TRAVEL BABBLE 101

When you see an ad for travel, your mind is quickly distracted by thoughts of happy, relaxed, leisure vacation time. Danger thus lurks, because you might not be paying enough attention to what the words in the ad really mean. Or don't mean. Here's a simple reminder of some of the most common double-talk in travel advertising. No doubt some of these common sleight-of-hand words in travel ads are familiar to you. It can't hurt, though, to get a little jog as to what might be lurking behind the ad-speak. "FROM" This is far-and-away the most common travel-babble word. Cruise lines, tour packagers, hotels, airlines---they all use it almost all the time. "From", of course, means that the price quoted is the lowest possible price among a wide variety of selections. If you select the "From" price, you will be getting the least desirable---and therefore the lowest priced---offering. When you see a "From" price it will usually look like this, in terms of the size of the type, say on a cruise ship cabin: from $1,199. The "From" is so small that you might not even notice it. The reason travel vendors use "From" is to grab your attention with the low price, and then get you to phone for details. Cynics might call this "bait and switch." And, in some cases, it certainly is. It's not illegal per se. But it can be dangerous. "UP TO" This is another price-bending play on words, as in, "Savings of UP TO 75%." You might thus think that the prices quoted in the ad represent a savings of 75%, or close to it. Such a deal. But the words mean something else. If the normal price of, say, a Florida vacation package, is $795, and the "discounted" price works out to $755, that's a saving of about 5%, not 75%. UP TO means ANY percentage or dollar amount from zero UP TO 75%. And whatever is offered at a full 75% savings, if anything, you might not want. Don't let the funny numbers fool you. "AIR INCLUDED" There's air, and then there's air. There are flights that leave from Los Angeles at a convenient 9 AM, that land in New York at a convenient 6 PM,---New York time---without stopping along the way. Then there are flights that leave from Los Angeles at 9 PM and land in New York at a very red-eyed 8 AM after stopping along the way in Phoenix and Chicago, just to make sure you don't sleep through the night. Needless to say, you'll fly in Economy Class. When air is included, as it often is in cruise packages, know full well that the packager or the cruise line will try to get the cheapest flights available. And that can involve red-eyes, extra long travel times due to layovers, having to make connections (often a challenge in their own right, particularly when baggage transfer is required), not knowing your flight schedule until the last minute, and overall fatigue. No way to start or end a vacation. Check to see what the cost is without the flight. It might be worth some extra bucks to pay the difference and choose your own flight times. "SIGHTSEEING ITINERARY INCLUDES…" Whether you're in San Francisco or London or Beijing or Washington or wherever, there are some things you're going to want to see and enjoy at your own pace. If you have a sight-seeing trip as part of your package, you must make certain that you'll be able to do your own thing to suit yourself, not the other 57 people on the bus. Merely mentioning a place on an itinerary----Fisherman's Wharf, or Westminster Abbey, or The Forbidden City, or the White House---doesn't necessarily mean that you will be getting off the bus to visit that place. It might mean that you are just DRIVING PAST it. ("….On your left you will see the White House…." says your friendly tour guide Swell.) If the tour brochure leaves you with any doubts as to what you'll visit, and for how long, check with the tour operator for specifics. If your desired spot isn't given enough time, plan to visit it on your own. And remember, a 30 minute visit to anyplace might include 15 minutes of 58 people getting on and off the bus. And someone will always be late while you wait to get moving again. Not fun. "PARTIAL OR RESTRICTED VIEW" On cruise ships that might mean that your view of the ocean is blocked by a lifeboat hanging over the deck. It might be just the tippy-tip of the lifeboat. Or it might be the whole life boat. Big difference. In a hotel it might mean having to stand at the far end of a window and looking out between two other hotels to glimpse a sliver of the ocean. (And in some cases that might even be called an ocean view room, with no asterisks.) Those cabins and rooms are priced to attract, but the view they promise might not be very attractive. "FOUR….FIVE….SIX STARS…" Who decides how many stars a hotel or a restaurant or a cruise ship deserves? It's usually some kind of travel trade organization, which offers some degree of comfort. But different places and different facilities can have different standards of measuring the number of stars. So what might be four star by one set of standards could be three stars by another set. And then there are hotels and restaurants and cruise ships that simply name their own number of stars. If you're paying a price for the number of stars, do some homework to be sure you're getting the right value for your money. "STANDARD….SUPERIOR….DELUXE…" Just like the Stars category, hotel rooms are rated, and priced, according to their size, location and amenities. But who decides the difference between the types? And does a "Superior" room at Hotel A equal a "Superior" room at Hotel B? For a short stay it might not matter, but for a longer stay you don't want to be ripped off. Look at the room you're assigned before you take occupancy. And if you don't like it, ask for an upgrade. Don't wait for them to offer an upgrade. They won't. Trust me. "DAYS AND NIGHTS" This can get tricky, particularly if you're on a package deal and flying across an ocean. Here's an example: You leave Los Angeles on October 1st at 11 PM for a flight to Rome. That day of departure, October 1st, might be counted as the first day of your trip. You get to your hotel in Rome at about 5-6 PM Rome time on October 2nd. That counts as the second day of your trip, but you're too wiped out to enjoy it. So far you've used up two days and one night of your trip, and it hasn't really begun yet. The same funny math can happen on your return. If you leave for home late at night and arrive the next day, you've used another two days and one night. So, when you see a package plan that says, say, "12 nights" or "10 days" you want to find out exactly how many usable days and "sleepable" nights you're going to have. (If you see some packages that honestly advertise "11 days and 9 nights" or vice versa, you'll now know how they arrived at that strange scheduling. Keep this mini-dictionary in mind when you plan your next trip. It could save you money, time and energy. This article supplements Chapter 3, pages 88-98 in Personal Finance. Access the textbook by clicking on the box in the right column.

CHEAPER BOOZE----GOOD NEWS?

Hallelujah! The Federal Reserve Bar and Grill has today lowered the price of a good stiff martini by 50 cents, to just $3. This is the second price cut in just the last eight days---on Jan. 22 the price was cut from $4.25 to $3.50. Ben Bernanke the Bartender also hinted that more price cuts could be in the offing. But why wait? If you're feeling nervous about being able to pay your debts, your worries are over. Just tap your plastic for another advance and get blotto! You've been spending money like a drunken sailor for years now. Why not keep the party going. Drink is cheap, so........ Wait. Wait! WAIT! I got a bit carried away for a moment. Of course you knew the realities---that the Federal Reserve cut interest rates, not martini prices, for the second time in eight days. But the harsh reality is that the last thing our economy needs is a cheap way to stay on our national spending binge. WANTED: NATIONAL HANGOVER What we really need is a solid, blistering, head-crunching hangover. We have to put a brake on our excessive spending. That goes across the board, from the government to each individual and family, and all points in between. It's fiscal rehab. Detox the spending frenzies from our systems. Sweat out the urges to buy, buy, buy. It only hurts for a little while, and we can come through it with a fresh realization that prudence and moderation and restraint can be healthy. Cutting interest rates will only encourage more spending---that's the point of it, after all---and that can be devastating, because we have forgotten how to spend wisely. We have forgotten how to budget sensibly. We have forgotten how to evaluate risk intelligently. Putting a bottle of booze in the hands of a drunk can give him another day or two of revelry. But the added damage to his liver will creep ever closer to the fatal stages. The teenager sneaks a gulp of rotgut whiskey from his parents' liquor cabinet. Next thing he's hustling someone to buy him a sixpack at the nearby 7/11. Then he's a regular at the local booze hall ("Honest, I just went in to watch the game. How could I know it would go into three overtimes?") Then he's having a few drinks at lunch, a shot or two in the afternoon, a stupor in the evening and a blackout on the weekends. It's a cycle that goes on forever. We started out a few years ago getting suckered into signing up for half a dozen "too good to be true" credit card deals. When we hit our borrowing limits, the banks lured us with home equity loans, which we tapped to the max because our homes had surged in value. When the mortgage payments got too high we refinanced with the fat guy from the TV ads. When the interest rates on those loans got boosted, we yowled for the government to bail us out of our dilemmas. MONEY FOR VOTES And along gallops government to the rescue. In addition to the interest rate cuts, the President and Congress are girding up to put hundreds of billions more in our pockets. All this in an election year, when "what have you done for me lately?" is all our elected pimps hear. Oh, yes, these government programs will result in huge ongoing annual deficits. Today they are estimated to be around $400 billion for 2008 and 2009, giving a new incoming President a royal red ink carpet. As our deficits soar, so does our national debt, and the interest thereon, which we increasingly pay to foreign investors. Then we reach a point where we have to say, "No more deficits." So we simply print more money. Literally. Too much money floating around is an open invitation to inflation. We panic at the thought of rising prices, so we borrow in order to buy, buy, buy before prices go up. Our panic buying indeed causes prices to go up. And the wheel has come full circle. Once a drunk, always a drunk. Deal with it. SHOP BANK'S QUALITY OF SERVICE AS WELL AS COST OF SERVICE By the way, the Fed's interest rate cuts will be felt first by banks which borrow from the Fed on a regular basis. The banks' lower borrowing costs will be passed along, in part, to their prime borrowers: the big businesses which will hopefully spend the borrowed money on job-creating projects. Very little, if any, of the banks' lower borrowing costs will filter down to the public. Why not? The banks' first priority is to boost their profitability. They might offer tiny cosmetic rate drops on credit card debt, but they'll increase their other charges swiftly and decisively. Then, in time, as their profit pictures improve, competition for your business will stimulate the possiblity of lower banking costs. Meanwhile, shop carefully, not just for the costs of a bank's services but, perhaps more importantly, for the quality of a bank's services. This article supplements Chapter 1, pages 16-18 in Personal Finance. Access the textbook by clicking on the box in the right column.

THE DUMMY'S GUIDE TO IDENTITY GIVEAWAY

It’s bad enough to have your identity stolen. But what if you GIVE IT AWAY? Can’t happen to you? You say you wouldn’t fall for a “phishing” scam. But millions of people do, despite the fact that many of the scammers are incredibly stupid. Their come-ons might look legit, but you can tell at a glance that they’re phony…IF you take the time to give them a glance. Here are some that flew into my inbox today. “Good heavens, Morrie…we just got an email from eBay/ PayPal/ Amazon/ Citibank/ Visa….They said that there’s a problem with our account, and we have to email information back to them right away or they’ll cancel the account! Quick, Morrie, solve the problem!” Cautious, concerned and wary, Morrie clicks onto the return link and types in the details that the phony phisher has asked for: bank account number, Social Security number, credit card numbers----all those little items that constitute your identity. “Just in time,” says Morrie. “We could have been in real trouble.” And bingo, within minutes they ARE in real trouble. The phishers are out having a field day with Morrie’s money. They didn’t steal Morrie’s ID. He GAVE it to them. A gift, pure and simple. Little lessons from recent mail: #1 A phishing letter from Bank of America, complete with their logo, their copyright notice and wording that sounds like what a real bank might say. Except---Here, exactly as the phishing bait was worded, are the flashing red lights: “…The update process is very simple and fast one….” See the goof? It gets better. “This process is mandatory , and if not completed within the nearest time your To securely confirm your information please click on the link bellow…” Bankers might not be sweethearts, but they do mind their grammar and their spelling. And the stupid goofs in this letter are a dead giveaway that you’re not dealing with a bank, but with a phony. “…The update process is very simple and fast one…?” Missing a little “a?” Give that guy an F minus in Phishing 101. Next goof---forget the statement that “this process is mandatory….” That’s nonsense. The rest of the sentence is hellacious! “…nearest time…?” “….your To securely confirm…?” “….information please click on the link…?” And, best of all, “BELLOW.” With goofs like that you wouldn’t want these people to really handle your banking, would you? #2. This one was from Wells Fargo Bank, with logo of course---horses pulling a stagecoach---all looking very Wells Fargoish. Once again, the exact wording: “We recently viewed your account, and suspect that your Wells Fargo Internet Banking account has been accessed by an unauthorized third party. Protecting the security of your account and of the Washington Mutual network is our primary concern……” Wait a minute! Hold those Wells Fargo horses! What’s wrong with this picture? Wells Fargo Bank is worried about the Washington Mutual network? Right. Just like Ford wants you to shop at Chevy dealers. Just a typo, you say? Anyone can make a mistake? Go a few inches down on this inanity, where the print gets really small, and read “Privacy and Security: To access the Washington Mutual privacy policy go to wellsfargo.com/security…” #3. A totally different letter from Bank of America, and you don’t have to read beyond the greeting to know that you’re dealing with dingbats: “In attention of Bank of America customers.” In attention of???. Whatever happened to “Dear?” #4. Another greeting from another dodo: “Dear Citi Bank Customer.” The bank’s name is Citibank, all one word. I am not making this up. #5. This one came to me from Downey Savings and Loan Association, where, by the way, I have never had any accounts. The salutation read, "Dear Downey Savings and Loan Association." Oops. It went on to say, in kooky language, "Your Internet Banking Account is currently locked! You must update your Internet Banking Account urgently!" They had my account number listed as "XBBHPJMZUC." What number do you suppose follows that? Okay, enough is enough for one day. Who do these dummies think they’re kidding? A lot of other dummies, that’s who. Identity theft is bad enough. Identity giveaway is shameful. This article supplements Chapter 4, pages 108-134 in Personal Finance. Access the textbook by clicking on the box in the right column.

DOWN UNDER? STUDY YOUR MAP!

It's summer Down Under, a great escape from the cold. A huge number of people who want to travel Down Under are, sadly, clueless about how much time they'll need to "do" both Australia and New Zealand. This posting will help you get started with good planning, but what you need most is a map. A good map. With distance scales on it. "We're going Down Under!" say our dearly naive traveling friends. "We're going to visit New Zealand, from Aukland to Queenstown and all points in between. And then we're going to Australia, and we'll visit Sydney, Melbourne, Perth, Ayers Rock and the Great Barrier Reef. We're allocating two, maybe three weeks, to do it all. Any suggestions?" Yes, I have a suggestion. Don't do it. Unless you're willing to pay for and experience nothing more than an exhausting siege of vertigo. Australia in three to four weeks? Okay. New Zealand in two to three weeks? Okay also. But the whole area in 15 to 21 days? Save your time and your money. These are wonderful places to visit, and you won't do them, or yourself, justice unless you allow plenty of time. (Consider as an alternate plan separate trips to New Zealand and Australia.) A Fool-The-Eyes Ad Part of this problem is due to an advertisement I've seen countless times in Sunday Travel Sections and various magazines. It's an ad for "Down Under" and it shows New Zealand snuggled up real close to Australia, and it looks to be almost the same size. That gives an unmistakeable impression that it's take just a hop, skip and a jump to cover both nations. The real maps say otherwise. Aukland, in northernmost New Zealand, is over 2,000 miles from Australia's main cities, Sydney and Melbourne. You're looking at a five hour flight across the Tasman Sea, plus another three to six hours getting to and from airports, going through security, waiting to board, collecting baggage, emplaning and deplaning, and so on. That's in both directions! In other words, it's a full travel day---you'll wake up in the morning and go to sleep in the evening having done nothing but travelling. And, by the way, figure that same three to six hours to and from your hotel bed to your airline seat, and vice versa, on all your flights. That also holds in the U.S.A., which is why if I can drive to any destination in three to four hours, I will do so instead of flying in today's crowded, demanding and uncomfortable airline environment, which is made all the worse by the inanity of security routines and the people who run them. Australia is as large as the United States, geographically. Sydney to Perth is like New York to San Francisco. Singapore is closer to Perth than Sydney is. Melbourne to Cairns (for the Great Barrier Reef) is like going from New York to Miami, plus another hour or two to drive from the Cairns airport to Port Douglas where you board catamarans for the reef. So, call it New York to Miami, followed by a drive to Key West. Package Deals vs. Do-it-Yourself Sure, there are package deals of two and three weeks that hold out the promise of seeing everything Down Under. But after the first 48 hours everything will be a blur. A sleepy blur. A dizzy blur. Los Angeles to Sydney is a 14-15 hour flight, and crossing the International Date Line does weird things to your body clock. And that's just the first day! Besides, you don't really need a package. (A good travel agent, yes. A "hurry-back-on-the-bus" package tour, no.) Everyone speaks English. You can read all the ads and the signs and the schedules and the menus. Everyone is extraordinarly friendly. You want to mingle and dawdle and stroll and give in to your curiosity at the slightest whim. You don't want to be herded. And a well-planned self-guided trip can be in the same price range as a package tour. So, please go Down Under. The sooner you go, the longer you'll have lovely memories. But do it when you have done ample planning and have ample time. We'll visit a lot of the Down Under delights in future posts. Meanwhile, study that map. This article supplements Chapter 3, pages 88-106 in Personal Finance. Access the textbook by clicking on the box in the right column.

SOMETIMES IT'S GOOD TO DO NOTHING

The stock market is bouncing up and down. (So what else is new?) Interest rates could go higher or lower. (….And?) Housing prices are getting very fluttery. (How quaint.) There are rumors that your company will be laying off workers (Update that resume.) SO WHAT SHOULD YOU DO? We have all been conditioned to react to such phenomena. How? By panicky phone calls from stockbrokers., By unsubtle warnings from lenders. By anxious suggestions from real estate salespeople. By news stories and headlines that are, by the nature of the beast, supposed to shock you, to get your attention. By water cooler gossip. By parents and/or kids who think you don’t know anything. So, all too often you DO do something. You’ll sell or buy shares of stocks and mutual funds. You’ll switch bank accounts. You’ll put your house on the market, or take it off the market. You’ll quit your job and/or start looking for another. And if you don’t actually DO something, you fret and sweat that you shouldn’t be doing nothing. Please, take a deep breath, count to ten, and listen to me. Sometimes it’s good to do nothing. Maybe more than sometimes. Maybe often. Acting on impulse is the worst enemy of financial sanity. First, whatever is motivating you to act might not be real. Facts are elusive in this wired age. Second, the stimulus to action might come from someone (a stockbroker?) who has an agenda---to get you to trade, for better or for worse, as often as possible. Third, you probably haven’t done the homework or research to validate your decision to do something. Fourth, even if you do research alternative actions, you could still make a wrong decision. This is particularly true if you’re trying to second-guess the stock market or the interest rate arena. Because whatever you decide to do (say, sell shares of stock) there is someone taking the opposite action (buying those same shares.) Who is right? Think back to the last time you made an impulsive decision to do something. How would you have fared if you did nothing? If you just waited for the crisis or the panic or the stampede to end? Ask yourself too, if you did do something that turned out to be wrong, what will it take for you to recover from your mistake? That has to be part of the overall equation. Doing nothing does not mean ignoring the call to action. There well may be cause for concern. But before you leap, you must look, and measure, and calculate, and analyze the source of the call to action. Again---is it a stockbroker, or someone else who might stand to gain by whatever action you do take? Don’t get me wrong. Lots of those action-motivators (such as stock brokers) do have their clients’ best interests in mind. But you shouldn’t have to mind-read someone every time there’s a tick or a tock. There’s a lot to be said for taking a deep breath and counting to ten before you jump off the handle. Maybe even better---take ten deep breaths and count to 100. Don’t let impulse waste you. This article supplements Chapter 15, pages 395-401 in Personal Finance. Access the textbook by clicking on the box in the right column.

HOW THE LOCUSTS ATE AMERICA

The University of Bob is proud to offer an exclusive look at a most extraordinary book, "AMERICA---HOW WE GOT THIS WAY" written by historian Hubert Hindsight, Ph.D., and published in the year 2020. From his vantage point, Hindsight looks back on some of our most defining events. He urges all readers to engrave in their minds the saying of philosopher George Santayana: "Those who cannot remember the past are doomed to repeat it." Hubert's quotes will appear from time to time, and can be identified by the "Looking Back" logo. Chapter 8, "Like Locusts, They Just Keep Returning." In the second decade of the 21st century there arose a phenomenon---still not under control---that critically threatened the world's financial stability. Known as "ACEs,", then "ABCDs," it had been gestating for many years. It resembled the most horrific swarm of locusts imaginable. Presidents Hillary and Chelsea Clinton couldn't stop it, and now, in 2020, with the Bush twins running for Co-Presidency, the threat still exists. The Locusts came from all walks of life. Some had been used car salesmen. Some had been real estate hustlers selling vacant lots in the wilderness. Then they graduated to the world of banking and high finance. They had very special skills enabling them to sell over-valued products to people who either didn't need them, couldn't understand them, or were just plain greedy. Most of those sales required the buyers to sign I.O.U.s, which would typically involve a high rate of interest. Banks and other investors were anxious to buy these I.O.Us to cash in on the high interest. When the authorities started to discover that a lot of the transactions involved fraud-----the land was sold on false pretenses, the used car had had its odometer set back, etc.----new laws began to put the scams our of business. They may have stopped the scams. But there was no way they could stop the scammers, the Locusts. They had skills that would always be profitable, so they just sat back and waiting for their next opportunity to sell junk. It didn't take long for those new opportunities to pop up. The Locusts, their skills honed to near perfection, had great success through the 1970s and 1980s selling time-share condos, travel agencies, taco franchises, motivational seminar companies and television shows promising fast and easy riches. The pickings were ripe, but the Locusts' hunger was never satisfied. Bigger Bucks on the Horizon In the 1980s the Locusts invaded Savings and Loan companies, America's prime source for home loans. They posed as appraisers, overvaluing properties right and left. They posed as loan officers, making doomed-to-fail loans based on the excessive appraisals. They posed as builders who sold homes for far more than their true value, with the builders pocketing the excess (after sharing with his co-conspirators.) The swarm was nation-wide. The entire Savings and Loan industry caved in. And because most of the S&L deposits were insured by Uncle Sam, U.S. taxpayers had to foot the bill for over $300 billion that the failed S&Ls owed their depositors. As icing on the cake, a stock market crash followed soon after. But wait. There's more. In the 1990s the Locusts spread their next generation of larvae. Dot-com was all the rage. Clever techies created internet browsers and thigamajigs and business plans and double-latte-frappucinos and all kinds of science-fiction stuff that lenders and investors couldn't throw enough money at. Visions of fortunes danced in their heads. The Locusts posed as venture capitalists who invested $25 per share in InterGalactic GigaBytes (IGGB) and started a pump-and-dump campaign (pump up the price per share and then dump it asap.) The Locusts posed as Wall St. analysts who said that IGGB would go to $300 per share by next Tuesday. And it did. The Locusts posed as stock brokers and mutual fund salesmen who said that IGGB would go to $400 by Wednesday. And it did. And all along the way there were Locusts posing as financial commentators who said that the venture capitalists and the analysts and the stock brokers were all right. When the dot-com market crashed the Locusts all swarmed to Houston and nested in a place known as the Enron Building. Mortgages Again---With A Twist After devouring Enron and its wannabes, the Locusts revisited the mortgage markets. By now they had mutated into very clever money-crunchers. Once again the Locusts posed as appraisers and loan officers and builders, but now they were the 3.01 models. They created doomed-to-fail loans worth trillions of dollars, disguised them in intricate packages of securities mixed up with good quality debts and legal gobble-de-gook, and sold these packages to investors all around the world. When it appeared that so many of these packages would default, lenders got cold feet and the financial world that is lubricated by borrowed money was in danger of grinding to a halt. By 2009-2010 the mortgage crisis began to fade, as loans once thought worthless were being repaid bit by bit, and the clouds of doom began to dissipate. But the swarms of Locusts didn't dissipate. They grew even more powerful, more threatening.The government imposed strict regulations on all the players in the home loan industry, and they returned to safer traditional lending practices. So the Locusts had to create new abra-cadabra to sate their lust for money. Any Debt Will Do The Locusts knew that any debt, or I.O.U., properly structured, could be sold to investors. If X owes Y $100, plus interest at 6% per year, there will always be a Z to whom that 6% return would look attractive. So Z would buy X's I.O.U. from Y. That's the essence of doing business, and has been since the dawn of time. If the debt is collateralized---that is, something of value can be grabbed by the lender if the debt isn't paid---so much the better. Collateralized means "safety." But what if the true value of the collateral is questionable? Over the years car loans, credit card debts, home loans, student loans, etc.---all of these had long been turned into investment packages, but now they were were either too tightly regulated or not profitable enough. How about bank escrow accounts? What are they? When banks lend people money to buy a home, they often require the borrower to make extra monthly payments to cover their property taxes and property insurance. That money is held in an "escrow account" and is used to pay the taxes and the insurance bill when they come due. Say that the monthly payment for the mortgage alone is $1,000, and the monthly tab for taxes and insurance comes to $350. The loan agreement could then require the borrower to pay $1,350 per month. When the taxes and insurance become due the bank pays them out of the escrow account. Many borrowers like this arrangement---it's a sort of enforced savings to cover those big bills. SMALL PRINT: If the borrowers don't pay their monthly escrow amount, they could be in default on the mortgage. The dollars that accumulate in those escrow accounts are, in a sense, debts that have to be paid to the city and to the insurance company. Many cities and insurance companies would rather have that monthly inflow, instead of getting it yearly, so they could spend or invest the money as it flowed in more rapidly. So, said the newest breed of Locusts, let's convince the cities and insurance companies to agree to take, say, 90 cents on the dollar to get their money monthly instead of annually. Using the above example, the Locusts buy an escrow account for $3,780 (90 cents on the dollar, or 90% of $4,200.) The city and insurance company agree to take the $3,780 in full payment for the taxes and insurance. That leaves Locust X with the $420 difference---a nice profit for their work, which can be handled by a couple of computer clerks. Multiply the $420 by millions of such loans, and you're talking serious money. Thus were created ACES---Accumulated Cash Escrow Securities. They became really hot. Good return. Safe. The Locusts created a gazillion dollars worth and sold them in little chunks to pension funds and mutual funds all over the globe. The ACES were so successful that similar plans were started for life insurance premiums and for auto insurance premiums and for estimated income taxes that self-employed people pay, and for any and every form of I.O.U imaginable. They all funneled through banks. The Plot Thickens as the Government Enters the Scene None of the above "payment due" items are really collateralized. If you don't pay your life or auto insurance premium, nothing gets taken away from you. You just lose your insurance. Also, there is no taxable event in paying those bills: Uncle Sam doesn't get a cut from what you pay your insurance companies. Enter the U.S. Government. By the final years of Hillary Clinton's administration, the staggering national debt had doubled since the G.W. Bush years because of Mrs. Clinton's final but costly success in passing a national health insurance law. Congress then---at Hillary's bidding--- passed a law saying that those "payment due" transactions were, indeed, subject to a new-fangled tax they called a Transaction Levy. Income from that levy, it was felt, could reduce the national debt and, within just a few years, could make the government solvent again. "Pay a little bit extra now to avoid a real mess a few years later," Congress and Hillary told voters. But the SMALL PRINT stated that if anyone failed to make a "payment due" on time, it would be tantamount to being delinquent on your incomes taxes. Uh-oh. The Locusts pushed hard for this new tax because they saw as a new form of debt they could sell. They called them ABCDs, or Aggregate Bank Collateralized Debentures . ALL of the "payment due" items were lumped together as investment packages and sold to eager investors around the world. Safety was the key feature of ABCDs. Being delinquent with the IRS was such a threat that no one dared skip their payments, and thus every analyst on Wall St. gave ABCDs the highest quality rating: AAA. But trouble was lurking. When Chelsea Clinton was elected to succeed her mother as President in 2016, her first initiative was to get rid of the Transaction Levy. There was never enough of a majority in her party to kill the levy, and the battle has raged since. Chelsea's alleged motive for turning against her mother was not fiscal policy, but, as she said, "Mom could have been a little more strict with Daddy." Co-Presidents? As this is written, the Bush twins, Jenna and Barbara, are running on the Republican ticket for the office of Co-Presidents, and they have made it clear that they will continue to support the Transaction Levy. At stake is the entire U.S. economy. Suspending the Transaction Levy would prompt tens of millions of people to skip their payments due, and the approximately $19.76 trillion in ABCDs would be downgraded from AAA to the lowest rating: Junk. What the Locusts had wrought threatens to throw the financial world into total chaos. We had forgotten the past, and the final bill is now coming due. A momentous legal battle is assured, but politics being what they are, Supreme Court Chief Justice Alito, appointed by the twins' father, is known to favor retaining the levy. His vote would be the swing vote to keep the levy in place. (The legal challenge to the twins running as co-presidents is yet to be heard by the Supreme Court, but their recent ground-breaking decision* regarding the number of people constituting a marriage is a strong indicator of co-presidents being allowed.) * In A.C.L.U. vs. United States, 2019, in a 5-4 vote the Court said that since the Constitution does not specifically prohibit a marriage between three or more people, then it follows that the Presidency---also not specifically prohibited from being more than one person---can consist of two or more people as co-Presidents. "Even though the Constitution refers to 'The President' in the singular, it does not specifically say that the President cannot be more than one person." This was the crux of the deciding vote, written by Justice Scooter Libby, G.W. Bush's last minute appointment on his final day as President.

BEWARE THE DEBIT BITE

You might think you have plenty of money in your checking account, then you get a charge of $30 or so from your bank telling you that your account is overdrawn. Yes, it happens more than you’d think. Here’s what you need to know. Crunch some numbers along with me. It could prove enlightening. We’ll keep it as simple as possible. You start off on a Wednesday with $100 in your checking account. At 10:00 AM you deposit a check for $185 into your account. The check is a gift from your Uncle Toody who lives in Spokane. You now have $285 in your account. At noon, while on your lunch break, you buy $200 worth of clothing and pay for it with your debit card, thus reducing your balance to $85. Your lunch tab is $18, and you pay for that with your debit card, bringing your checking account balance to $67. Friday is payday and you’ll deposit your paycheck for $800 next Monday. Is everything okay? No. Far from it. The next day, Thursday, you get a notice from your bank that your account is overdrawn by $178! The bank gives you this explanation: “ We tally up all deposits and withdrawals (check and debit card charges) at the end of each day. We do not tally them in the order they came in. Rather, we tally them by amount----largest first. Thus, when you charged the clothing for $200, we debited your account by that amount, resulting in an overdraft of $100, plus a penalty charge of $30 for any overdraft, bringing your balance to minus $130. The overdraft charges are debited immediately. Then came your $18 lunch---this was another overdraft, so there’s another $30 penalty. In other words, your lunch cost $48---$18 for the lunch itself, and $30 for the penalty. So, adding that $48 to the prior overdraft amount of $130 leaves you with a negative $178 balance. Please deposit that amount into your account immediately or we’ll start adding further penalties for every day you remain in overdraft status.” “WAIT A MINUTE! What about the $185 check I deposited first thing in the morning? That would have brought my balance to $285, which would have more than covered the $200 clothing cost and the $18 lunch?” “Sorry, but that $185 was drawn on an out-of-town check, and we can’t give you credit for an out of town check until we’ve given it time to clear---three business days. So it didn’t count in your balance for that day. Now please pay up.” “That’s terrible. What if I deposited a check for $185 from, say, the United States Government, such as an IRS refund?” “Technically, we still could have waited one day for the check to clear, so it might not have helped. However, had you deposited $185 in cash, we could have credited it that same day and you could have avoided the whole problem, overdrafts and all. Of course, if we knew you better----well enough to be sure that you’d cover Uncle Toody’s check if it bounced---then we could have credited it to your account before we debited the charges, and you would have avoided the overdrafts. But we didn’t know you better. So you owe us $178. Now!” To be sure, this is a worst case scenario, but it happens all the time. A recent Congressional study showed that banks reap billions per year in overdraft charges---many of them perfectly legitimate, but a big chunk arising from this practice of tallying a day’s business as your bank had done. Not all banks tally that way---many tally the debits and credits in the order they’ve been received, rather than largest first and so on But if your bank does like the one in this story, you’re vulnerable. A bill is being introduced in Congress to protect consumers from such abuse, but until it becomes law (if ever) you have to take care of yourself. As a general rule---even if you’re a long-time customer of the bank---it’s wise to ask your teller at the time you make a deposit when an out-of-town check will have cleared and be credited to your account. Tally your ongoing balance accordingly. Some banks will bend the rules and cancel overdraft penalties if your account has been otherwise kept in good condition---that is, no overdrafts or bounced checks. In the case at hand, you certainly have nothing to lose by pleading your case with a sympathetic officer. Many do have the discretion to cancel charges, and you might also find that many are willing to do so because they also don’t think the debiting method is fair. This article supplements Chapter 11, pages 277-283 in Personal Finance. Access the textbook by clicking on the box in the right column.

WHEN IS A "LOSS" REALLY A LOSS?

We're being told on a daily basis how much is being lost as a result of the sub-prime mortgage crisis. I agree that it's a rotten situation, caused by the greed of both borrowers and lenders, and spreading pain throughout the entire economy. It is also a case---and I hope you'll find this helpful---of how the naive media are confusing the naïve public, and perhaps compounding the problem due to accounting semantics. If we feel depressed economically, we act depressed economically. If things REALLY aren't as bad as they seem, our national economic spirit might get perky. Read on. When do you incur a loss? If you put five bucks on number seven on the roulette table, and the ball falls into slot twelve, you've lost five bucks. It's gone. Fuggedaboudit. If you bet $50 on Shady Lady to win the fifth race at Santa Anita, and she comes in second by a nose, you've lost $50. Gone without a trace. If you total your new $50,000 Chevrolet Subdivision by smashing it into a wall and you don't have insurance, you've lost $50,000. Pfffft! Deal with it. But a lot of incidents that are called "losses" really are NOT losses. In the financial world that happens quite a lot. Call it "accounting semantics" if you will. The fact is that things are not always as dire as the word "loss" may make it seem. The media have gone overboard in recent months reporting the "losses" suffered by banks, brokerage firms and investors because of the sub-prime mortgage chaos. The articles spook the markets. Investors sell out and run for cover. The affected stocks go into free-fall. And the headline writers go back to work scaring their readers about the plunge. Bad news is largely a knee-jerk self-fulfilling prophecy. MISSED PAYMENTS DO NOT EQUAL "LOSSES" The fact that payments are not being made on a loan does not necessarily mean that the amount of the loan is "lost." Joe has a loan from his bank of $2,400, payable at $100 per month for 24 months (plus interest.) Joe makes his payments for six months and then stops. He still owes the bank $1,800. Two months, four months, six months go by with no payments from Joe. Has the bank lost $1,800? No. Joe might catch up on what he owes, and the bank doesn't lose a penny. Or, Joe might refinance the loan, thus giving the bank a chance to get all its money back. Again, no loss. When Joe misses payments, his loan might be considered "non-performing," or "delinquent" or "in collection." But until Joe completely abandons his debt, "loss" has not occurred. There's always a chance that Joe will make good on the loan. People who have been saddled with high interest rate mortgages might scrimp and save….OR inherit….OR get a nice raise….OR win the lottery….OR work harder and spend less, OR sell their home to free up some cash….OR finish paying other debts so they can resume payments on their mortgage….OR sell some unimportant assets so they can get square with the debt on their important asset, their home….OR negotiate a new and comfortable repayment plan with the lender….OR add a co-signer to their IOU to give the bank more security, OR…. OR…. OR…. etc. You get the picture. There are a lot of ways that people can and will honor their obligations. But the media aren't recognizing that important fact. Likewise with foreclosures. Yes, the number of new foreclosures is frightening, but the VALUE of the properties that are being foreclosed is not necessarily LOST. Most of those houses will be resold, and their loans taken over (or replaced) so that a high percentage of the original foreclosed loan will go back on the books as a good loan. LIKE YOU, LENDERS SET ASIDE FOR "RAINY DAYS" The lender might, at some point in Joe's delinquency, designate Joe's loan as "Uncollectible." Lenders know that this will happen with a certain percent of their loans, so they set up a "Reserve For Bad Debts." Each month or quarter they take some of their income and put it into this "bad debt kitty." It's like you putting away a few dollars every so often to cover yourself for that "rainy day." When Bad Debts in the Reserve are paid off, that inflow of money counts as current income. When times turn bad the Reserve is topped off. And so it goes. In the sub-prime mortgage situation, a huge amount of money has been transferred into the Reserve for Bad Debts by the lenders. The problem is that the media reports give the impression that the money being put into the Reserve is money that has been LOST. The fact is that a good chunk of those "bad" debts could be repaid. But that repayment doesn't get reported in the mass media. It's lost in the auditors' mumbo-jumbo many months later, and the public doesn't know about it. Unfortunately, Accounting Semantics 101 is not taught in Journalism Schools. And only experienced financial journalists pick up the meanings during their tenure. Meanwhile---given uninformed or imitative reporters and editors---the public is getting its collective head filled with jargon that can be meaningless and misleading. You have to educate yourself if you want to be on top of the game and know how to deal with gobble-de-gook.

HOME SWEET SOMEONE-ELSE'S-HOME

When we go on a vacation we stay in a hotel looking forward to getting a taste of another city or country and meeting some locals. But there are no locals staying in the hotel---just a lot of folks like yourself. You could have stayed at a hotel in your home town and saved the travel expense. Here’s a fascinating alternative. Thanks in large part to the internet, a huge industry has grown up offering people’s homes to stay in on your vacation. There are websites galore brimming with listing companies which in turn are chock full of specific listings of houses and apartments all around the world. Check out “Vacation Rentals” on your search engine of choice and you’ll see what I mean. Here are some of the advantages of booking a “rent by owner” accommodation. In no particular order: a well-chosen home or apartment can be a lot cheaper and a lot more spacious than a hotel….You’ll be part of a neighborhood where you can meet local people in the shops, restaurants and pubs.….You’ll no doubt have the use of a well-equipped kitchen, which can save you lots of money by having meals in instead of going to restaurants…..Many homes have good libraries in which you can indulge your reading habits….A home is a home. Here, again in no particular order, are some precautions you can take in choosing a rental home for a vacation. They should help you get the best deal for your money. Good Research Can Pay Off ---Never was there a better use for a google map, or a mapquest one, if you prefer. It can zero you in to the immediate neighborhood, and list all kinds of businesses in the area. Use it to gauge how far the house is from the center of town, or other places you might want to be near. Beaches? Malls? Zoos? Museums? Golf courses? Playgrounds? Highways? Airports? Whatever. The google maps can show you a satellite photo of the immediate surrounding in many cities, a good way to orient yourself to the nearby amenities. ---The rental sites will, or should, show you some photos of the place. Be aware that photos can be staged and manipulated. Staged means that a lot of attractive furniture, etc., is brought in for the photo shoot, to replace the grunge that’s really there. Manipulated means that rooms can be made to look bigger and brighter than they really are. Scrutinize any photos with those factors in mind. I hope that my negative suspicions are proved wrong. ---Try to get referrals from past tenants, although if the landlord chooses them you might not be getting the real deal. If any of the past tenants give you their phone number, a phone call might elicit more important information than the letter. Probe politely. ---You don’t have to read a contract when you stay in a hotel, but when you’re renting someone’s house there will be a contract, and you should understand it thoroughly. Get a lawyer’s help if you’re not sure what some of the words mean. Assume that the landlord had a lawyer draft the contract, and you’ll understand why you might need legal counsel. Contract Issues Within the contract itself you should make sure all these points are covered to your best advantage. Rental deposits---when, how much, under what circumstances is it refundable? Cleaning and breakage deposit---how will original conditions and termination conditions be determined? Photos? Personal inspection? Liability---What personal liability insurance does the landlord have that will cover you if you (or your family) are harmed by some defect in the property? Also check your own homeowners or tenants policy to see if you’re covered if you do any damage to the landlords property. Automobiles---Some vacation leases include use of the landlords’ cars. Be certain that all details regarding damage, loss, mileage and condition are expressly spelled out in your rental contract. Utilities---(including telephone, internet and tv connections) Who pays for what, to whom, and when? Repairs and maintenance---If something goes wrong and you need a plumber, electrician, handyman or any other trades person, who pays how much. If you broke it, you’ll likely have to fix it. If it came broken, it’s the landlord’s responsibility. Proving which was the case can be tricky. Noises and nuisances---This might seem a bit silly, but all houses have their own special noises. Occupants might be so used to them that they don’t even notice them any more. But if you are awakened by a strange squeaking sound in the middle of the night, it may be just the wind. Or it may be something that needs fixing. Know up front what to expect. The same goes with neighbors who might have late parties, loud boom-boxes, and barking dogs. The landlord might be used to these nuisances. But they can ruin your peace and quiet. Again, know up front. Unlike in a hotel, where you can complaint to a manager 24/7, you’re on your own in a rented home. This article supplements Chapter 3, pages 88-98 in Personal Finance. Access the textbook by clicking on the box in the right column.

ADVICE ON INVESTING IN FORECLOSED PROPERTIES

INVESTING IN FORECLOSED PROPERTIES So, you want to make a killing by buying homes that are in foreclosure---on the cheap---and flipping them for a quick profit. Such a deal---taking advantage of people who are losing their homes because they couldn’t make timely payments on their mortgages. Innumerable home loans (nicknamed “sub-prime”) are flooding the housing market. The banks/lenders have to take back the houses and try to sell them to recoup their losses on the defaulted loans (which probably shouldn’t have been made in the first place) Do the words “anxious seller” come to mind? And if so, might you be an anxious buyer, looking to grab sweetheart deals from overloaded lenders, and turn some quick profits? Buying and selling foreclosed properties has long been a favorite in the savvy real estate investors’ book of tricks. As with any kind of real estate investment, success requires skill, capital, patience and a keen knowledge of the local market. Know well the primary rule of investing in real estate: The Expert Profits at the Expense of the Novice. In foreclosure dealings much of the profit will go to those hucksters who offer you “free” seminars on Valuable Secret Ways To Make Huge Profits Buying and Selling Foreclosed Real Estate. Some of the ways they can profit: 1) After the free seminar they’ll sell you overpriced books and DVDs which repeat what they’ve already told you in the seminar. 2) They have already taken options to buy foreclosed profits from lenders, and will sell you the options at a nice profit to themselves. 3) They’re in cahoots with real estate people and lenders to generate sucker lists of possible buyers, for which they receive a fat finder’s fee, and a fatter commission if a deal goes through. 4) By attending the seminar you have put your name on a list of potential victims who will be invited to every “get rich quick” seminar on the planet. 5) Any combination of the above. Now ask yourself: “If the secrets they’re selling are so valuable, why are they willing to sell them? Must be that they can make more money by selling you the secrets than they can by using the secrets themselves. And if enough people buy the secrets, they’re not secrets anymore, and thereby no longer valuable. Suppose, though, that you bypass these seminars, which will be flourishing like the grass after a spring rain, and decide to try it on your own. Here is a checklist for would-be profiteers in the foreclosure market. Now Please Pay Close Attention A) It’s gospel in the lending business that people who don’t take care of their financial obligations often also don’t take care of their property. Call it human nature. Repossessed cars are in need of far more fix-up work than those with clean payment histories. Businesses that fail are riddled with problems you’d not likely find in a business with a good track record. Homes that have been foreclosed have been physically abused by their residents---abuse that can often be hidden and that can often be very expensive to fix. Just as you should hire a housing inspector before you buy a home to live in, you are hereby admonished to hire a housing inspector before you buy a foreclosed property. Yes, this will cost money. If you’re not willing to pay for this simple form of insurance then you should stay away from the foreclosure business. B) Don’t be so sure that the lender will let the house go cheaply. They are out for every penny they can squeeze from the property, and they, and their real estate agents, will use every trick in the book to get you to increase your bid. “Somebody else is is ready to pop for $10,000 more than you’ve offered….” And so on. Sound familiar? Yes, of course they are stupid for not taking the first decent offer that comes along. Every day that goes by means that many more dollars in interest they’re losing, and that much more costly manpower to administer a portfolio of bad loans. . But consider: if they were stupid enough to make the loan in the first place, who says they can’t be so stupid as to try to sell it for more than a weak and overloaded market dictates? If a foreclosed home needs major repairs, wouldn’t the lender take care of that to facilitate selling the house? Ever heard of throwing good money after bad. The lenders don’t think that way. They want cash, and they want it fast and trouble-free. Let the buyer deal with the troubles. C) How healthy are your supplies of capital, patience and luck? You’ll need plenty of each, maybe more than you think you have. Capital: Whatever cash you tie up to make a down payment is not earning a penny for you. Indeed, if you’re taken over the former owner’s IOU, you’ll have to be making regular payment on that loan. How about paying for needed repairs, which often can be hidden and beyond guesstimating as to cost? Then there are the costs of advertising, paying a real estate commission if you sell through a broker, capital gains taxes if you are lucky enough to turn a profit, and hazard insurance. If you need to borrow to cover any of these costs, can you do so quickly and at a reasonable price? A second mortgage or a home equity loan on a foreclosed property can be tough to come by. Do you have the credit capacity to borrow without interfering with other credit needs you might have? There are a lot of numbers to crunch before you know whether you’re looking at a good deal or a bad deal. Failure to crunch can mean failure to profit. Patience How long is it taking to sell comparable houses? Check with your local Real Estate Board to get some ballpark figures. How saturated with foreclosed homes is the area likely to become? Check with a few mortgage lenders to get a sense of what lies ahead in that regard. (All you’ll get is a “sense.” They might not know have a clue as to how many loans in their portfolio will be going bad.) What prices are comparable homes selling for? Note that the price you might be able to get will definitely depend what the competition is today as well as months from now. Money aside, how long can you wait until you find a buyer---how long before your anxiety affects your work and family life and emotional stability? If you answered, “I haven’t the foggiest idea because I’ve never done anything like this before,” you are being honest and wise. Unless you can answer that question, and live with the answer, speculating in foreclosures could prove disastrous. Luck This is the great unknown. The bigger the foreclosure market, the more competition you’ll be facing---other speculators who don’t know what they’re doing; investors who really do know what they’re doing; lenders themselves whose strategies for dumping foreclosed properties are kept close to their vests; insiders who can get non-public information from lenders as to what those strategies might be. Other unknown factors include how quickly your locality can absorb new foreclosures coming on line; what direction interest rates on home loans are going; and what underlying economic realities might come into play in your community, such as a major industry leaving, or a new one arriving, either of which will affect the job market and the housing market, for better or for worse. So, roll the dice. Put the quarter in the slot. Drop a chip on odd or even, red or black. Raise the stakes while you’re hold a pair of twos. Use your kids’ ages to bet big on the trifecta. Take a hit on 16. And then pray. You’ve just been reading the counsel of a conservative and successful real estate investor, who has seen it all, coming and going, through the ups and downs and over many years. You’re on your own. Don’t say you weren’t warned. This article supplements Chapter 16, pages 432-442 in Personal Finance. Access the textbook by clicking on the box in the right column.

ADVICE ON BEING FORECLOSED

You, or others you know (friends, relatives, co-workers) might be faced with the prospect of losing their homes through foreclosure. It’s a devastating situation, not only financially but emotionally, and the ripple effects can be felt for years. There is some action you can take to protect yourself. Heed! Please don’t be embarrassed to tell anyone you know who’s in such a plight to take defensive steps IMMEDIATELY. (Hopefully it’s not too late.) Post this on your bulletin board at work….email it to your cyber-correspondents….however you do it, get the word out that there are steps to take to minimize, if not altogether avoid, the shock of foreclosure. FIRST---This step is tricky but absolutely necessary. Sad fact of life: When people are in a financial jam, the LAST thing they want to do is go face-to-face with the lender. In reality, the FIRST thing they should do is pay a visit to the lender to plead your case. NOT by letter. Not by telephone. NOT by email. IN PERSON. When a loan starts turning delinquent---and lenders can spot these a mile away, ---the lender assumes that the borrower is intentionally avoiding making the payments promptly UNLESS the borrower makes a sincere attempt to explain the situation. And the best, if not only way to show that sincerity is by a personal visit to the lender. Your visit will be most productive if, in the months preceding, you have A) responded promptly to any and all attempts by the lender to contact you, by mail, phone or otherwise; B) given timely notice to the lender that your next payment might be late. These simple tasks help establish your credibility and your intent to do the right thing. BE PREPARED. BE VERY PREPARED How should you prepare yourself for a personal visit? Draw up a list of all your current income and your current debts, including the payments you’re making and the interest rate you’re paying. If there have been ANY circumstances that have caused your payments to become late, bring in whatever proof you have of 1) medical problems in the family; 2) salary cutbacks or job termination; 3) demands from other creditors---including the IRS---that threaten imminent debt collection procedures; 4) evidence of unexpected and necessary expenses you’ve had to make, such as costly home or car repairs. And so on. Yes, the lender might take your word for all of this. But remember, you’re there because you have not kept your contractual word regarding your monthly payments, so the lender might need more convincing, such as the above evidence. What can you expect from the lender if your story is credible? Lenders do NOT want loans to become delinquent. It’s not just a matter of them losing money. It’s a royal pain, and a costly pain, to handle delinquencies---extra paperwork, extra surveillance of your account, extra notification to credit bureaus, extra time listening to excuses, extra anxiety when you yet again fail to keep a promise to pay. Here are the main things a lender can do for you. If these options aren’t offered, ask about them. YOU DON'T ASK, YOU DON'T GET (ROSEFSKY 'S RULE 378b) ---Determine if you are in the small percentage of home owners who qualify for help from the plan announced in early December designed to aid certain home loan debtors. The government played a small role in this program, but any help must come voluntarily from the lenders. If you do qualify, take whatever advantage works best for you. ---Your payment date can be delayed to give you some breathing room each month, maybe enough to get you back on track within an agreeable time frame. You might score some important points in this regards if you seek the lender’s advice on how to better budget your family finances. ---Late charges can be waived, at least for a short time. This won’t get you off the hook entirely, but it can give you some breathing room. ---Discuss refinance options. You might be able to write a new loan for the same amount you now owe, but with a lower payment schedule. You might be able to write a new loan that will provide you with extra money you can use to pay off other more costly debts, such as high interest rate credit cards or other IOUs that are tacking on late charges and threatening legal action. This is where the tricky part comes into play. Very likely, the lender you originally dealt with in getting the loan no longer holds your IOU. They may have sold it to an investment group, which in turn packaged your loans with other loans and securities, and then sold chunks of that package to mutual fund companies, who in turn peddled shares in the mutual fund to any and all takers. Your IOU changed hands every step of the way. You must determine who in that chain has the authority to modify the terms of the original loan, and deal with them as best you can. Ultimately, you must convince whoever has the authority to modify the loan that a refi will put control of the loan back in his (and your) hands. If there’s a prepayment penalty in the original loan that would kick in on a refi, you’ll have to try to negotiate around that. OTHER WAYS TO STAVE OFF DISASTER : ---Explore what the lender will do for you if you can add a co-signer to your loan, or if you can provide some good collateral in addition to your house. Doing either of these things might win you a short hiatus from making payments, after which you’ll have to catch up and stay caught up. ---Contact non-profit agencies that might be able to help: HUD (the federal office of Housing and Urban Development). 1-800-569-4287, or online at http://www.fha.gov/. ; Association of Community Organizations for Reform Now (ACORN) at http://www.acorn.org/ (888-409-3557); Homeownership Preservation Foundation (HOPE) at http://www.955.org/, 888-955-HOPE. DON'T SAY WE DIDN'T WARN YOU LAST BUT NOT LEAST: WATCH OUT FOR SCAM ARTISTS WHO WILL PROMISE TO CHASE AWAY THE FORECLOSURE WOLVES. SNAKE OIL SAM HAS A FIELD DAY WITH POTENTIAL FORECLOSURE VICTIMS. HE CAN CONVINCE YOU TO PAY HEFTY FEES IN ADVANCE TO SOLVE THE PROBLEM, AND YOU CAN BID THAT MONEY FAREWELL. HE CAN MANIPULATE YOUR MIND SO THAT YOU UNWITTINGLY SIGN PAPERS TO STAVE OFF FORECLOSURE, BUT INSTEAD GIVE HIM TITLE TO YOUR HOUSE. MANY SO-CALLED LOAN CONSOLIDATORS ARE REALLY SNAKE OIL SAMS IN SHEEP’S CLOTHING---CHECK WITH YOUR LENDER AS TO THE RELIABILITY OF LOCAL LOAN CONSOLIDATORS. This article supplements Chapter12, pages 320-326 in Personal Finance. Access the textbook by clicking on the box in the right column.

"MEGO"---THE TRAVELER'S DEMON

If you haven't already seen it or been afflicted by it, you will sooner or later. You'll be enjoying a vacation, and taking some time to visit a famous museum or art gallery or shopping venue, and WHAM, you're attacked by MEGO, and you succumb. Plan in advance and keep MEGO at bay. It's easy. It's free. It's wise. You're spending a lot of money to fly somewhere, to stay in a nice hotel, to enjoy good restaurants, to soak up another culture, to have fun people-watching, to shop for things you can't find at home (even at Costco). It's every vacationer's dream, right? ou're So much to do and so little time. You wisely study the guidebooks, surf the internet, talk to friends who have already been there, and you set down a schedule that will give you time to do everything you care to do. Except stay conscious. The Warning Signs I've seen it happen to other travelers more times than I can count. And I admit that It used to happen to me until I recognized the warning signs of MEGO: Suddenly, nothing makes sense any more. You forget where you are, or why you're there. Your mind can only focus on having your body lie down and rest. MEGO: My Eyes Glaze Over. It's probably the most frequent symptom of carefree travel planning. Fortunately it's easily cured by a nap----if you're anywhere near where you can take a nap, which isn't always the case. Once you're afflicted with MEGO the rest of your day is shot. You get short-tempered with your companions and kids. You find yourself dozing when you should be gazing. You start feeling angry that you've come all this way and you just don't understand what everyone sees in the Mona Lisa or the Eiffel Tower or the Smithsonian. Your feet ache and your stomach rumbles and your head throbs and you are not a happy camper! And you've got just as busy a schedule for the next day? Oh dear. Here are some simple scheduling tips that can help you avoid MEGO, and thus let you get the most pleasure out of your travels. It's better to enjoy what you see and do than to be a miserable grouch because of a MEGO attack. First You must carefully prioritize what you want to see and do, and how long you want to spend on each activity. This is where the most careful research is essential. You must take into account the wishes of any companions or children traveling with you. Some compromising might be necessary, but that is all for the common good. Shopping and eating times must be included in this list as activities in their own right. Second This is something that is too often overlooked---you must determine how long it will take you to get from Place A to Place B to Place C and so on. That means taking into account driving and/or walking time, mass transit scheduling, and the all-too-frequent waiting in line to see what you've spent so much time getting to. Third This is the tough part, and you should work it all out on a schedule divided into days and parts of the days. How much time you allocate to each specific activity is up to you. These are only general guidelines, but they're based on a lot of experience. Let's say you want to plan your days in units of 60 or 90 minutes. Allocate how many units you want to spend at each activity. To keep things most simple, plan to spend two units each morning and two more each afternoon. Between each unit you must set aside eating time, rest time, and travel time if any. The rest time is mandatory---15 to 30 minutes depending on your energy level and what rest facilities are close at hand. Sit on a park bench and feed the pigeons or people-watch. Dawdle over a cup of mochachino frappe latte, or whatever those things are. Stretch out on any dry grass that's nearby. Above all, relax. Recharge your batteries. Then proceed to your next unit, followed by a leisurely lunch, and your afternoon program. Only four to six hours a day doing and seeing everything? Modify the time slightly if you wish, but yes, four to six hours (not counting eating or traveling) is the limit if you want to fend off attacks by MEGO. Younger travelers might increase their time units. Elders might want to keep them on the short side---remembering that you can't keep up a thirty-something schedule when you're sixty-something. By the way, one of the more interesting things you'll see if you stick to your MEGO-avoidance planning is other people who didn't read this article being attacked, right in front of your very eyes. But don't approach them to explain what's happening to them. They won't understand until a day or two later. This article supplements Chapter 3, pages 88-98 in Personal Finance. Access the textbook by clicking on the box in the right column.

TRICKY TIMING WHEN SELLING BUSINESS OR PRACTICE

You've begun to anticipate retirement, and you have all your ducks in a row as far as investments are concerned. But what about selling your business or professional practice? How much will it be worth come retirement? When is the best time to sell? It can be a slippery slope. Here is a very sad story. A good friend had a booming professional practice. He was making good money, had a fine reputation, and worked his buns off. He was getting tired. Retirement started looking more and more intriguing. He looked far and wide for the right person to take over (buy) his practice---someone who would look after the clientele properly, and would run the office efficiently enough to make payments on the debt he incurred in buying the practice. He found someone, made a deal and went fishing. Loved it. Uh-Oh Alas, everything went wrong. No need to dwell on details. In brief, after almost two years the buyer couldn't hack it, and the seller had to come out of retirement and go back to work again. He needed the income from the sale of the practice to meet his needs. Either that or cut back his life style drastically. This is not an uncommon problem. Psychology plays a major role---as retirement time nears, the more anxious the would-be retiree gets. And the more anxious he gets, the less attention he pays to detail in running the business. He's thinking "fishing," not "income and expenses." It's arguable that the value (and now we're talking cash-on-the-table value) of a business or practice diminishes as retirement day nears, all other things being equal. As one's attention drifts from profit statements to fishing trips, the business begins to suffer. There is no easy formula to determine the exact best time to sell a business. There isn't even a hard formula. Each case has to be evaluated on its own merits. The longer you wait to seek a buyer, the more anxious, and vulnerable, you will become. On the other hand, if you project selling a few years down the road, and you take on a potential buyer as a partner, you can train him or her to keep the shop running smoothly. That's the good news. If, after some time has gone by, you find that your new partner/buyer is bad news, you're in a real quandary. So Many Questions, But You Must Tackle Them Then there is the equally difficult question of how much value do you personally bring to the enterprise? Do your clients/patients come to you because they are so appreciative of you? If someone takes over from you---financial questions aside---will your clientele stay with the new person, or will they flee, saying, "She's not as good as the previous one, so I'm splitting." Every prospective buyer of your business or practice has a totally different set of credentials that must be examined. Money. Personality. Reputation. Experience. Connections. Age. Family stability or lack thereof. Debt. Good and/or bad habits. Health. And more. Then add in the inevitable financial and legal aspects of a sale. Down payment? Ongoing payments? Interest rate on money owed? Right of seller to examine financial records of buyer? What happens if the buyer defaults (financially or in maintaining the proper operating condition of the enterprise)? And then there's the worst case scenario. You might not want to think about it, but I have to, for your sake. It's my job. What if you had to come out of retirement to take over the enterprise? What if you found that it had been left in poor condition, financially and/or physically? How would your life be affected financially and emotionally? Here Comes the Cavalry----Your F.A.I.L.- Safe Team All of these issues must be examined by you, your family and your F.A.I.L.-Safe team. F for Financial---your banker to advise you on the credit conditions and needs of a would-be buyer. A for Accounting---your accountant to evaluate the tax implications of a sale, in whatever form, and to help you analyze the ongoing condition of the business once you've gone fishing. I for Insurance---your insurance agent to help you make sure that your buyer is properly insured to protect you against insurable losses once he/she owns the enterprise. That includes hazard insurance (fire, etc.); public liability coverage; key man life insurance if your buyer dies before he has paid you off; disability income insurance if your buyer is disabled and can't work; health insurance to keep him afloat if heavy medical costs threaten what's owed you. (Your F.A.I.L.-Safe Team can also be valuable in estate planning, so use them to the fullest.) This brief essay is only the tip of the iceberg. We'll examine specifics more closely in other posts, as time goes by. If nothing else, what you hopefully will have learned today is to get busy NOW arranging your F.A.I.L.-Safe team. The sooner they get on the case, the better off you'll be when the Big R Day comes. This article supplements Chapter 21, pages 637-639 in Personal Finance. Access the textbook by clicking on the box in the right column.

THERE'S NO SUCH THING AS FREE MONEY

The U.S. government has not done a very good job (among other things) at marketing coins. Remember the Susan B. Anthony dollar coin that looked and felt just like a quarter, which is just one reason why it never became popular. And then there was the Sacajawea dollar of a few years ago that had a similar fate. Will they never learn? How can you resist when you're being offered free "Presidential Golden dollar" coins? That's the latest in a very long chain of come-ons meant to lure collectors and anyone else wanting a handful of free money. The full-page full color ad in my local newspaper (and, for sure, many other papers) touted it as a "free money giveaway." Let's play a game of "The Big Print Giveth, The Small Print Taketh Away" to see just what you'd be getting if you fell for the pitch. * The ad say that the coins are "golden," not "gold." Big difference. "Golden" refers to the color, or appearance, not to the base metal. * To hype the supposed (in your dreams) appreciation in value of some coins, it notes that "if you had saved just one uncirculated Eisenhower dollar from as recently as 1973…believe it or not it's now worth 1,200% more today." It doesn't say "any" such coin. It says "just one." Clever wording, right? Maybe, out of the millions of those coins minted there is "just one" that has zoomed in value. But it took only about two minutes on an internet search to come up with coin dealers who would sell brilliant uncirculated 1973 Ikes for $10 to $20 a pop. That's a far cry from $1,200. If you believe what you want to believe, you may get what you deserve. * The offering includes 2---count 'em---2 free coins. At a value of one dollar each that comes to, let's see, $2. But wait. There's more! Act within the next 72 hours and you also get a frame to put all 40 coins in, "a $231 value" for only $28, plus service and handling, of course, of $4.85, bringing your total to $32.85. GET READY FOR THE HARD SELL Hold on there. 40 coins? Right. The two free ones are just for starters. Four times per year for the next 10 years you will get another coin to add to your valuable collection. Oh, and how much will those additional coins cost? The nice young salesperson on the phone didn't know what the cost of each coin would be year by year. But---get ready for the hard sell---if you want to sign up right now, you can buy the whole ten years worth for the incredible price of just $162, payable at $18 per month for the next 9 months, and that includes service and handling. Add to that the $32.85 you pay for the starters, and your total cost, for 40 one dollar coins, is $194.85. Incredible price? Do the math. It's about a 500% markup. And….AND…your name will be included, at absolutely no extra cost, in every sucker list that the promoters can sell it to. For 10 years. Still interested? Lots of folks who don't read this article will be. For all the credibility that such ads lose because of their outrageous claims, they gain credibility because the ad was "in our newspaper." And "our newspaper" would protect us from such evils. As noted earlier, in your dreams. This article supplements Chapter 4 in Personal Finance. Access the textbook by clicking on the box in the right column.