World of Warcraft

jaunpol

Beyond the fact that spending time at home playing WoW is more cost-effective than going out to bars, clubs and pubs, there are several legitimate lessons to be learned, applicable for both the business world and for personal finance. For one, players don’t level-up without paying their dues, much like in business, where it is also important to forge lasting relationships (alliances). Secondly, it teaches one the value of money (gold), how much time and hard work can go into earning it, and what it takes to manage it — purchase of X precludes or may limit the purchase of Y. Also, in WoW it becomes easier to earn gold as you progress; just as should be the case with the real world, the harder you work at something (play the game), the higher the return you receive.

What did we learn?

Staying-in is the new going-out. People are beating the recession by substituting their world of wasteful spending, with the World of Warcraft. A month long subscription to World of Warcraft can cost less than $0.50 cents per day, which otherwise wouldn’t even cover the cost of a parking meter during a night out on the town. Get creative with your free time. The potential savings are enormous.

The Oregon Trail

playfullibrarian

Although we probably didn’t realize it at the time, The Oregon Trail provided us one of our very first lessons in the importance of life, liberty, and the pursuit of happiness. This “educational computer game” was built to simulate the struggles of a 19th century family as they traveled vast distances in hopes of fulfilling their vision of Manifest Destiny. But the game was unusually difficult for some children to grasp. With very little room for error, The Oregon Trail took ill-prepared pioneers on a journey that would inevitably end in famine, infectious disease, and a long list of equally horrifying scenarios. Not only was The Oregon Trail a game, it was a harsh lesson in the unpredictable nature of life.

What did we learn?

When it comes to personal finances, always hope for the best but prepare for the worst. In a world filled with unexpected downsizings, enormous layoffs, and more competition for few jobs than ever before, preparing for the worst is no longer an option. It’s a responsibility. Create a budget, keep track of your expenses, look for unique ways to save, and do whatever it takes to reach your own financial (manifest) destiny.

Sonic the Hedgehog

nickstone333

At a time when the gaming world was in dire need of a new hero to lead them into the next era of consoles, Sonic the Hedgehog made his grand entrance onto the scene as a flagship title for the Sega Genesis. The Genesis console was SEGA’s first legitimate attempt at proving that they had a brand and a product that was worthy of stepping into the ring with the undisputed heavyweight champion of gaming, Nintendo. And just like that, one of the fiercest console wars in video game history was born. Almost immediately, the world was hooked on Sonic’s distinctive look and radically different spin on Nintendo’s weary approach. One of Sonic’s best tricks was also one of his most unique. Instead of dying like most other characters would, Sonic would first lose all of the golden rings you had collected up to that point. Although it worked out in Sonic’s advantage most of the time, it’s never nice to know that everything you’ve ever worked for is constantly at risk.

What did we learn?

Sometimes the best offense is a good defense. Protect your assets at all costs and don’t be afraid to pull out all the stops when it comes to securing your identity. There are services and agencies which specialize in protecting against cyber-related crimes, and many have developed a flawless reputation for doing so. And if that’s asking too much, at least do a quick search for easy ways to protect yourself from becoming another statistic of identity theft. And, at the very least, make sure you don’t carry all your rings around in your pockets — you could lose them.

Grand Theft Auto IV

DeclanTM

When they weren’t busy revolutionizing the gaming industry with groundbreaking new titles, single handedly prompting immediately legislative reform, and exchanging blows with some of Washington’s most influential politicians, the team behind The Grand Theft Auto series taught us that there are only two types of debt-collectors in the world: Those who use a telephone, and those who prefer to take things into their own hands. But as anyone who’s ever been on the wrong side of debt will tell you, actions don’t always speak louder than words.

What did we learn?

Armed with a telephone, a condescending attitude, and the uncanny ability to wake you up early on your only day-off, debt collectors seem to find meaning in making your life hell. If you’re already in debt, the worst possible thing you can do is ignore it. Not only will it be detrimental to your blood pressure, it’s also a good way to ruin your credit for life. Take small steps in connecting with your debt-collectors. You might be surprised how flexible they’re willing to be.

Madden NFL 10

Wikimedia Commons (Madden with friend)

While scouring Madden NFL 10’s labyrinth of leaderboards, stats, financial data, and revenue generators, two things become blatantly obvious. Number One: Terrell Owens might be the most overpriced player in football. And, Number Two: there’s no good reason why we all can’t have detailed breakdowns of our salaries, expenses, personal finances in an easily digestible format. Madden’s Franchise mode allows you to take control of any team in the NFL, which gives you access to data on player salaries, revenue generation, and fund distribution. In other words, it’s like the ultimate digital checkbook you’ll probably never have.

What did we learn?

Luckily, you don’t have to be a professional athlete to keep track of your finances. Websites like Mint.com are simple enough to be used by anybody and give you an at-a-glance overview of all of your income and spending. It’s all about the data. Further, mobile apps like Mint.com’s iPhone app have made it possible to track your expenses down to the penny while on the go, all in a sleek, detailed, and easily accessible format.

E.T. The Extra Terrestrial

Let’s face it – video games aren’t cheap. In fact, they never have been cheap and you shouldn’t expect that to change anytime soon. To make matters worse, nearly all video games are sold at the exact same retail purchase price regardless of quality. You’ll fork out the same amount of money whether you’re purchasing the best game ever created, or a heaping pile of dung. That’s where E.T. The Extra Terrestrial comes into play, considered to be the absolute worst game of all time. The game was marketed as the next big thing in gaming, but did little to impress. The game was plagued by rushed deadlines, which caused the developers to release an effectively incomplete game. Before the internet and video game critics came to be, we were left to believe what the marketers told us about their products and not much else.

What did we learn?

Whether you’re purchasing a new car or a loaf of bread, take time to think out the purchases that you make. Sadly, the days of impulse buying are gone for a large percentage of us. Be skeptical of the hype surrounding new trends and gadgets, and make sure you know what you’re getting into when you pull out that credit card. An educated consumer is a powerful consumer. Take advantage of information and product reviews readily available online – take advantage of what consumers didn’t have access to 25 years ago.

Counter Strike

Pal Berge

Counter Strike has long been one of the more successful first person shooters of all time. Long after its release, it continues to be one of the most popular games played worldwide. But upon closer look, it’s noteworthy just how relevant Counter Strike is to personal finance. The game gives each player a budget to start out with in each game. At the beginning of each round, this budget is used to purchase better weapons and upgrades, which subsequently increase your chances of success.

What did we learn?

Strategic financial planning can yield big rewards both in the game of Counter Strike and in life. Sure, you could spend your entire budget in the very first round and see marginal results. But, the players who can manage their budget to withstand the test of time, are often the players who end up with the best weapons at their disposal in the final rounds.

The Sims

CLF

They say art imitates life, and perhaps there’s no truer application to this saying than The Sims… the game that simulates real life. The Sims is an example of how one man took a concept so simple, yet so necessary in today’s culture, that it would eventually sell more copies than the population of some small countries. The Sims went on to become the highest selling PC game of all time, and the rest is history. The game was responsible for showing us just how satisfying it can feel to take a blank canvas, help it grow, and then watch it flourish into a masterpiece. Through hard work, patience, and a little financial ingenuity, The Sims taught us all sorts of life lessons.

What did we learn?

Success and failure in The Sims can be closely compared to the successes and failures of your everyday life. Much like the real world, The Sims rarely rewards laziness. So unless you’re banking on winning the lottery, realize that the financial world revolves around hard-working, diligent, and goal driven individuals.

Dungeons & Dragons Online

Ramon Cahenzil

One of the very first forms of geek-culture to infect the mainstream was Dungeons & Dragons, which is a role-playing game that was played by rolling dice, cards, and whole lot of imagination. Thankfully, technology has provided us with a less shameful and more anonymous way of living the D&D lifestyle. Much like World of Warcraft, Dungeons & Dragons Online is an ever-evolving world that gives you the ability to conquer things much bigger than yourself. What many people don’t realize is that D&D Online features a deep-rooted entrepreneurial driven economy, with players using their skills, talents, and products as a means for virtual financial success.

What did we learn?

A trip to one of the many auction houses in D&D Online can allow you to walk away with some killer deals. When wholesalers and consumers directly connect, both parties can benefit greatly from the absence of a “middle man”. A real-world example of this concept can be found on Ebay, Craigslist and many other online services that facilitate and encourage the connection between wholesalers and consumers.

Ally

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The online-only bank Ally, formerly known as GMAC Financial Services opened for business in 2009. At a time when customers are more suspicious than ever of banks (brand consultant Rick Barrera likens it to, “…walking down the dark alley with your arms up” according to the Wall Street Journal), Ally has positioned itself as the ultimate in courtesy, support and trust. The branch-less nature of the bank allows Ally to operate without monthly fees, minimum payments or minimum deposits, and their “Tier 1 capitalization leverage ratio is almost triple what is deemed “well capitalized” under the FDIC’s regulations”, according to Ally’s website.

Aldermore

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The dearth of new banks extends beyond the US and into Europe, but at least one UK bank has decided to open its doors amidst the recession – Aldermore. Billing itself as a “new name in British banking”, Aldermore is a relaunch of Ruffler Bank, according to the UK’s Guardian. Its primary selling point is a lack of involvement with the sophisticated securities and investment vehicles at the heart of our currently financial crisis. As the Guardian explains:

“It will be dead simple, old-fashioned banking. We don’t have any ‘back book’ of toxic debt, we are British, regulated in the UK and will provide consistently good rates to savers.”

The bank, which is, “…the first new bank to launch in Britain since the onset of the credit crunch”, chose to open under the name Aldermore because, “…alder is an ancient British tree that grows well while others fail.” It also aims to become known for its exceptional rates on savings bonds – currently offering anywhere from 3.69%-5.11%. At a time when savings are on the rise, Aldermore could be positioned for superb growth.

California General Bank

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On March 23, 2009, Reuters announced the opening of California General Bank, the only bank to open in all of southern California this year and one of only two in the entire state. Starting out with $20 million in capital, Pasedena-based California General bills itself on its website as a, “…community business bank specializing in the financial needs of the small to medium size privately owned business, professionals, and high net worth individuals.” All eyes will be watching to see how the fledgling young bank handles its first few years of existence amid the worst economy in decades.

Coastway Community Bank

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In its article “Coastway Becomes RI’s Newest Bank”, MoneyAisle.com discusses Coastway Community’s transition from a credit union to a full-service bank. As they explain, the newly formed bank is now free from the burdensome regulations it had to contend with as a credit union:

“As a credit union, the maximum Coastway could write in business loans was 12.25 percent of its assets. That was $36 million. The actual amount Coastway had in business loans as a credit union was almost double that at $70 million. It was able to do this because of federal guarantees mostly made by the Small Business Administration that guarantee up to 75 percent of a loan.”

Coastway is one of several financial institutions that have re-branded themselves or, in some cases, re-opened with a totally new array of services since the recession began.

Ann Arbor State Bank

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Ann Arbor State Bank opened its doors in December 2008 just a few months after filing for permission to operate. Starting out with $10 million in capital, founder Bill Broucek, a 47 year financial industry veteran exclaimed, “…it’s the very best time to start a bank because of the problems other banks are having” according to Michigan Live. The bank (which uses just one branch currently), was created in order to, “…target small to medium-sized businesses and professional organizations in Washtenaw County, specifically Ann Arbor, as well as offer retail banking and loan services for individual customers.” This seems to indicate a trend in new bank openings during the recession – start small, with growth engaged in only after solidifying one’s roots.

TD Bank

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Following its 2008 merger with Commerce Bancorp, TD Bank has opened several new banks. Most recently, TD has launched, “…its largest US initiative by opening a full-service bank center in downtown Boston, a move that will fill a big gap in its New England footprint” according to Boston Business Journal. And this branch is just the start. The BBJ goes on to explain that TD Bank is looking to aggressively expand its presence, opening several more banks despite the economy in efforts to “build its Boston-area deposit base by several hundred million dollars.”

Farmington Bank

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A major trend in banking during the recession has been rebranding existing banks, in an attempt to distance themselves from past perceptions. One of the more recent banks to utilize a branding strategy is Farmington Savings Bank, the long-standing Connecticut bank that will, effective in October, be known simply as “Farmington Bank.” According to HartfordBusiness.com’s article on the now-widespread practice, bank rebranding is much more than simply a name change.

[Farmington President, Founder, and CEO John J. Jr,] Patrick said the bank is dumping “Savings” from its name because it signifies a smaller institution that has only limited offerings.

“As we talked to a broader spectrum of influences in the region they didn’t realize we had the commercial lending capacities we now have,” Patrick said.

“We are not just a savings bank anymore and we want the name change to reflect that.”

Farmington is the latest in a series of bank rebrandings, including our last entry, TD Bank (formerly known as TD Bank Financial Group).

JP Morgan/Bear Stearns merger

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The bank merger perhaps most relevant to the recession was the sudden marraige of JP Morgan and Bear Stearns. In a deal orchestrated and largely financed by the Federal Reserve, JP scooped up its fallen competitor for a song and a dance, paying only $236.2 million (or roughly $2 per share.) According to MSNBC, the deal represented, “…a 93.3 percent discount to Bear Stearns’ market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29.” In exchange for the unprecedented discount, JP agreed to guarantee all of Bear Stearns’ business – particularly its trading and investment activities, which the Fed felt were too important to leave to chance. The combined entity is known simply as JP Morgan, and it is unclear whether the Bear Stearns name will surface again.

SJB National Bank (Coming Soon, Presumably)

(Free Ers)

Miami Dolphins owner Stephen Ross has been given the green light to charter a new bank, according to Bloomberg. Tentatively called ‘SJB National Bank’, Ross is said to be sharing majority ownership with Bruce Beal Jr. and Jeff Blau. Bloomberg also states that sources claim the new bank, “…will have at least $750 million of capital and may buy assets of banks seized by the Federal Deposit Insurance Corp.” While SJB will not begin operating as a bank until it is accepted by the FDIC, industry analysts expect no complications with either this or securing FDIC membership. This all follows Ross’ completed purchase of the Dolphins in Janurary for an estimated $1 billion.

Full disclosure: Ally is a MintLife sponsor but none of the banks included in this article, including Ally, had anything to do with writing it.

Photo: Plug 1

Ever driven through a neighborhood and noticed there is a bank in almost every block corner? It’s easy to spot a well developed and financially stable neighborhood by the number of banks it has. But if you take a turn into a neighborhood that’s struggling, it’s almost impossible to find a bank branch and the only ATM available is in the local bodega that charges a high fee for its use. These are the so-called unbanked or underbanked communities and it’s where a new breed of banking is surfacing. These hybrids of banks and check cashiers are popping up in under-developed areas where affordable and convenient banking services are needed to serve low-income earners.

Unbanked communities made up of people who are not part of the mainstream of banking customers are not a small group. According to a June 08 survey by The Center for Financial Services Innovation, it is estimated that 40 million US households (106 million individuals) are either underbanked or unbanked. That means that the individuals who make up this number either have only a basic checking or savings account or no bank accounts at all. 685 banks responded to the survey sent out to 1,300 banks. 53% of those who responded said that they teach financial literacy and education sessions targeted towards these communities and 25% designed marketing strategies aimed at them.

Individuals in unbanked communities are mainly immigrants, low-wage earners and minority group members who go to check-cashing facilities to cash their work checks often at high fees. Reasons for going to these high fee facilities include distrust of the banking system and the need for transparency. According to surveys, low-income wage earners looking to cash their checks feel that the best place for this transaction is a supermarket or a check cashier facility where they know the exact fees. This is in contrast to banks where there is a lack of transparency and fees are not always clearly laid out. Distrust of the banking industry has reached new highs in the wake of the financial crisis, even among those who bank with more traditional financial institutions. It seems everyone wants visibility into what’s going on with their finances these days. However, the drawback to not having a bank account is that unbanked communities are unable to build a credit history or take advantage of interest accruing accounts.

Banks that cater to these unbanked communities have been increasing over the past several years. Many banks and other organizations have realized the potential for growth and economic development by banking these underrepresented areas. For example, in 2003, Key Bank started a check cashing service in Cleveland and by the end of 2008, Wal-Mart opened 1,000 Money Centers across the U.S. Wal-Mart’s Money Centers offer a variety of services including low cost check cashing with wire transfers and utility payment services. Conventional banks such as Citibank has also taken an interest in unbanked areas and sees the potential. It partnered with the United Way of Greater Los Angeles (UWGLA) to create the UWGLA Saving for the American Dream asset- building program which helps promote economic development to low-income families by mitigating language and cultural barriers and meeting the banking needs of the these areas.

Low-income neighborhoods benefit from these new banking facilities from the services they offer such as payroll cards. These are stored- value cards issued by employers instead of paper paychecks. Like direct deposits at commercial banks, the money is deposited directly into a bank account from which the employee can use the card to withdraw money from an ATM machine. Opening a checking and savings accounts is also easier since these banks offer very low minimum balances and fees.

In addition to Key Bank, Citibank and retailers like Wal-Mart who have expanded their services to include unbanked individuals, other facilities like CheckSpring have been created solely to service these neighborhoods. CheckSpring is a development bank founded in 2007 and headquartered in Bronx, New York. The bank offers personal loans, credit building services, residential mortgages and home equity loans and lines of credit. In addition to check cashing, bill pay, money transfers and online banking, the bank serves businesses in the area with commercial lending, currency services and checking and savings accounts. Prior to the recession, many cities had major branch openings from banks like Washington Mutual, HSBC and others. However, this Bronx community had not seen a bank branch opening in the past 25 years.

The transition to becoming banked has worked well, most of the customers who come into CheckSpring for check cashing services end up opening bank accounts by enrolling in a savings clubs. The savings club later converts into a regular savings account when a certain balance requirement is reached. This is the ultimate goal of these developmental banks, to convert unbanked individuals to bank account holders.

It’s evident that more banks see the economic potential of these communities and are trying to gain market share by targeting the areas that where ignored in years past. While many banks have either expanded into these communities and new developmental banks have sprouted giving these areas an economic lift, there are still many underrepresented places without adequate banking services.

Photo: signal9

Banking is a part of everyday life but at times can be extremely frustrating. Arcane policies, banking newspeak, overdraft fees, and waiting for funds to clear can be a source of frustration. And, with the rate at which technology is advancing, you’d think that banking would become increasingly efficient and trouble-free. Unfortunately, this is not the case with all banks yet, but we can rest assured that some of the more forward-thinking institutions are on the vanguard of a mission to make banking more enjoyable and more accessible for its customers. We like these types of banks, and we like banks that are willing to embrace new ideas, especially those with us in mind. The following are six innovative banks that have helped restore our waning faith in banking institutions:

USAA

Arguably, the most technologically innovative change to mobile and online banking this year was USAA’s new check deposit feature, via their iPhone application. Essentially this allows customers to take pictures of both sides of the check (using the iPhone’s camera) and send the images as attachments to USAA for approval, as a deposit — with this system, the physical check never has to actually make it into the bank. With this app, the time that a check takes to clear is the same as if you were to go into a branch and deposit a check physically, and pending approval, funds are then made available. The app can also use your GPS coordinates and tell you where the closest ATMS are located, if you want to deposit checks the old fashioned way, or if you just need cash and are looking to avoid non-bank ATM fees.

ING

ING routinely generates positive press, and with good reason. This bank has one of the easiest online platforms to use, and offers a wide array of services including: high-yield checking and savings accounts, CDs, money market accounts, IRAs, and mortgage accounts – all of which can be linked to each other, and even linked with other accounts to outside institutions. But you can also keep your retail checking accounts separate from your ING accounts, if you want to create a buffer, or if it is easier for you to stay on budget this way. For example, with ING, you can have your paycheck deposited to each account automatically, or to your ING savings account, and from there to each account automatically. Recently ING announced iPhone optimization (available at http://m.ingdirect.com), which enables a mobile banking experience, including: scheduling payments, linking accounts, and transferring between accounts. There was recently also an app released for the Android platform (ING Wegwijzer) which is still Europe-only.

Ally

Ally Bank’s major selling points are twofold: they try their hardest to get the highest return for customers’ money, and they offer unparalleled customer service. For starters, Ally’s products offer returns that are well above what is currently available from most banks: 1.65% for savings, 1.7% for money markets, and 2% for CDs (for which there no penalties for early withdrawal). And, if a new product should become available with a better rate of return, Ally will email you to tell you about it. The bank has also made contacting a customer service agent extremely easy. For those that want to call in, there is 24/7 customer support line, and the wait time for customer service is posted on the home page (which usually is 0 minutes). But the really exciting feature is the occasional prompt to ‘chat with an agent’, that may pop-up if you are on one page for an extended period of time. You can also choose to initiate the ‘chat now’ feature, if you want. This is definitely a far cry from having to deal with call centers in far away lands, and getting the run around, when you are really looking for help.

MoBank (UK)

MoBank is the self-styled “wherever you go” bank. The service this UK brand provides is offered via the iPhone and iTouch. While the app is linked to your bank account, it is the commerce aspect which is truly innovative. With this service customers can search for and purchase movies (similar to buying tickets via Fandango) and train tickets, and buy things from web retailers all with the click of a button. There is also an interesting feature – that Mint users could appreciate – that categorizes your spending, so you can better track your spending habits. My initial concern about an application with this type of service was: what if I had this and lost my phone – what would stop the lucky finder from buying a bunch of stuff online with my money? Luckily, the accounts are PIN protected. Unfortunately, however, this service is only available in the UK, but I wouldn’t be surprised to see a flood of similar services being offered in the very near future in the US market, with the current hype about, and demand for m-commerce apps.

SmartyPig

SmartyPig is a really great idea, and unconventional as it may sound, it works. This site makes saving fun, and social: after joining this service, subscribers set savings goals, and make them public ( along with your progress). Members can then invite friends and family to help save – it effectively lets them know, “hey, I’m trying to saving some money over here and you are welcome to help me out by directly depositing into my account.” While maybe not all of your college buddies will be willing to shell over money for you to get a new motorcycle or laptop, it might be a way to subtley suggest to a grandmother than you’d rather her contribute to your savings, than buy you another sweater this Christmas.

Wells Fargo Envelope-less ATMs

TheTruthAbout

One of the less-hyped but more interesting innovations I have seen lately is the implementation of Envelope-Less ATMS at Wells Fargo. I often find myself depositing checks at the ATM, and for whatever reason, I usually don’t carry pens around in my car. There have been other times, where I have made it to the ATM, only to find out that I had a pen, but that the machine was all out of deposit envelopes. Thankfully, Wells now has a feature that enables customers to deposit up to 30 Checks, or up to 50 Bills in one transaction, without any envelope (or pen, of course). You simply feed the checks or notes into the machine, everything is scanned in and counted for you, shown on a display for you, and you are issued a receipt. Bank of America has recently implemented a similar product, but their ATMS operate on a one-check-one-deposit transaction, although multiple bills can be deposited. Not surprisingly, Chase earlier this month announced that they will be introducing these new ATM’S in many of their branches later this year. Hopefully, one day a system will be in place for funds from checks scanned into these new ATMs to be made instantly available, but for now this will have to do.

]]> http://www.mint.com/blog/trends/6-innovative-banks-that-change-online-banking/feed/ 101 http://www.mint.com/blog/trends/health-care-reform-impact/ http://www.mint.com/blog/trends/health-care-reform-impact/#comments Tue, 28 Jul 2009 00:13:14 +0000 GE Miller http://www.mint.com/blog/?p=4969 ]]>

Source:kokopinto

Health insurance premiums in the US have increased in cost by almost 100% since the year 2000, a growth rate three times larger than wage increases over the same period of time. At the same time, one out of every three Americans is uninsured, or underinsured. Moreover, health insurance premiums are more than double for Americans than they are for citizens of the second highest cost nation, Norway.

These daunting facts leave little doubt that health care costs in America have spun out of control and the financial health of each American, and the country as a whole, is dependent upon smart health care reform. What’s not as clear is the right way to go about it. Details on the health care legislation currently making the rounds are sparse and very fluid at this point, but we’ll try to dissect some of the basics and how the plan may impact you if it were to pass in its present form.

What are the basics of the Obama Administration’s health care reform legislation?
So far, this is what can be decoded from the constantly changing legislation.

1. All Americans would be required to be covered by health care insurance – either through out-of-pocket or government subsidy.
2. A new health care insurance exchange market would be created. You can think of this as a gigantic group plan, monitored by the government.
3. You can keep your employer’s plan, if you’d like (and they decide not to drop their plan for the cheaper exchange).
4. Insurance companies would be required to provide a basic level of insurance for everyone who signs up for the exchange. Premiums cannot be increased for those with pre-existing conditions.

When would the reform go into effect?

The Obama Administration had been leading a big push to get a health care reform bill passed quickly by the Senate. However, the details and resulting consequences of legislation of this impact have stamped out that possibility. On Thursday, Senate Majority Leader Harry Reid (D-Nev.) announced that the Senate will not vote on health care reform legislation by the August recess, saying that it is “better to have a product based on quality and thoughtfulness rather than try to jam something through,” as reported by the AP/Boston Globe.

Despite the delay, if the legislation were to pass later this year under the same timeline as proposed, it would go into effect in 2013.

Who stands to benefit the most from Obama’s health care reform?

It’s unclear how the bill will benefit the majority of Americans who already have employer sponsored health care plans at this point. In theory, premiums should be decreased because the insured are no longer footing the bill for the uninsured. The reform aims to immediately help:

1. Those without any insurance.
2. Those who have paid for expensive individual policies on their own.
3. Employees of small businesses that have trouble affording the cost of joining a group plan.
4. Low income Medicare participants who are left paying for whatever is not covered by Medicare for their medical bills and prescriptions.

Whether intended or not, the legislation could also mean more profits for insurance companies by making it a requirement for all Americans to purchase an insurance policy, be it by subsidy or out-of-pocket.

How much is this going to cost?

The legislation is expected to cost $1 trillion over 10 years. Obama insists that it would be revenue neutral, meaning that it would not be an expense added to the budget deficit.

Who is going to pay for it?

The entire tax burden is expected to be placed on the shoulder’s of the very wealthy. Originally, it was to come from a surtax on American households earning over $250,000 annually. However it was recently bumped to those earning over $350,000, and even more recently, those earning over $1 million.

What will happen to my doctor?

Nothing. You can still go to them, and they’ll still be living large in the wealthiest zip codes in your locale.

Who is opposing the present version of the legislation?

1. Republicans: This goes without saying, right? Any new taxes on the wealthy or are sure to meet Republican opposition. This legislation is no different.
2. Democrats: Wow, really? Yes. Some of the more liberal Democrats, led by Dennis Kucinich, have been pushing for the addition of a single payer option. The United States is currently the only high-income industrialized country in the world that does not have some version of a single payer, public health insurance. Single payer refers only to health insurance and payments for health service being funded by a single public fund. Kucinich and others want this option to be included in the legislation.
3. The Obscenely Wealthy: More taxes means less luxury goods and $900 bottles of wine vs. $1,000. Can you blame them?

Where can I find out more?

The White House has created a public site dedicated to providing information and news on health care reform – at healthcarereform.gov.

For more of GE Miller’s writing, visit personal finance blog 20somethingfinance.com.

roland

Peter Griffin is the latest in a long line of stereotypical television dads: dense, crass, jealous, impulsive, eager to drink and constantly living in the past. It would be easy to ignore anything this man had to teach us about money, or anything else we value, for that matter. But perhaps to think this way would be oversimplifying. After all, it was the sophisticated, smooth-talking financial “experts” who kept us all in a lather while the economy was secretly imploding. In light of their failures, maybe the unpretentious straight-talk of an true American family man is just what our wallets need, once again, largely in the form of, “do the complete opposite of this guy:”

Value Based Shopping

Peter: I hope this isn’t a ripoff like that breakfast machine I bought.
(Cut to Peter in his kitchen activating his breakfast machine. A ball rolls activating a series of devices soon reaching a balloon attached to a string attached to a gun. This pulls the trigger and shoots Peter right in the arm.)
Peter: AAAAHH!! WHAT WAS THE POINT OF ALL THAT?! THIS JUST SHOOTS YOU IN THE ARM! IT DOESN’T MAKE BREAKFAST AT ALL!

Cash is scarce in a recession, and many of us exacerbate the problem by spending what we do have on inferior or unnecessary products. The road to recovery begins here. Whether you are being targeted by a fast-talking salesman or feeling the tug of your own whims, it’s time to institute a new policy: don’t buy something you do not need.  Simply purchasing something because you see it in a store and it “looks cool,” might sound hilarious at first but that can turn to mild depression upon receipt of your credit card statement. Discipline yourself and scrutinize every purchase beyond the bare necessities. Find customer reviews by people that have used products you’re interested, and you can learn from their disappointment rather than your own.

Peter: I’ll give you $40 for that coffin.
Store Owner: Sir, this casket is $1,000.
Peter: I’ll give you $2,000.
Store Owner: Sir, that’s double what it costs.
Peter: $60.
Brian (to the store owner): He doesn’t know how to haggle.

But what if there’s something you really do need – say, a new car? In situations such as this, negotiation is key. You wont get very far using a bone-headed haggling strategy like Peter’s. To shave every last dollar off your final purchase price, you will need to arm yourself with pertinent information prior to arriving at the dealership. The sticker price is not enough. To achieve real savings, you need to know the invoice price, which is what the dealer pays Ford or Chevy for the car. Between the sticker price and the invoice price is your room to negotiate. (It also helps to tell the salesman that you are fully aware of the invoice price and what it represents at the start of negotiations.)

Wise Credit Use

(At a lemonade stand)
Girl: I can’t take a credit card sir. I need real money.
Peter: Oh yeah? Whatcha sellin’? Meth, ex, crack, dust, coke, block, crystal? IN MY NEIGHBORHOOD? I DON’T THINK SO!

Most people would not seriously try to buy lemonade from a little girl with their credit cards, but it’s not too far off from reality (i.e., @ Starbucks, Jamba Juice, etc.). Today, credit cards are used for more purchases than ever, and a 2008 study revealed that we actually tend to spend more when paying with credit than cash. According to a recent report by LiveScience.com, researchers concluded that, “…less transparent payment forms such as credit cards tend to be treated like play money and are hence more easily spent or parted with.”

[Peter has bought a sexy version of a relationship tape]

Lois: $49.95? Are you sure we can afford this?
Peter: Lois, our relationship can not be measured in nipples and dimes … nickels and boobs … money.
[runs off]

In addition to making you likely to spend more, credit cards also make it easier to buy impulse items. While the wisdom of buying adult-related content is not for us to decide, this is something all budget-conscious consumers must be mindful of. Anyone serious about intelligent credit card use should take steps to restrain these tendencies, such as only carrying cards when needed or lowering the limits on cards you do carry. In short, only use cards in emergencies or when it really makes sense.

Competitiveness

Brian: Face it Peter, you get competitive about everything.
Peter: I am so not competitive. In fact, I am the least non-competitive. So I win.

Interestingly, this is one aspect of money management wherein Peter has it exactly right. Prosperous economies mask our shortcomings with the “flab” of easy profits and raises. Simply showing up is often enough to preserve your standing in the eyes of bosses or customers. But this is nothing more than a security blanket stripped away in recession. With businesses and consumers cutting costs and scrutinizing spending like never before, continued prosperity demands that you out-compete others. Whether it’s delivering a superior product or accomplishing more in each day’s work, the key is to be seen as doing better than everyone else around you.

Retirement Planning

“Peter: My dad worked at that factory for sixty years. That’s almost eighty years.”

Peter’s liberties with numbers notwithstanding, sixty years is roughly how long the average person works. Unfortunately, many of us do not make retirement the priority that it should be. Increasingly, people do not have enough put away to retire at 65, what was once-considered the normal age of retirement. This is due to either (or a combination of) poor planning, and bad management and working for the wrong employer. In any case, more than ever, individuals need to be more proactive in preparing for retirement, and make understand that poor financial decisions today can result in a lack of financial freedom in the future.

“Peter: I have a plan so good, it’s retarded!”

If you want to save for your retirement instead of just wishing you did, you need what Peter had – a plan. Start by playing by tracking your expenses, and setting goals. Take into consideration how old you are now, when you want to retire, your yearly income, how much you save, and put a realistic plan together that you are able to stick to. You might need to start small, and as you become more ambitious with saving, you’ll learn to change your consumption habits. The bottom line is any plan is better than none, put together a savings foundation, and feel free to monitor and chart your progress, because most people do not retire financially self-sufficient by accident.

Financial Savvy

Brian: Peter, did you read the fine print on this loan contract?
Peter: Um, if by “read” you mean imagined a naked lady, then, yes.

Every family should have someone they trust with important legal and financial documents. This is the go-to-person for buying a house, a car, investing or anything with a minimal level of risk. Clearly, Peter is not that person. But, his gullibility illuminates the importance of a healthy skepticism. Never assume that the other party to a transaction is looking out for your best interest, because they usually are not. Debt consolidation or restructuring are good examples. The allure of a lower monthly payment can be tough to resist, but ask yourself: does this sound too good to be true? If the answer is yes, then it probably is. “Quick fix” debt consolidation means you make payments for longer and therefore pay more over time than if you just made the current payments. Always do your research on the implications of committing to a deal that “sounds irresistible,” – and here is the important part – and is readily available to anyone in any financial circumstance.

Peter: I don’t take coupons from giant chickens, not after last time.

Everyone loves a discount, and bargain hunting is a cornerstone of financial savvy. That being said, discerning shoppers know that many alleged “discounts” and “sales” are no such thing. Grocery stores, for example, have long been criticized for advertising “3 for $20″ type deals where $20 is just the every day price of buying three of that item. Other stores will claim that they usually sell something for one price, but are now selling it for a lower (but still high) price for a limited time. Research often shows that the item was never actually sold for the “original” price and so the “sale” was illusory. Still other coupons require buying more than you intended thereby eliminating the savings. The only way to know a deal is worth taking is to shop around and ascertain the real “original” price of the item in question.

Curbing Unnecessary Costs

Peter: Come on you guys. I gonna buy us the most expensive meal we’ve ever had.
Peter (to drive-through speaker): Yeah, I’d like 6,000 chicken fajitas please.
Drive-through speaker: I beg your pardon?
Peter: 6,000 chicken fajitas.
Brian: And a sausage McBiscuit please.

Most families only include groceries when estimating food expenses. And this may leave out substantial money spent on vending machines, coffees, convenience snacks, and yes, fast food. It’s cliché advice to be mindful of these expenses, but sometimes clichés are correct. Giving yourself a pat on the back for “only” spending $150 a week at the grocery store to feed your family deceives you about your true spending in this area. And while we assume the typical reader isn’t ordering fajitas by the thousand, most of us could stand to scrutinize and restrain our out-of-home eating expenses more than we currently do.

Financial Independence

Peter: Hey, anybody got a quarter?
Bill Gates: What’s a quarter?

One of the most common rationalizations for not saving or investing is: “I don’t make enough money.” Surely, the reasoning goes, whatever pathetically small amount you put away in a week wont amount to anything. But this ignores the real issue involved, especially if you’re young. What matters is not so much that you start saving $500 a week (although it wouldn’t hurt) but that you start at all. Recession or no recession, most people see their income rise throughout their working lives until retirement. You will eventually be able to save more. But how likely is it that you will save more once you have it if you don’t get into the habit of saving now? Saving should be scaled up in-tandem with earnings, rather than put off until earnings are perceived to be high enough to have an amount taken out for savings.

Peter: Guys, our money problems are over; we’re officially on welfare! Come on, kids, help me scatter car parts on the front lawn.

Don’t take the Peter Griffin approach to solving your “money problems.” Instead, adopt the above mindset of starting to save and invest with whatever resources currently in your possession. The only exception is if you are in debt, in which case, pay that off first. A well thought-out and consistently implemented savings and investment program should minimize your need to rely on others (be it friends, family, or Uncle Sam) during financial hardships.

TV Guide

At first glance, South Park’s Randy Marsh does not seem to have the makings of someone with financial savvy. Neither his job as a geologist nor his irrational tendency to over-react suggest we should trust his judgment with money at stake. And yet, there is something this man can teach us about personal finance. For all of his sporadic obsessions and fad chasing, Randy Marsh exhibits a sincere desire to discover and (just as important) act on good ideas and principles. More of these are explained below.
Just do it

“There’s no time for your immaturity Stanley, do it!”

Many of the causes and crusades Randy commits himself to are foolish. But boy, does he commit to them, and fast! Once he gets it into his head that something (anything!) must be done to assure safety, prosperity, or prestige, Randy wastes no time getting started. In this last thought we find a bonafide gem of money management wisdom, which is simply this: all the personal finance knowledge in the world is worthless unless you act on it. In his excellent book I Will Teach You to be Rich, Ramit Sethi advocates “the 85% solution.” That is, taking the imperfect (but sufficient) steps you know rather than endlessly delaying action because you don’t know everything.

In other words, once you know that financial independence comes from sustained investment and savings, start investing and saving. You will prosper far more by simply investing $100 (or however much) per month in a plain old boring index fund than by perpetually trying to figure out what the “best” stocks are – and investing nothing in the meantime. Ditto for retirement savings. Open an IRA (preferably of the Roth variety, in which your money grows and can be withdrawn tax-free) and contribute to it every month. What matters is not whether that is the 100% best and most optimal strategy, but that you are doing it. You can always make adjustments later. And while your friends engage in fruitless debates about interest rates and ETFs, you will be the one actually making headway.

Manage your risks

Stan: “Dad, I don’t want to put my head in the sand.”

Randy: “It’s the best way Stanley, did you eat your Fruit-Roll Up?”

Stan: “Yeah…”

Randy: “Okay make sure your snorkle is working and get your head in the hole.”

Investing is full of risks. What often determines how prosperous and secure we are is how we manage these risks. Unfortunately for South Park fans, this comical exchange from the “Family Guy” episode illustrates exactly the wrong approach to risk management. Burying your head in the sand is just as ineffectual and wrong-headed in response to investing risks as it was in dealing with terrorists. The correct approach is to confront risks, understand their implications for your own wallet and insulate yourself as best you can.

For example: the Enron fiasco illustrated the risks of investing in only one or two things. In effect, Enron’s former employees “stuck their heads in sand” by putting their eggs in that one basket and hoping for the best. They had no hedge against the risk of the whole company failing – which it ultimately did. A far better approach is to diversify your investments across a broad swathe of index funds, mutual funds, foreign currencies, and other vehicles. This way, hiccups or slowdowns in one area wont decimate your entire portfolio.

Price Comparison

Stan: “How come Wal-Mart can afford to sell everything so cheap?”

Randy: “Well son, it’s simple economics…I don’t understand it all.”

People don’t always grasp the underlying reasons (volume purchasing, economies of scale, distribution efficiency) why certain stores always have lower prices. Fortunately, you don’t need to understand any of it to reap huge savings. All you need to do is comparison shop before making major purchases. It doesn’t have to be time-consuming or difficult; in many cases, simply Googling a few different retailers to check their prices will be net you significant savings the next time you buy furniture, appliances, cars, or any other major purchase. Not understanding simple economics didn’t stop Randy from saving at Wal-Mart, and it shouldn’t stop you from comparison shopping.

Develop Financial Priorities

“I was shopping at Wal-Mart all night. I was standing in the checkout line…they had these little stickers filled with glitter! They were only ninety-nine cents for fifteen of them, I couldn’t resist! Do you want one?!”

Randy’s giddiness at Wal-Mart exemplifies a trait many of us possess: mindless, impulsive spending. Don’t worry, we’re not telling you to never make spontaneous purchases (life would be awfully boring if we only saved and paid bills). The key is to establish priorities that you satisfy first. It is often the lack of such priorities – rather than the spending itself – that gets people into trouble.

In the end, your priorities will determine and depend on your financial goals. Most people would do well to put retirement, investing, and general savings on their list, and decide how much money they can contribute toward them each week or month. Most experts suggest having 3-6 months in living expenses at all times. Any planned major purchases (such as a new car or house) can be planned and saved for month to month as well. No matter the priorities you choose, the important thing is that you attend to them before letting your wallet run wild on impulse spending.

Educate Yourself

“Do you have any concept of money at all?!”

A common criticism of our schools and colleges is the lack of personal finance education offered to young students. This is blamed for the lack of financial savvy among adults young and old. But this doesn’t let you off the hook -  just because the ins and outs of money management weren’t spoon fed to you in class doesn’t mean you can’t learn them on your own.

Use Good Judgment

“These are not ’space cops’, there is no ’space jail’, and ’space cash’ is only worth what you as a planet decided it was worth.”

Randy again demonstrates the opposite of sound judgment in the episode titled “Pinewood Derby “. When visited by aliens, Randy and the other citizens of South Park were tricked into thinking that a massive hoard of “space cash” stored on board the alien’s ship was a real and valuable currency. Their naivety wound up costing Earth a membership in the ‘Federation of Planets’ and sealing them off from the entire universe. While your choices aren’t likely to determine Earth’s interstellar future, you can still take a big hit if you aren’t aware of scam artists and ripoffs. Countless Americans have poured untold millions of dollars into Ponzi schemes, pyramid schemes or dodgy multi-level marketing programs. These typically promise huge rewards for persuading others to sign up. They typically fail, little is done to stop people from promises of “getting rich quick”. In general, anything promising lots of money in a short time with little work is a scam.

Be Truthful About Taxes and Income

“Stan you have to learn to lie properly someday, it might as well be today.”

Despite Randy’s exhortations to lie, the one situation when this always comes back to haunt you is tax time. Many who neglect to file tax returns don’t hear anything from the IRS for months or even years after. They then erroneously conclude that they got away with shafting Uncle Sam and all is well. But this is rarely true. According to the book Standing Up to the IRS, this only happens because the IRS database is perpetually 12-24 months behind. Non-filers have not “gotten away with” anything, and an eventual phone call from the IRS is therefore inevitable. It’s best to simply pay all taxes owed and file all returns on time. It’s never fun, but the alternative is much worse: fines that sap your savings, time wasted with federal agents, or in the worst case, prison. Surely fulfilling your civic duty is not as terrible as this.

The Takeaway

The core of Randy Marsh’s approach to personal finance is to be active. You could also take away from this article that it is better to manage risks and educate yourself instead of sticking your head in the sand. Search for the lowest price instead of buying from the first store you visit. Let consciously chosen priorities, rather than whims, drive your spending. Don’t fall for hyped-up scams. Be honest in your dealings.

]]> http://www.mint.com/blog/finance-core/personal-finance-according-to-south-park/feed/ 9 http://www.mint.com/blog/finance-core/looking-for-a-silver-lining/ http://www.mint.com/blog/finance-core/looking-for-a-silver-lining/#comments Wed, 24 Jun 2009 01:29:03 +0000 Joshua Ritchie http://www.mint.com/blog/?p=3984 ]]> Silver was first used as currency over four thousand years ago and its name is synonymous with the true value that can only come from a real-world commodity. Here we take a look at the history of this oldest of old-school currencies, explore how it is used today and let you in on the basics of making silver your own personal hedge against inflation.

Silver was first coined between 700 and 600 BC and, during the height of the Athenian Empire (5^th century) the ‘drachma’ was established as the first ‘international standard’ currency – used throughout Mediterranean territories.

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Silver Mining and Silver Rushes

Not surprisingly, the Athenians also had quite a sophisticated mining industry during the height of their Empire. Silver mining has been a major international industry for centuries, and has played a major role in territorial expansion, empire building, and international economics. Silver mining was one of the largest factors in the exploration of the Americas, most notably by Spanish Conquistadors. In, as early as the Sixteenth Century in Mexico, and coinciding with major North American gold rushes in the Nineteenth Century, a series of silver rushes encouraged western expansion. Silver mining during this time was especially profitable as many of the world’s strongest economies remained on a Silver Standard.

RickC

Largest Silver Producers

Today, the largest silver-producing countries are Peru, and Mexico. They are estimated to produce nearly 35% of the world’s silver each year, and silver makes up a generous proportion of each country’s GNP. The Fresnillo mine located in Zacatecas, Mexico is the world’s second largest silver mine. In 2007, this mine produced over 33 Million ounces of silver; Mexico alone contributes about 15% of the world’s silver production per year, which in the same year was 670 Million troy ounces. Silver has been mined in the Zacatecas region since as early as 1546.

The World’s Largest Mine

The Cannington Mine, in QL Australia produces an estimated 40 Million tons per year, making it the world’s largest silver mine. Owned by BHP Billiton (the world’s largest mining company with$16B in profit, 2008) Cannington is considered the world’s most productive mine, generating an estimated 6% of the world’s yearly silver output. Additionally, the Cannington Mine is considered one of the world’s most cost efficient mines, as well as one of its youngest.

Silver and Gold

Silver lost substantial clout when it was replaced by the Gold Standard – first in Britain in the 18^th Century, and then in the US and most other economies in the 19^th century. Ever since, Silver has been priced in terms of dollar-per-troy  ounce, and a silver-to-gold ratio as well. In the last 10 years, Silver has effectively been exchanged at an average of 59.83 troy ounces (with very few outliers) to one troy ounce of Gold; versus the dollar, silver prices have actually increased by nearly 300%. Many attribute these effects to the concurrent rapid increase in gold values, and steady devaluation of the dollar. While silver and gold were traditionally “loosely tied” to one another – meaning that if the value of one increases, the other typically does as well – recent market conditions have have led to unique circumstances.

Silver and the Dollar

Recently, the trade value of Silver has shifted considerably. Today, Silver is at $14.11 per troy ounce. This is nearly thrice its $4.95 per ounce value in 2000; it is also 73% of its all time high of $19.39 (1980), when the infamous Hunt Brothers nearly cornered the world’s Silver market in an attempt to hyper-inflate the trade value. It is important to note that silver has more or less stayed steadily on the rise, enjoying a fate similar to gold.

More recently, however, in the last decade, central bankers of developed economies have worked together in order to depress the silver price with the aim of slowing down the pace of currency devaluation – mostly due to the surplus of US dollars (as a fiat currency), in the marketplace, and being held in foreign countries’ reserves. This collaboration by the US and those central banks holding billions of dollars in US Treasury bonds was deliberately aimed at pumping up the dollar in favor of silver prices.

It is estimated that this combined effort has depressed the value from nearly half of where it should be (around $25-28) per troy ounce based on the silver-gold ratio. In short, the lower the price of silver, the stronger the US dollar, as each are effectively valued against gold.

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How Individuals Invest in Silver

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Silver Mining Companies

Silver differs from gold in that it is still widely used as a raw material. Silver mining can be a very profitable endeavor, as silver is commonly used in many electronics products. Individual investors can decide to invest in a Silver Mining Company, just as they would invest in a company such as Ford or Apple. This is different than trading in simply the commodity’s price, because, while the price of silver does play a role in the success (in the form of increased margins) of the company, there are other factors which contribute to the profitability of a company, and consequently the value of its stock. Additionally, if the value of silver decreases rapidly (as it did during the last six months) this can cut into a company’s profits considerably.

Exchange Traded Funds

The most popular consumer silver investments are exchange traded funds. (ETF) The value of an ETF reflects the value of held assets – bonds or stocks – and trades at the rate (as a derivation) of the net asset value of the fund’s net asset value. Tracked on various indexes, ETFs are accessible and are traded in the same way as common stock. They are relatively cheap and tax-efficient.

For the casual investor, ETFs offer an entry into the silver market without having to either own silver or invest in an individual mining company. Ownership of these types of funds is the same as ownership in other types of equities that can be traded and sold on a dynamic basis. Of course, because these funds are meant to represent only the cost of silver, their stock changes throughout the day, and can change on a dime.

Why People Invest in Silver

Many tend to invest in silver in lieu of, or in addition to gold. Because silver tends to mirror the ups and downs of gold, it can serve as a good alternative. You’ll incur about the same risk but it can be much more cost effective. Of course it must be noted that the market is not always allowed to run its course – because of the rapacious demand for gold, silver has lost some of its relative value, while the international financial community has also contributed to suppressing silver growth rates.

Wall Street (1987)

“The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.” – Gordon Gekko

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Michael Douglas’ Oscar-winning performance in this film is not only his most memorable, but it is the reason why Wall Street is the quintessential 1980s business-themed movie. His famous monologue (above), illustrated the atmosphere of greed and corporate malfeasance so characteristic of the time. The Gekko character has become an international icon, synonymous with unchecked greed. Additionally,  many have opined that today’s economic climate is a result of the mainstream having adopted this character’s teachings.

Shawshank Redemption (1994)

“Get busy living or get busy dying.” – Andy Dufresne

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This critically-acclaimed film about a wrongly accused New England banker is one that has many messages. Dufresne (played by Tim Robbins) eventually escapes from prison, due to his commitment to a meticulously choreographed escape plan and his ability to persevere. His dedication reminds one of the focus needed to effectively plan ones’ long-term financial future, especially in today’s economic climate. This movie also illustrates that no one person ever knows where life will take him, so it is best to be prepared. Take the good with the bad, and learn to adapt.

The Godfather (1972)

“I’m going to make him an offer he can’t refuse.” – Vito Corleone

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The Godfather trilogy is widely considered a benchmark for filmmaking, and this timeless quote could not be more appropriate. Bluntly stated, money talks. Other lessons taken from this film include, taking a bold stance in decision making, and knowing the value of things for which a high price might sometimes need be paid.

Jerry Maguire (1996)

“Show me the money!” – Rod Tidwell

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In this film about a high-powered sports agent on the rebound, Maguire learns to value people above money. His up and down path towards enlightenment teaches him to respect himself, others and the value of proper business ethics. While dissimilar to some of the films on this list, the message of this film is that there is more to life than money, and an important moment of self-awareness comes only when one realizes the value of their ability.

Field of Dreams (1989)

“If you build it, he will come.” – Shoeless Joe Jackson

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To those entrepreneurs out there: if you have a good idea that you believe in, pursue it. Everyone has to analyze risk versus reward, but for those that aspire for more, bigger risks must always be taken.

Boiler Room (2000)

“And there is no such thing as a no sale call. A sale is made on every call you make. Either you sell the client some stock or he sells you a reason he can’t. Either way a sale is made, the only question is who is gonna close? You or him? Now be relentless, that’s it, I’m done.” – Jim Young

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In business, there are winners and there are losers. Typically one’s winning is a preclusion of that of another. Even though not everyone works in sales, opportunity knocks on a regular basis. It’s those that take initiative that tend to succeed. This can be applied to personal finance, enterprise, and even in the workplace.

The Big Lebowski (1998)

“I can get you a toe, believe me. There are ways, Dude.” – Walter Sobchak

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This cult classic illustrates the absurdity with which people sometimes regard money: the things they do, the way they act, and the things they say. From those with keys to the city, to unemployed, amateur bowlers,  the film’s characters show that it is important to be creative to get what one wants. Finding alternative ways to solve problems is especially pertinent in a downwards economy.

Glengarry Glen Ross (1992)

“A-B-C. A-Always, B-Be, C-Closing. Always be closing, always be closing.” – Blake

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This quote, taken from Blake’s (played by Alec Baldwin) angry speech is about the importance of continuing to sell – to sell harder, and to sell better – in a downwards economy. His character is brought in to coerce a group of failing salesmen into producing better numbers. While bordering on abusive, this speech was meant to inspire, to set the bar higher. The point being that no one with a high level of success is without a high level of confidence. Sometime drastic measures ought be taken, especially in order to pull oneself out of a precarious financial situation.

How to Succeed in Business Without Really Trying (1967)

“If you have education, intelligence and ability, so much the better. But, remember that thousands have reached the top without any of these qualities.” –  J.B Wiggley

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This was spoken to a man that started out as a window cleaner, and eventually climbed his way to the top, This quote is meant to express that there are always a number of ways to succeed. For those with real ability (but maybe not the credentials that society places value in) hard work, determination and creativity are key.

Trading Places (1983)

“Think big, think positive. Never show any sign of weakness. Always go for the throat. Buy low, sell high. Fear . . . that’s the other guy’s problem.” – Louis Winthorpe III

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This early 1980s comedic classic is about a high powered businessman being made into a criminal, while a street hustler is made into a legitimate businessman. Clever title, isn’t it? It’s interesting to note the different ways each character deals with the fate handed to them,  and it touches on the Shawshank notion of how to cope with uncertainty. From this quote one could also learn another important pricnipal: without comprimising the well-being of others, look after, and always think about your own finances first.  Definitely appropriate in these times.

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At one time or another most of us have seen a stock quote. But how many times have you wondered what one of the metrics in the quote actually meant? It’s not too difficult to venture a guess as to what a 52 week high is, but even experienced investors might have a much harder time clearly explaining what market cap, forward p/e, and beta are, in their simplest terms.

We’ll hit on all the basic metrics that most online stock quoting services provide so that the next time you’re evaluating whether or not to purchase a stock you aren’t left scratching your head and wondering if you should be worried or excited about what you are seeing.

Open: The US stock markets are officially ‘open’ for trade from 9:30 AM to 4:00 PM EST Monday through Friday on most days. Open is the price of the stock at 9:30 AM on an open trading day. In between the close and open are ‘after hours’ (4:00 – 6:30 PM EST) and ‘pre-market’ (8:00 – 9:30 AM EST) trading. Trading that goes on during these times often will impact the open price.

Prior Day’s Close: The price of a stock at the close (4:00 PM EST) of the previous trading day. Note that the prior day’s closing price may not necessarily equal the next day’s open price, as there is after hours and pre-market trading in between the two.

High: The highest price that the stock has traded for during the most recent trading day.

Low: The lowest price that the stock has traded for during the most recent trading day.

Volume: The number of shares of that stock that have traded hands during the most recent trading day. This is an important metric that measures how easily (liquidity) a stock is traded. If volume is high, it is easy to trade shares. If volume is very low for a stock, it may be much harder to buy and sell a specific amount of shares at exactly the price you would like.

Avg. Volume: This is a measure of volume over an extended time period – usually one year. This metric is used to compare to volume in a given day. If volume is relatively high versus the average volume, it may indicate noteworthy news regarding the company that would result in a higher level of trading.

Market Cap (Capitalization): A dollar amount that equals the share price multiplied by the number of outstanding shares. Relatively, stocks are considered large cap if they have a market cap of $10-200 billion, mid if their market cap is between $2-10 billion, and small if the cap is between $500 million and $2 billion.

52 Week High: The highest price that the stock has traded for over the last 52 weeks (1 year).

52 Week Low: The lowest price that the stock has traded for over the last 52 weeks (1 year).

P/E: P/E (Price-to-earnings ratio) is a mathematical computation that takes a stock’s current stock price and divides it by its previous annual earnings per share. A stock that sells for $40 dollars per share that earned $4 per share over the previous year would have a P/E of 10. P/E’s can be an indicator of value relative to other similar stocks when taking growth rates into consideration.

F P/E: Forward P/E’s calculate a stock’s current price divided by expected earnings for the following year. For instance, a stock that sells for $50 per share that was expected to earn $5 per share would have a F P/E of 10.

Beta: Beta is a measure of a stock’s trading volatility level in comparison to the entire market. A beta of 1 means that the stock tends to trade with the market. A beta of less than 1 means that the stock’s price tends to be less volatile than the market. A beta of greater than 1 means that the stock’s price will be more volatile than the market. If a stock has a beta of 1.4, in theory it is 40% more volatile than the rest of the market.

EPS (Earnings Per Share): A company’s profit, or earnings, divided by the number of outstanding shares. For instance, if a company earned $60 million in a year and had 6 million outstanding shares, the company’s earnings per share (EPS) would be $10.

Dividend: A cash reward given by companies to shareholders of stock, typically on a quarterly basis as determined by the company. Dividends are most often given by very profitable or mature companies as an incentive for owning and holding shares. The ‘dividend’ metric in a stock quote is the actual cash reward per share given to shareholders in the most recent quarter.

Yield: Yield is a percentage that reflects the return received from dividends paid on stocks over the most recent quarter (multiplied out over a year) relative to its current price. For instance, a stock that is priced at $80 that most recently paid a quarterly dividend $2 of of  would have a yield of 10% ($2 x 4 quarters/$80 = 0.10 = 10%).

Shares: The total number of outstanding shares that the company has issued for public trading.

Institutionally Own: The percentage of outstanding shares of the stock that are owned by financial institutions (mutual funds, pension funds, etc.).

For more common investing terminology, check out the Mint’s financial term glossary.
For more of GE Miller’s writing, visit personal finance blog 20somethingfinance.com.