I’m going to take next week off. I will, in equal parts, be enjoying the end of summer and catching up on a few things I promised to get done by September. Next week will be "Best of Frank" reruns. I’m sure several of you haven’t yet worked through the entire back catalog of posts anyway.
In the meantime, I thought I would clear off some links and topics I’ve been meaning to get to, but am now willing to admit that I won’t.
A while back one of my best tipsters sent me a link to this really rather bizarre post on Mint.com’s blog written by Chris Larsen, CEO of Prosper, which claims to be "America’s largest peer-to-peer lending marketplace." It’s about his apocalyptic view of the near future in which the middle class disappears and we are left with a tiny elite of super rich and the poor, who will be employed primarily as members of the elite’s household entourage.
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I feel a little silly doing this, but it seems like I need to make that case that house prices are important.
You might recall that the Great Recession started with a fall in house prices. A mountain range of bad mortgages and the bonds that they were packaged into got most of the attention, but let’s remember that the whole sub-prime accident-waiting-to-happen wouldn’t have existed without a decade long run up in house prices. And if that run up had by some miracle continued, the accident would be still waiting. (And getting worse.)
But even if American house prices hadn’t recently been the rug that got pulled out from under the global economy, it’s a topic of huge importance in the world of personal finance. More than two thirds of American households own the place that they live in. For nearly all those households, the house is the largest single asset and one bought with mostly borrowed money.
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This week the carnival is at Budgets Are Sexy.
Right there at the top in the editor’s picks was a submission from Free Money Finance, telling us that a pleasant attitude and personality will help you succeed. I’ll have to take his word for that.
Realm of Prosperity had a brilliant idea to help us all pay down our debt. "Create the illusion of a smaller amount through the use of many 9s." Don’t pay $20 each month on a debt, pay $19.99. You’ll feel better. Somehow.
I was encouraged by a post from Financial Methods on Stupid, Pointless and Worthless Frugality Tips. The author is obviously new at this. Neither toilet paper nor dryer lint is mentioned. Still, it’s always good to see another blogger willing to take a stand against dumpster diving.
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Last week Fivecentnickel had a post on how to Avoid Lifestyle Inflation: Create an Artificial Sense of Scarcity. Basically, the idea is that you need to hide your money from yourself so you won’t spend it.
Out of sight, out of mind. If you don’t see the money sitting there every time you check your accounts, you won’t be constantly reminded of its presence, and you won’t be tempted to spend it.
This is a fairly common idea. The Automatic Millionaire series, for example, is based around it. But very little has been written, until now, on how to find that money again when you really need it.
For some people, the "hiding" of money is merely notional. They just open a so-called "savings" account at the same bank that has their checking account. But for many of us, that kind of hidden is not hidden enough. We need the money to be truly out of sight and mind. For us, the money must not be merely well hidden, but in a place we would never think to look.
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If there is one topic that professional journalists just love to report on and analyze, it is the troubles of traditional newspapers. They’re in very bad shape, we are told, and if something is not done these vital institutions might just go away, obviously taking our civilization along with them. There are even pundits who quietly suggest that government subsidies are in order.
What is most weird about this (spectacularly self-serving) sort of commentary is that it often actually understates the economic problems that newspapers face. Some papers may stagger on for a few more years or even a decade or two, but make no mistake, this patient is terminal.
Imagine, if you will, that newspapers didn’t exist. Now imagine somebody came to you with an exciting new business idea. His plan is to print the news of the day on paper overnight in massive printing plants and distribute copies to driveways in the wee hours throughout the region using a network of motorized vehicles. This operation would be paid for mostly by selling advertizing, but he would also have to charge about a dollar a day to readers.
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