Couple Working on Finances

Reason #1: Broke as a 20 year old? Then strategize like a 20 year old—think young.

Many of us were battered and bruised financially by the Great Recession of the past decade. Some of us went back to school with the assistance of student loans when employers cut back or vanished. Others drained 401ks and relied upon credit cards just to get by. Many homeowners became renters once again as they lost homes to foreclosure.

Now the Holiday season begins with messages across virtually all media encouraging conspicuous consumption while some of us try to cope with reduced hours at work, smaller or non-existent year-end bonuses, and 5-10 years of flat wages.

The Holidays might not offer much more than stress with everyone under so much pressure to spend, spend, spend and put on a brave face for family and friends. If you can’t keep up the “doing just fine” image, you might feel really alone and disconnected this Holiday season.

2004-2013 may have been a “lost decade” in financial terms for many of us. Really, are you much better off this Holiday season than in Christmas 2003? How much progress towards financial security have you made since January 1, 2004? Do you feel much better off than you did during Christmases past when you were 20? Or when you were 30?

The “lost decade” may have led to a bankruptcy filing. Sometimes the choice was bleak: (1) file bankruptcy or (2) lose your sanity and ruin your health over financial stress.

So as the financial “lost decade” draws to a close, what to do?

There’s an alternative to the financial rat race. If you are 40 or 50 years old but not much financially better off than when age 29, doesn’t it make simple good sense to visit the financial advice columns and blogs read by financially savvy and well-informed 29 year olds?

I suggest survive the the Holiday season with a goal and a purpose to begin the new year with a new point of view, and with the support and shared wisdom of a group of forward thinking individuals just like you. How? Where? Read on.

Reason #2: Pass on the wisdom

If you are in your 30s, 40s or whatever, some younger person is going to look up to you for direction and help. Over the spiked punch bowl this Holiday season, your nephew may just spill the beans that he is struggling financially and is very unhappy. What better way to help lead someone else to greater financial literacy and better decisions than to introduce your nephew to the supportive and interesting on-line community found at moneyunder30.com.

David Weliver started moneyunder30.com  after he found himself $80,000 in debt at age 25 with nothing much to show for it. David writes, “I started moneyunder30.com in 2006 for [a] singular reason: to provide simple, honest and relatable financial advice for starting out. By the way, it is fine if you are over 30, too. It is never too late to get right with your money! Whatever your goal, I want to help you get there.”

The articles on the site are great. Staying informed is easy. You can either sign up to receive a free email newsletter on the site, or can follow David’s Twitter account there so that you’ll automatically be notified of new posts and comments on the site.

What sets this site apart from the rest is that by participating, you’ll join an active community of likeminded people. You can leave comments on articles to share your experiences or expand on the content, too. The article comments are surprisingly numerous. By participating on topics on the site relevant to your situation, you may soon learn that you are not alone in your stress over finances. But this is not just a community of complainers. It is a group working to proactively change their current financial status and share ideas and comments to that end.

The site does look at bankruptcy as an option, but not as a panacea or an end without epilogue. I think that participation in the moneyunder30.com community will help you to realize when it is too late for anything but bankruptcy, it makes perfect sense as a positive alternative to years unnecessarily and hopelessly wasted, toiling with debt to no avail. The site is balanced and mature in that sense. Sometimes no amount of smart shopping or expenditure trimming can avert the need to consider bankruptcy.

There are millions of people just starting out or just starting over at the end of this ”lost decade”, or perhaps recovering after a bankruptcy or other financial shock. Stress over finances can feel isolating and embarrassing, but as a countermeasure, moneyunder30.com offers a welcoming online community you can join to fight back. This community welcomes you to make contributions by commenting on nearly every article.

David’s website features the contributions of a number of knowledgeable guest posts about consumer, home, auto, educational, and investment finance as well as timely and entertaining feature articles on topics like saving during the Holiday season.

Many of the moneyunder30.com articles seemed to echo what clients ask me every day, such as: “How to build credit (for the first time)”, “Should you save or pay off your student loans”, “Top Financial iPhone Apps” and ”Why it is ok to rent”.

The deeper financial advice articles are balanced with shorter, action oriented one, including: ”Cut back on spending: 10 painless money-saving tips for the upcoming holidays”, ”Free budget spreadsheet”, and “10 best cities for the young, broke and single—where to live if you are 18-44 years of age”.

I also note that the moneyunder30.com site appears to vet some credit offers, saying in effect that “if you need credit, we took a look at this credit product/offering and as far as we can till, it seems to be the least of all possible evils”.

Reason #3: Excellent Holiday savings!

The moneyunder30.com website has some great gift ideas that are economical. Speaking of which: want to save a truckload on last minute Christmas shopping? Who doesn’t! In next week’s post, we will review some low-cost gift ideas suggested by a recent moneyunder30.com article.

The Choices Get Tough Once the Frying Pan Gets Hot

Brazil is known as one of the BRICs, the term that economists use for Brazil, Russia, India, and China. For much of the past 5 years or so, Brazil has been a darling of global investors. Investment flowed into Brazil at a floodwater’s pace, and Mr. Batista had little trouble finding investors to provide credit, which he used abundantly to help build his empire.

Much of Brazil’s economy is based upon its natural resources such as timber, foodstuffs, oil, and gas. As demand and prices for these commodities increased around the world, Brazil’s abundance in most of those categories attracted large amounts of new investment. Consequently, as prices and demand for these commodities increased around the world, Brazil prospered even further as money from the sale of Brazilian commodities fueled a domestic consumption boom for consumer goods as more of Brazil’s once poorer citizens were able to afford cars, televisions, appliances, better housing, and nicer furniture.

Many global investors wanted a piece of the Brazilian investment action, and Mr. Batista’s companies provided ready opportunities for them. Mr. Batista started an oil company, OGX, followed by OSX1, a ship building company, followed by LLX, a logistics/shipping company, and by MMX, a mining company.

The idea was that LLX would buy oil transport ships and offshore oil drilling platforms from OSX1. OGX would then pay LLX to transport the oil in the ships that OSX1 built and sold to LLX. LLX would in turn lease offshore oil drilling platforms to OGX. LLX would also operate the ports where OGX oil and ore mined by MMX would be transported and exported.

But there was one problem, and it turned out to be a big one.

There wasn’t much extractable oil in the oilfields controlled by OGX. OGX had raised $4.1 billion in a 2008 public offering to acquire money to tap offshore oil field reserves then estimated at 10.8 billion barrels. In the ensuing years, OSX burned through much of its cash in a failed effort to develop those fields. In July 2013, OSX finally disclosed that it was incapable of extracting oil from most of the oil fields, triggering a fire sale on its shares.

The Brazilian government loaned Mr. Batista’s companies about $4.5 billion, making the Brazilian people likely losers to some extent in this disaster.

Things can happen explosively in Brazil, and Mr. Big can suddenly find himself as Mr. Nobody. While Eike Batista is a long way from a nobody, he could be on his way if his fortunes don’t improve.

Is Mr. Batista gone and forgotten? Not quite yet. Under Brazilian bankruptcy law, the debtor is granted quite a bit of leeway to propose and attempt to complete a reorganization plan. So Mr. Batista may have quite a long leash, but with new oil discoveries elsewhere, including in the U.S.A. thanks to new technologies like hydraulic fracking and applying data mining techniques to locating promising drilling sites, and with other Brazil’s other commodity prices stagnating, it may be very difficult for Mr. Batista to assemble a feasible reorganization plan.

Had the oil fields turned out better, perhaps Mr. Batista’s story would have turned out differently.

What Can We Learn From The Eike Batista Story About Financial Planning?

At first glance, the story reminds us to not borrow and spend future revenues that are not assured, particularly if the business venture involves high risk and is subject to intense competition like drilling for oil in unproven fields offshore.

Playwright William Shakespeare reminded us of irrational exuberance when he wrote of the unfortunate farmer in Macbeth, Act 2, Scene 3, “Here’s a farmer that hanged himself on the expectation of plenty.”

Another lesson is that just because we can borrow more money to get more stuff, it doesn’t always mean that we should. Mr. Batista borrowed from everyone to buy more stuff, including borrowing from his own country, the government of Brazil.

If you or someone you know bought too much stuff and now confronts a struggle with excessive debt due to poor financial planning, give us a call. A bankruptcy filing may help you out, as it may Mr. Batista. If you bought a reasonable amount of stuff, but an illness, or job loss, or some other life event has left you struggling with debt, please give us a call for a compassionate, non-judgmental and understanding consultation about your bankruptcy options.

Can Your Idea Bring Thanksgiving Blessings To The World?

In the 1980s, Mr. Polak’s “new” idea was nearly heretical to the charitable aid community. His idea that business could play a role in undeveloped/developing nations to help lift people out of poverty met with plenty of cold shoulders. The view in the 1980s was that people needed charity in the form of food, sanitation, electricity, and medicine rather than simpler innovations that might lead to skills, jobs, and work. The old idea was that once the desperately poor of the world were provided adequate nutrition, health, and safety that the poor would eventually figure out how to support themselves and lift themselves out of poverty. The old view: it would be unseemly for anyone to make a profit while helping the world’s poorest citizens.

The new view is that so-called charitable food and medicine hand-out schemes are subject to criticism because the organizers of the charities see the needy as victims who are unable to ever support themselves, and who need perpetual care. Critics say that the emphasis on free aid in the developing world results in victims who are “made”, and the self-images that the free aid recipients develop breeds feelings of dependency and inability to help themselves. In contrast, the newer view is that business will treat poor people as workers and customers, empowering them to stand on their own two feet and provide for themselves.

Mr. Polak and Mr. Warwick’s book focuses on the particular challenge of trying to reduce poverty by building businesses that have products or innovations that might serve the 3 billion poorest people in the world—products and services which those people might buy with their own incomes. Polak and Warwick join other thinkers in this idea including a well-known work entitled “The Fortune at the Bottom of the Pyramid” by C.K. Prahalad. Mr. Prahalad’s book also examined the idea of larger businesses making money while helping the poorest people of the world.

Mr. Polak’s innovations include concepts he calls “zero-based design” and “radical affordability” to appeal to people earning only a couple of dollars a day. The product or service sold need to be deliverable locally, as potential purchasers are unlikely to be on a postal route, let alone in an area with FedEx service. Polak also emphasizes that not only multinational corporations can play a role, but even individual entrepreneurs may have a place in helping the neediest people in the world.

Are You Called To Serve? Will You Act On Your Calling?

So what have you dreamed up that might be useful for the third world? An innovative and portable water filtration/purification method? A “super shoe” that is durable, comfortable, and long lasting? A smartphone application that teaches English? A solar food dehydrator? An affordable drip irrigation system for the small home-garden plot? An efficient, affordable, and durable light fencing material to keep marauding animals out of the subsistence farmer’s family food growing plot upon which the farmer’s family depends upon for much needed income?

If you believe that your idea is more than just an idle thought, and you want to try realize your dream as a real product or service, then one approach that you could take is to present your idea on “kickstarter.com“ in hopes of attracting sufficient “crowdfunding” from people interested in helping bring innovations to aid the world’s poor. I wrote a blog post about kickstarter.com not long ago that may interest you. Simply type “kickstarter” into this website’s search box to find it.

I remember from childhood Sunday School that in Mark 14:7 Jesus said “For ye have the poor with you always, and whensoever ye will ye may do them good: but me ye have not always.”

There are 3 billion really poor people on the planet. Do you have an idea or innovation that might improve their lives? Today might be your day to “do good” for some of the world’s poorest citizens.

The Thanksgiving Holiday week is a special week to remember how we have been blessed. And also to think about how we might share our blessings with others.

As we all know, insurance companies want to make billions and billions of dollars. I mean, who doesn’t? What we don’t know is just how they do it. Yes; charge more in premiums and pay less in claims is the trick. But just how do they do that?

Tactic #1: Settle Fast and Cheap.

They push hard and fast—go to your home, take you to lunch, offer you $500 bucks—whatever. Just get a signature and then sit back and enjoy that you just saved them thousands, if not tens of thousands of dollars.

But if that doesn’t work, well then, welcome to 3D land!

Now I wish I could tell you that this is some sort of fun attraction like an IMAX 3D movie, but no! It’s a notorious way insurance companies wear out injured people and get them to settle their claim for sometimes pennies on the dollar.

Tactic #2: The 3Ds: Delay, Deny, Defend.

You’ve successfully resisted the “shock and awe”, “sign your life away” blitz of the insurance company. You’re feeling pretty good, but now the more devious of practices awaits—delay, delay, delay.

Life happens and the more the insurance company can delay, the tougher it is for you, the injured person, to resist settling for whatever the insurance company will offer. Work is missed, medical bills pile up, and collection notices arrive—all giving the insurance companies leverage to get you to sign on the dotted line.

But you persist, and make it past the delay phase. You’ve been valiant so far—only to find out that the next turn brings you into denial. Yep, they won’t pay your claim! They make up some ridiculous excuse of how you are at fault or were not hurt in the collision and then politely—or not so politely—deny your claim.

They’ve got you where they want you. You’re hurting and your only options are take the insurance companies low ball offer or bring a lawsuit. Yep, the billion dollar insurance company with its legions of lawyers is inviting, tempting you into its playground—the courtroom. “Come fight me, but beware I fight here every day. I know how to defend and defeat you.” This is where many cave and sign on the dotted line.

But that doesn’t have to be you. You don’t have to add to the insurance companies bottom line. When tragedy strikes, seek out a well-qualified injury lawyer and let your attorney take the fight to insurance company and get you what you deserve.

A professional athlete doesn’t go to bat and personally negotiate his own contract. The serious athlete hires a professional, as do musicians and artists, because they know that having a professional fighter on their side against a billion dollar industry is essential.

At the Law Offices of Harold D. Carr, P.S., we have been fighting insurance companies for over 25 years, and have handled more than 10,000 claims. We hold insurance companies responsible, and get injured people what they deserve.

If you are involved in a collision, call us at 800-700-8082 and let us even the playing field for you.