Archive for June, 2009

Once again, I am considering putting my blog on hiatus for a long while as, despite being unemployed, I find myself busier than ever.   Between gardening (just replanted corn seeds), mentoring people over at LiveMocha, learning a new language at LiveMocha, spending time with kids, checking on my investments and preparing for going back to work and possibly school (MBA) I am feeling a bit stretched but I also have a few blogs and other forums that I contribute material to almost daily and it’s getting a bit overwhelming.

I was recently asked to go get a Breathalyzer test as part of my pre-screening process for a potential new job.   When I got to the lab, I asked the technician if it made any sense for me to take a Breathalyzer test.  She asked who I was working for and I said I was unemployed but doing a pre-screening.   She said it doesn’t make sense because you’d have to be an alcoholic to show up to a Breathalyzer test knowing full when, where and how it would be taken for you to fail.

I’m guessing these tests cost a few hundred dollars and I’m not sure what the purpose was since the job I’m intending on getting isn’t a driving job at all.   Oh well, I guess some companies have money to burn…

I’m sorry to hear of the passing of a great capitalist Billy Mays. At first I was usually annoyed by his late night commercials but after watching the show Pitchmen it became one of my favorite shows and I found a whole new level of respect for the man and his profession. I had planned on writing a series of posts on the show and the inventors featured but I never got around to it.

I guess that’s an example of how procrastination isn’t good for any of us long term.

TAMPA, Fla. – Billy Mays, the burly, bearded television pitchman known for his boisterous hawking of products such as Orange Glo and OxiClean, has died. He was 50.

Tampa police said Mays was found unresponsive by his wife Sunday morning. A fire rescue crew pronounced him dead at 7:45 a.m.

Goodbye Billy, I’m gonna miss you and in your honor, I’m going to buy some Oxi Clean later today.

So I have a family member that is interested in purchasing a home.   They asked if I could join them at the mortgage  brokers office to look over the documents and make sure there wasn’t anything weird going on with the process.    First, I have to give you a bit of a background and you’ll understand why we ended up here.

A few weeks ago, person x found a home they were interested in purchasing.   Person x asked for my help to look at the property and share some thoughts on the possible purchase.   I drove over, checked out the home and thought it was a reasonable deal.  Nothing out of the ordinary in my opinion until……I got a call from person x a few days later saying the Realtor suggested a particular mortgage broker.  We’ll call mortgage broker “Greedy Selfish Bastards Mortgage Broker” or GSBMB for short.

Immediately alarms went off in my head.   Hmmm…Realtor suggests mortgage broker….where have I written this story before?   So without going into a long convoluted story, the quick summary is that GSBMB came in with a ridiculously high loan rate, ridiculously high fees, and ridiculously high selfish greed.   So person X is advised to get someone else by another family member to comparison shop.   Sure enough, the second mortgage broker (SMB) is a bit cheaper because Person X gave them a COPY of what GSBMB  and they reduced the fees, interest and lowered their greed (a small bit).

I come into the story when Person X is heading over to SMB to sign some paperwork.  We get there, I sit down and start looking at all the paperwork and that’s when I go “ugh” and sigh a bit.    I immediately start off by asking why there is $1000 in fees for doing nothing more than shuffling paperwork and the response from SMB agent is immediately, “it’s cheaper than what GSBMB was charging and Person X is getting a great deal.”

Now if you paid close attention, you’ll note that the fees were still high just not as high as GSMBM which made Person X feel better but it’s still a big waste of money.   Unfortunately, Person X is too busy and too much in a hurry to take a step back and consult with another bank or broker and simply wants to get the deal run.  The meter is also running on their contract and they have to close within a particular date and time is dwindling away.

Person X signs the paperwork and we go to lunch.   “What do you think?” is the question I get and I respond, “You were in a hurry and probably paid an extra $2,000 for this home that you didn’t need to spend” is what I say back.    At the end of the day, we both agree that the interest rate is irrelevant because Person X plans on paying off the mortgage within a year or two so it’s no big deal but the fees are pure profit for the worthless mortgage broker.  As best I could tell, the SMB was making at least $3,000 in profit for doing virtually nothing but signing paperwork.

At some point in the near future, I suspect technology will overtake the real estate industry.  We’ve seen companies like Redfine and Zillow start chipping away at Realtor commissions of 6% (ridiculous) and some enterprising young man/woman will come up with a system to automate the whole process.   With the advent of things like Google streetview, Google earth, automated property tax records there is no reason why appraisals can’t become more automated and there really is no reason for the existence of real estate mortgage brokers anyway since you can go to places like Lending Tree or BankRate and get quotes for loans from most banks.

So to all mortgage brokers, I hope you’ve enjoyed the quick and easy cash but it’s all going away over the next generation or so and you will go the way of the dinosaurs!

The iphone came on the scene back in September 2007 and two years later I’m still waiting to buy one.  In theory, I should have owned at least two different version by now: the original and the new 3G; That would likely translate into some nice cash for Apple but I haven’t done it.   I love Apple products but I have no love for AT&T and Satan himself couldn’t convince me to taste the fruit of AT&T’s network.

I can’t think of any other industry in electronics where such a screwed up mesh of carriers and manufacturers monopolize markets.  If I buy a TV it works with any “carrier” like Comcast, Dish Network, Direct TV, Time Warner, etc.   I don’t have to go and get my TV “unlocked” to get it to work when I switch “carrier” so why does the cell phone industry work this way?

You can take a land line phone that works on Verizon, unplug it and plug it into AT&T and it will work just fine.  Ditto for just about any other network worldwide on those old tethered phones.

Imagine if the electricity grid worked this way too whereby if you buy an appliance from Maytag it would only work with electricity delivered by X company.   If you use Y company as your electric provider, your Maytag applicance wouldn’t work.

The free market is supposed to fix this but carries and manufacturers seem all too happy to create artificial monopolies and the FCC and other government agencies say nothing about it.

I do understand that there are some technical issues in that carrier like Sprint is running a CDMA network which is incompatible with GSM but that’s part of my point.   I like the Palm Pre but I would never buy one because I travel a great deal internationally and the rest of the world is on GSM.   AT&T, T-Mobile and Verizon all have or have access to GSM network so there should be no real reason why the iPhone shouldn’t be sold for T-mobile or Verizon networks.

In the early days of the electric grid there were debates about using DC or AC based electric grids just as in the early days of VHS/BETA and HD-DVD/BluRay format wars.   It seems ALL of those debates were worked out and a standard was set and we’ve all moved on EXCEPT when it comes to cell phones.

I’m still waiting Steve, I have a few hundred dollars burning holes in my pockets for an iPhone all you have to do is not force me onto AT&T.

It’s a cliche to say that the best things in life are free but if you pay close attention, you’ll find this statement to be very true. I’ve had an extraordinary opportunity to do what many people would consider mundane things but they’ve had a tremendous impact on me. First, spending an unprecedented amount of time with my kids has been phenomenal. We’ve had the opportunity to live care free days and heading to the pool, a movie, a nearby city, a park, and many other places on a whim.

I’ve had the opportunity to visit my grandfather at the nursing home. I can see a bit of his light dwindle every time I visit him and there are days when he doesn’t recognize any of us and then there are the good days. I’ve also had the opportunity to visit family and friends and not be pressed to get home early so I can get well rested for a brutal day of work the next day. I helped family chop down trees and build new fences. I’ve had time to plant, water, weed and smell the roses. I’ve had the opportunity to share food I’ve grown with friends and family.

Lastly, my health has improved tremendously and I suspect getting plenty of rest, exercise, eating home grown foods without hormones, antibiotics or other crap and eating food fresh daily has made an enormous difference. Gone are the vitamins, fish oil, supplements, and medicines. I haven’t taken an aspirin in months!

So why go back and give all of this up? The simple answer is that we don’t know what the future holds and I just assume keep working until I am no longer able to or until I have a stack of money so high I can easily convert it to compost for my garden to keep me well fed.

According to Bloomberg, Chase will up their balance transfer fee to 5% and with Advanta shutting down their credit card division and banks continuing to cut credit lines, it looks like credit card arbitrage is effectively dead and I suspected as much back in October 2008 but was hoping for a turn around.

The math simply doesn’t work at 5% for any type of arbitrage.   I generally borrow in 25k blocks and generally did about 50k at a time and at 5% balance transfer fee we’re talking about $1,250 in balance transfer fees per 25k!    The math could potentially work if the terms were for 12 months or longer  at zero percent and it were possible to find an investment with 7% or higher return but that’s asking a lot during these turbulent times and most balance transfer offers are for 1.99% with 5% balance transfer for SIX months!

I’m guessing other banks will soon follow suit and up their balance transfer fees.  I think Bank of America recently raised theirs from 3% to 4% for all balance transfers.

I feel sorry for small businesses that use this tactic to float their payables while they wait for payments from customers and I can only surmise that it’s going to kill a good percentage of small business owners.   This is one of those “unintended consequences” of re-regulating the banking sector but I don’t think there was much of a choice.

I’m feeling a bit nostalgic.  For almost a decade I borrowed hundreds of thousands of dollars and arbitraged my way into some quick cash over the years and that’s all gone now.

During my unemployment phase in life, I cut back on nearly every expense and this included not going to Costco. I’d easily spend $1000 per month at Costco on wine, fish, and other great food but with a bleak uncertain future I opted to skip shopping there. Instead I opted to experiment and try some generics to see if they had improved any in the last 10 years.

Much to my surprise, I found some items that were fairly comparable so I began experimenting in greater detail by widening my selection of generics and unfortunately, I found some items where generics just won’t do. The first was dish soap as I bought a cheap generic and was disappointed to barely get any suds when I poured some on sponges during dish washes. The second disappointment was toilet tissue and nothing more needs to be said about that.

The most surprising item that I’ll likely never go back to name brand was laundry detergent. It seems stores are selling store branded generics on laundry detergent and bleach that is now nearly identical to the name brand product except it generally sells for about 40% to 50% less! Sorry Gain and Clorox but you’ve lost a customer forever to store branded generics. The last laugh might be on me if it’s the same product just rebranded in which case I won’t be paying full price anymore!

I actually wonder how many times this is being repeated across America. How many people have discovered some generics that are just as comparable as the name brands? Clearly, everyone will have their preferences and while I may be unwilling to accept generic dish soap, there are some that will accept it but it’s interesting to think how the growth and profit lines are changing for many brands.

If there is a single thing that gets my blood boiling, it’s the damn health insurance industry.    I found this article on Yahoo and read this year’s most ridiculous statement ever.

Another obstacle was evident Tuesday — the insurance industry.

In a joint letter to senators, the two largest industry groups warned in stark terms that a proposed government insurance plan would dismantle the employer coverage Americans have relied on for a half century and overtake the system.

America’s Health Insurance Plans and the Blue Cross Blue Shield Association also said they don’t believe it’s possible to design a government plan that can compete fairly with private companies in a revamped health care market. That particular statement seemed to be aimed at lawmakers of both parties who are seeking a compromise on the contentious issue.

Hey knuckleheads, the health care system is totally broken and the “quasi free market model” has caused the problem.   I’m a Ron Paul die hard capitalist but the ONLY major exception I make is with the crazy health care system.    Let’s briefly examine what health insurance really is:  a socialized form of health care.

Correct me if I’m wrong but this is how “free market” health insurance works.

  • Get a policy and pay ridiculous premiums of say $200 to $1200/month.
  • If I don’t ever get sick and need medical care, the health insurance company keeps the premium as profit.
  • If I do get sick, the health insurance company will do everything in its power to limit, reduce or refuse to pay for medical care, otherwise this cuts into their profit.   The greater the success in limiting coverage, the bigger the bonus for health care execs.

Did I miss anything?    This reminds me of the argument that it’s better to have a huge mortgage for the tax deduction.  The crazy theory here is that it is better to pay a bank a bunch of interest than paying the government their due taxes.  So somehow it’s better to pay bank interest than government money?   With health care, it’s better to pay health insurance companies money rather than the government taxes?

I have no idea if government will do a better job than the “free market” but I’m ready to try something different.  Doing the same thing over and over again and expecting different results is the definition of insanity.  Medicare and Medicaid aren’t perfect but it seems seniors seem to be relatively happy with the program and it is THE MOST POPULAR health plan out there.  In contrast I keep hearing that Veterans Administration health care is horrible so I don’t know what to make of that and why there is such a huge disparity between the programs.

Any argument that a government bureaucrat is going to be making rationing decisions is mute when you consider that a health insurance bureaucrat is making the exact same decisions now.   Let’s be realistic here too, we’ve got 80 million boomers that will be heavily taxing and draining the health care system and rationing is an inevitability no matter what happens!

It’s interesting that Senators and Congressmen don’t appear to choose any “free market” health care system and about all opt for the government run program.   That’s what I find really interesting….

So now that I may be heading back to the corporate world of hard work I thought I’d share some thoughts on lessons learned during unemployment. The first relates to “hard work” and during my time off I worked outdoors a great deal doing various projects. The largest of these projects has been home gardening and landscaping.

I spent a great deal planting various crops in my garden at home including bell peppers, tomatoes, corn, watermelons, carrots, green onions and other items. This has been literally the “hardest work” physically that I’ve done in a very long time. In prior years I would have planted one or two tomato plants and perhaps a bell pepper plant and half-heartedly tended the garden during the season. Since I had plenty of free time, there were no excuses for not following through building a great garden. I actually loved working outdoors planting, weeding, and upgrading my backyard. I loved it so much that I’ve built my own trusses with left over pickets from an old fence.

As strange as it may be, working in a garden lifting heavy bags of soil and fertilizer is a much more demanding work out than going to the gym and lifting weights. I can’t explain it but my only guess is that muscles become very efficient when you’re at the gym so the strain on the muscles is entirely different than when you’re juggling bags of fertilizer back and forth throughout the backyard. I still prefer the “targeted” workout at the gym vs. the garden but exercise is exercise nonetheless.

If you ever feel that you’re not making a difference in the world or at the office, try to take a day or weekend and plant some veggies or flowers. You’ll get a really great sense of accomplishment from seeing the butterflies, birds and other insects get to live off of the work you put in. Sure it’s annoying that birds eat your crops but we can’t be too selfish can we?

Well I’ve been unemployed now for five months and I’ve just about become accustomed to my time off routine but I’ve been interviewing in the process periodically. My interviews haven’t been with multiple companies, they have been with only two and I’ve been interviewing with these companies for the past 10 weeks.

The schedule works something like this:

Week 1 – Phone call pre-screening.

Week 2 – HR second pre-screening interview.

Week 3 – off while company decides when first executive interview can be scheduled.

Week 4 – Interview with 1st executive.

Week 5 – off while company decides when second executive interview can be scheduled.

Week 6 – Interview with 2nd executive.

Week 7 – off while company decides when third executive/management team interview can be scheduled.

Week 8 – Interview with 3rd executive and/or Sr. Management Team.

Week 9 – Wait for group of managers & executives agree on final candidates.

Week 10 – Get notified by HR/Recruiter an offer letter is pending or final interview required.

I did interview with other companies simply because the State requires me to “actively engage in looking for work” while on unemployment benefits and the problem with those companies was always the same: the company could not come anywhere close to meeting my salary requirements. So during each phone screening, I would be “pre-qualified” for the job until they asked for my salary history. When I gave them the information, I rarely heard back or was immediately told that the company could not match. Only one company had the courage to tell me the truth although I knew they were all thinking it, “you’re a flight risk” is what one said to me. He meant that if they hired me at 80k to 100k, I’d bolt as soon as the job market recover and they’d have to go through the hiring process all over again.

It didn’t bother me and I hated wasting their time but I’m required to “actively engage in looking for work” by the state in order to collect unemployment benefits so we all went through the dance and wasted everyone’s time. I guess this keeps people busy and employed.

I’m at the point now where I’ll likely receive a couple of job offers in the 125k to 150k range (with bonus and other benefits) which is acceptable given the economic climate. Before I go back to work though, I’m thinking of going to Europe or South America for a few weeks but I may just hang out closer to home. It’s been a long road and I’ve learned quite a few lessons which I’ll be writing about in upcoming posts.