Debit versus Credit

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  • The University Kid

    I recently discovered a great website that focuses on Entrepreneurship, and more specifically Young Entrepreneurship.  I think it’s a great fit for Debit versus Credit since here I also focus on helping young people learn about finance and business.  The University Kid is run by Jason Pereira who just so happens to be a sixteen year old university student at a university in the United Arab Emirates.

    The University Kid is a great blog to read if you’re interested in making money online.  It’s about more than just making money online though.  Check out what Jason says about it on TUK’s about page:

    I started with the whole make money online thing last summer after I had holidays and not much to do in them; anyways, although I started off poorly, writing articles at $2/hour, being naive and not knowing any better – I have come along since then and make quite a bit more these days.  I run a few websites, including the coolest blogging forum out there and make money from various things like affiliates, website flipping, blogging, offline marketing. On average, I earn mid $X,XXX per month.

    I’ve been following The University Kid for about a month now and I’m really a big fan of Jason’s ideas for entrepreneurship, marketing and making money online.  I definitely recommend checking it out if you’re interested in any of those things.  Let me know what you think!

    August 11, 2008
  • Weekend Reading: Aug 9th

    It’s been an interesting week for me. I finally finished with the summer semester at ASU so now I’m on break for about two weeks before classes start up again. I pulled off a couple of A’s so I’m extremely happy about that. Anyway enough about me. Here are a few posts which I ran across over the last week:

    For those of you who are health-conscious and into the organic movement there’s a great post over at organiccoupons.org covering 25 ways to make an organic lifestyle more affordable.

    While we’re on the topic of frugality I thought I’d bring up a great post I ran into over at Iwillteachyoutoberich.com about how you can save money by purchasing expensive items abroad.  Check out I saved $2,500 by purchasing two items abroad.  Is that un-American?

    For those Extreme Makeover fans out there here’s a sad tidbit of information.  A family who received a home via the Extreme show in 2005 is facing foreclosure after a failed business attempt with funds taken out of the equity in their home.  Check it out at AccessAtlanta.com

    That’s it for this week.  Stay tuned for more next weekend!

    August 9, 2008
  • Sizzling Stocks To Buy Right Now

    Here’s an interesting video.  By posting this I’m not recommending you take the advice construed in the video, I just wanted to point out that there are still great buys in even today’s market.  As a disclaimer I own shares in BAC, which is listed in the video.

    I told you it was interesting… right?  Here’s something to think about.  Mr. Fitzpatrick mentions financials as a good place to park your money still and then goes on to say that on a fundamental basis “they basically suck.”  As a long-term investor (rather than a daytrader or speculator) I’m interested in fundamentals more than technicals.  Based on that I’d be worried about investing in most of the stocks that he’s listed here.  Just my two cents.

    August 7, 2008
  • My Stock Portfolio

    After 9 months of almost absolute silence from me regarding what sort of investments I have made, I think it’s about time that I present to you my stock portfolio.  I own shares in 9 different companies.  Some of my investments may not have been very wise at the time, but I’m under the impression that rather than selling for a loss I should hang on and see what happens.  Truthfully I’ve started rather small and don’t have much to lose, but I do have a lot to gain.  So without further ado, here you are…

    Picture of my stock portfolio, its gains and losses: AAPL, BAC, BX, C, GE, JSDA, RIMM, SIGM, V

    As you can see I’m hanging on to AAPL, BAC, BX, C, GE, JSDA, RIMM, SIGM, and V.  The largest loss I’ve taken at this point (dollar wise) is AAPL, but it’s a long-term move in a company I love so no big deal.  In fact I just bought another share of AAPL the other day at around $161 – so I’ve done just a wee bit of dollar cost averaging.  As I continue to build up my cash I’ll be moving more and more money into stocks – especially now that the market is down so much.  Stay tuned then for future stock portfolio picks.

    What are you holding?

    August 5, 2008
  • What I Learned In Mexico: Illegal Immigration

    Not nearly as hot a topic as it used to be due to the impending threat of recessionary fears; illegal immigration is still of prime importance and one close to the hearts of many U.S. citizens, especially those close to the border.  Who are these people coming to the U.S. illegally?  Why are they coming here?  Where are they coming from?  If I were to ask myself these questions just a few months ago my answer would be that they were people from Mexico coming to escape their poverty-stricken nation.  Now that I’ve been to Mexico on a foreign-exchange trip my answer is quite a bit different.  Not so much with who is coming, but more along the lines of WHY they are coming.  Why are these people coming, if not to escape poverty and to find a better life?

    “Better” is Relative

    It is true that these “aliens” are coming to find a better life.  It is not necessarily poverty that ailed them in their homeland though.  True they were poor by our definition of the word, but a closer examination must be made to realize the exact reason for their departure.  Although many of these people were quite possibly poorer than we can imagine they were still able to survive.  It is not the poverty that hurt them the most, but the social system that prevails so strongly in Mexico.  I do not mean to judge, and I do not mean to offend with any of the following comments.  I just want to point out what I’ve learned and hopefully teach others why things are how they are.

    A Little Bit of Background Information

    Just as the United States’ culture can often divide people into classes based upon their race and wealth as well, Mexico has a culture that divides by social classes and standings.  It has been this way since the formation of Mexico as a nation.  When the Spaniards came to Mexico they made themselves rulers over the natives.  Over time some of them bred with the natives creating what we know today as the Mexican people while some chose not to breed with the natives and to maintain a ‘pure’ blood.  This began the class system in Mexico, which is still functional today.  The native Spaniards were the highest class, the Spaniards born in Mexico just underneath, the mixed breed (Mexicans) just underneath them and finally the natives (or Indians) were at the bottom of this ‘totem-pole.’  With these classes also came the distinction between what each class is able to do.  The pure blood Spaniards were the only ones allowed to hold any government or religious positions – the highest positions one could have in Mexico.  The mixed blood Mexicans were the merchants and other various “middle-class” workers, while the natives were the lowest class and used mostly as peasants and for near-slave labor and wages.

    A Primary Reason For Illegal Immigration From Mexico

    These class distinctions still exist today, in various degrees.  Those in the lowest class and of little to no Spanish blood are almost never found in high positions and seem doomed to live in poverty and filth.  With these strong social classes in place it would be almost impossible for someone at the bottom level of this ‘totem pole’ to ascend to the highest heights.  These are people who know that nothing will ever change, unless they make it change.  To them, their only hope for change resides with us here in the United States.  They know that it is not so much class as it is hard-work and determination that either holds you down or propels you forward here.  And so they come.

    August 4, 2008
  • The Automatic Millionaire: Chapter 7

    Today’s Friday Book Club will feature Chapter 7 of The Automatic Millionaire and is entitled The Automatic Debt-Free Lifestyle. In this chapter David Bach focuses on debt and lists several reasons why it is usually a bad thing to have and why wealthy people most often will not be in debt.  I really appreciate the first sentence that he starts the chapter out with and I’ll quote it here for you.  It’ll be a great way to start this week’s Friday Book Club.

    For most of us, debt can be a trap that forces us to work longer than we should have to.

    What a great statement.  I know from first-hand experience (and David says he does as well in this chapter) that debt can literally trap you in this meaningless cycle of minimum monthly payments on credit cards and living literally paycheck to paycheck sometimes being forced to use your credit card just to live which of course usually negates any payments you might have made on your credit card in said month.  It’s a terribly depressing cycle and one that’s not always easy to get out of.  This much is true and is a sad reality for a large number of people in the world.  In fact for us in the U.S. of A it’s almost a way of life.

    The Average American Family’s Credit Card Debt: $8,400

    How’s that for a depressing statistic?  According to David we American’s have half a trillion dollars in credit card debt, which works out to be that $8,400 average number.  The question is… why?  Are we living above our means or are we literally just unable to survive without using our plastic?  I’m sure that there are many who will agree with the first answer and many who will agree with the second.  I’m inclined to think both ways… after all I’ve been in the second cycle, but I also can’t say that I didn’t at one point deserve the debt that I got myself into by purchasing things I didn’t need and couldn’t afford.

    “Operation No More Debt”

    So what do we do about it, David asks.  How can we fix this and get ourselves out of debt?  He lists five steps here which I’ll outline for you.  Of course I’d recommend picking up a copy of this book yourselves so you can read the full details.  It really is a motivational read.  Anyway moving on, here are the five steps.

    1. Stop Digging: In other words, don’t take your credit cards shopping with you.
    2. Renegotiate the Interest Rate on Your Debt: Call up your creditors and ask for a lower rate – if they don’t respond positively then threaten to transfer your balances to someone who will.
    3. Pay For The Past, Pay For The Future: Don’t just pay down your debt, but pay yourself as well by moving money into a savings account or retirement account.  This will keep your attitude positive when your debt doesn’t dissipate as quickly as you’d like it to.
    4. DOLP Your Debt Out of Existence: In other words if you can’t consolidate your credit card debt into one place then make a list of which one to pay off first and pay them off one by one.
    5. Now Make It Automatic: This one’s easy.  Set up your credit card payments to pay automatically so you won’t have any say on if you’re paying extra this month or not.

    That’s it for this week’s Friday Book Club.  This chapter has been one of my favorites because it applies so clearly to so many people.  Debt is a big problem in the U.S. and something that really needs to be reevaluated.  Remember that The Automatic Millionaire is not someone who carries debt.  See you next week!


    August 1, 2008
  • What Happened To Free Enterprise?

    Free Enterprise: an economic system in which private business operates in competition and largely free of state control.

    What happened to the days when Free Enterprise reigned supreme and it was bad news when a government stepped in to take control?  Our nation is quickly becoming a “bailout nation.”  While many will argue that it is for the greater good that our government bail out companies such as Bear Stearns, Fannie Mae and Freddie Mac, they may ask themselves yet, where do we draw the line?  By bailing out failing financial companies are we sending the wrong message to business and also taxpayers?  I think we are.  I think that we’re essentially telling companies that if they’re large enough – important enough – that we will bail them out if they make mistakes and are in risk of going under.  After all if we’re willing to bail out Bear Stearns then why not anyone else with enough clout?

    It Hurts The Taxpayer

    As if it wasn’t bad enough that we’re sending the wrong message to big business it becomes worse when one stops to think about where the money to bail these companies out is coming from.  Last I checked our nation is running a huge deficit.  Impossibly huge, one might say.  The money sure isn’t coming from the U.S. savings account, because we don’t have one.  It’s coming from your pocket.  It’s coming from my pocket.  Maybe not directly, but you can be sure that this will affect us in the future.  The Fed’s magic money making machine of course will be what creates the money to bail these companies out.  They create money out of thin air, to use at their whim.  This of course is what’s providing us with the highest inflation rates in some time.  Of course that’s another day and another topic.  To stay on point essentially what will happen is that the fed will bail out these companies, creating an even larger budget deficit this year which will one day need to be payed off by us.  The taxpayer.

    A Slippery Slope

    It’s a slippery slope that we’re on right now.  Where should the line be drawn?  Is it better to bailout large financial firms in danger of failing and save ourselves from an even longer and more drawn out recession that will create financial difficulties in the future or is it better to let Free Enterprise reign and whatever happens, happens?  I prefer Free Enterprise.  We’re not a great nation because our history has been filled with bailout after bailout after bailout.  We’re a great nation because of our belief in Capitalism and Free Enterprise.  The further we move away from this, the greater danger we place ourselves in.  Stay on a slippery slope for too long and you’re bound to eventually slip and fall.  I hope to God that we don’t fall.

    July 30, 2008
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