again, I'm no fan of Wal-Mart, but I do believe that they are providing many jobs in the communities where they exist, and I happen to like low prices (as long as service doesn't suffer too much as a result). Any "evidence" I present to support my position as to the value and quality of these jobs relative to the ones they may have supplanted would be purely anecdotal, which is why I never made any statements of absolute fact. I respect your opinions, and even agree with much of what you said.

My overall problem with Wal-Mart is more along the lines that RickER brought up. They are truly a bare bones business. You see it in the quality of their employees [generally speaking] and their products. They fly the American flag, while importing more Chinese merchandise than any other U.S. business. They allow any and everyone to solicit in front of their stores, so you need basic self defense training just to get through the throng of peddlers and activists assembled there on any given day. And yes, we have an old building near where I live that just sits empty because Wal-Mart is too paranoid to sell it to a competing interest. I try to shop at Target whenever possible. I don't mind the higher prices as I think it's a fair trade for the much-improved shopping experience. But Super Targets are rare in my area, so sometimes Wal-Mart still wins. Bottom line is, they couldn't exist without our help. In the end, the people always get what they [collectively] want.


John

Re: Are you changing your behavior in response to current events?

So true. But they might be trying to clean up there rep a little. The "ghost"-mart in our town became a really nice high end farm supply store. Not much competition for Wally World with that. But that area looked ugly for years and business came and went in that place for years. The woods and country houses that were there before were greatly missed.

Btw, their "falling price" campaign is a joke. They raise prices way up on certain items them lower it back down just to put up those signs. I burns me up when I see a "WAS $7.88 Now FALLING PRICES $6.88" and I know damn well I'd paid $6.88 for the stupid thing for the passed 3 years. It happens often and you can guess which items they are going to do it to next. They don't fool me!! :p

Re: Are you changing your behavior in response to current events?

Absolutely, John.

Our Piggly Wiggly in this area is doing a "Our cost + 10%" to complete. I Shortly after this campaign started our local Fred's store went out of business. That sucks but hopefully Piggly Wiggly will keep this up. Businesses like Freds need to complete in this manner as well. Like Walmart, other businesses need to learn to complete and provide what the customer wants. Hell, our Super WalMart has a McDonalds in it. And several other businesses along the front (inside the store), including a place to get eyeglasses, a pharmacy....not to mention all the store in the same shopping center. Our town could support a mall but S-Mart (hee hee, Super Walmart) is like one already! Point is, Wally World knows how to complete and other businesses better learn to do that same or they will be another Freds.

Incidentally, there's another Freds just down from that Super Walmart. They are actually the best place to get bandages and betadine for my doggie. so I have to keep up with where to go.

Re: Are you changing your behavior in response to current events?

Ahh... Wal-Mart
Just around the turn of the millennium, I got a job at Huffy Bicycles in Ohio. The factory had been open there for 40 years making the bicycles that we all grew up with. Wal-Mart told them that they needed to lower their prices 30% of else. Huffy stood their ground and Wal-Mart stopped ordering from them. In order to stay alive the union gave major salary concessions. Now usually I am down on unions do to lazy work environments I have worked in the past, but I will say these factory workers worked their tail off. They defiantly earned their paycheck. My job was to learn the process so we could shut down the factory and move it to a much smaller operation in Mississippi. After 9 months in Mississippi, we still could not compete so the factory shut down. As far as I know, Huffy bike frames are built in China, painted in Mexico and put in boxes in Missouri. These were hundreds of USA jobs that were driven out of the country by Wal-Mart. The small town in Ohio lost its biggest employer and there wasn’t much else to do around there.
Now move to small town Kentucky. Wal-Mart had a store in town and decided to build a super store. First they had the government put in a divided 4 lane road on the outskirts of town. “The bypass”. This connected three roads into town. There was no reason to connect these roads, let alone a 4 lane road, but Wal-Mart was building in the middle of it all. They used imminent domain to relocate people whose houses were in the way. One elderly couple moved next door to me from the house they lived in for many, many years. The man was dieing from cancer and spent his last months on earth moving all his belongings so Wal-Mart could have a big road leading to their store.
With in 6 months of the new super store opening, 2 local grocery stores close. The old Wal-Mart store didn’t sell groceries. Now a couple of years later, the whole area around where the old Wal-Mart was, there is nothing but empty stores. Probably about 20 or so. We do shop at the new store, but we don’t have much choice in the matter. There are no other stores with in a 45 minute drive.

Re: Are you changing your behavior in response to current events?

I never said we weren't part of the problem. The low prices are just too tempting for the masses to ignore.

If 2000 people save $20 a year by shopping at Wal-Mart, that's a $40,000 in paychecks wiped out. See how quickly it adds up?

Heck, if they raised prices by 5-cents an item and passed that money on directly to their minimum wage front-line employees, the customers probably wouldn't notice and the employees would be better off.

Re: Are you changing your behavior in response to current events?

Back to the topic... Avoiding the 800-pound gorilla-mart in the room, both metaphorically and physically as much as possible; have my habits changed due to the fact that I just drove all over south Charlotte looking for a gas station that (a) has gas and (2) doesn't have a long seventies-esque line of cars snaking from it?

Yes, and no.

We work from home, mostly, so we don't "commute." Lucky. We have newish cars, which get good enough mileage so that I can wait till the stations come back online this weekend, as they are predicting. We have few hobby needs, beside home theater and, um, my wife's hair care products, and most of that is either already bought or bought frugally, you know?

As for debt, my business runs on a certain amount of credit, but my scores are high and my balances are paid. (Is my business stalled? Yep. But the rents tend to come in, luckily, without too much babysitting.) My wife works in a retail-associated industry, so there's some trepidation there, but she's well-liked and does good work. It would cost more to replace her than to keep her working.

Our biggest expenses then, aside from the mortgage payments, are food and utilities, I guess. We're pretty frugal in general and do not spend money willy-nilly.

So, have our habits changed? Not really. We were living smart-ish, and continue to do so. I use my bicycle often, we walk to nearby stores, we rely on Netflix instead of the local $10/person movie theater. We try to buy bulk or at least at Trader Joes when we can, buying store-brands when we can't. We turn off lights (CFLs). I, um, sometimes don't flush when I just pee a few ounces; I wait for something more... flushable.

I think there's a lot of panic out there now. And the news from Washington is not helping. (One, because it's news and the news media really doesn't do much to explain or illuminate, and two because it's Washington and... duh. It's meant to bamboozle ya.) The economic problems we're having now should be no surprise to anyone who's been paying attention. If you have to radically "change your habits," then you may not have been paying attention. Hunker down, watch movies, and eat Ramen noodles till the sun comes back out.

Warning: Spoiler! (Click to show)

Anyway, we're hunkered! What's come from Netflix today, honey?

MC

PS: I have to say, seventies-style gas lines outside of gas stations is a sight that will freak you right out. I mean, it's like MAD MAX. Where's my electric car?

Re: Are you changing your behavior in response to current events?

I agree 100%

Re: Are you changing your behavior in response to current events?

I don't know where all this anti-WM talk comes from, but I suspect it's jealousy.

If they are such a bad place to work, why do they get so many people lining up to apply there when they open a new store?

Why do the actual WM employees I know like working there? They told me WM pays better than other places and has more opportunities to advance.

Have you talked to any WM employees?

How are the pay and benefits at Kmart or other retailers in comparison? If those places pay better (which I doubt), why don't the WM workers go there instead?

Where is this WM that raised prices? I haven't seen it. That wouldn't make much sense, because the whole reason for shopping there is low prices.

I'm also looking for the WM that drove all the other stores out of business. All the WMs I've seen (in many states) had other stores around them, still open for business.

The WMs that closed were remodeled or torn down and replaced by other stores.

Re: Are you changing your behavior in response to current events?

People seem to forget that Wal-Mart started as a single-location, Mom-and-Pop type business. It didn't spring up, fully-formed, as a 2,000-store chain. What are they supposed to do, not grow? Not be successful?

They're just doing what every other major American business has done over the past 20 years...maximize profits for your shareholders at the expense of your workers and their communities. Just because WM is one of the biggest success stories in US corporate history makes them the convenient target, but most other chains and large businesses aren't any more benevolent.

WRT to the original question, I haven't changed my behavior. I just sprung for a new computer and hope to update some HT components in the next year, and maybe a new HDTV. Then again, I just paid off my car loan earlier this year, have only a small credit card debt that will be paid off by the end of this year, received a very nice raise this past July, and have a reasonably secure job so my financial picture is healthier than many.


.

Re: Are you changing your behavior in response to current events?

I gave myself about a $2,000 raise today.

I fired one of my banks and opened a CD at a new bank in town that just opened up this morning: JP Morgan Chase. Anyone ever hear of them? Funny how the sign out front says Washington Mutual.

Check out this website www.wamu.com .

Going from 3% to 5% APY is worth the hassle. Now that JPM is in charge I'm much more trusting of WaMu.

Re: Are you changing your behavior in response to current events?

I don't know about "all" but come to Glasgow, KY and you will see many. And yes few other stores opened up around the new WM store but they are of WMs choosing. WM bought up all the surrounding land before they built and decides who to sell or rent it to.