A question I am asked all the time is “How come young people like Bernie Sanders so much?” I guess they ask me because I am young…allegedly. The answer is actually quite simple, it just requires outside the box thinking. Yes, he is very old, and quite frankly looks so disheveled some days I wonder if he is being fed a constant flow of opioids just to stay upright! However that being said, he is offering a message that is very different from other politicians. In a sense Obama started this, (Hope and Change) then Trump had one (Make America Great Again) and Sanders has one (Socialism). People have a tendency to gravitate to something new, and all 3 drew record crowds for the most part. In a way all 3 are similar, as the premise of their campaigns were vague.
Back to Sanders, a reason he is so very popular with young people is they see him as Santa Claus. An old man with a big bag of gifts from which you know something in that bag is for you. If you’re illegal, its protection from ICE; if you’re Black, its reparations…which just to add some commentary, none of them deserve…if you’re young, its student loan forgiveness, if you’re unemployed/poor/old free medical coverage, throw in a minimum salary and voila! You have a cult following, as long as you are perceived as able to come close to delivering on said promises. As I stated earlier, there is something in that bag Bernie is holding for you, it’s just a matter of what. Bernie, much like Obama and Trump, speaks directly to the groups he wants to help the most, and they are hearing exactly what they want to hear. I’ll explain this more in depth.
Imagine you’re a 33 year old, you’re toiling away sometimes working 2 jobs just to try to make a student loan payment of which you still owe $100k. You are living at home because you cannot find an apartment to rent that fits your budget.
You hear the “jobs report” was great, yet you can’t find work and you have come to realize your degree in liberation theology, anthropology, psychology, etc. is worthless. Your parents tell you apply for more jobs…etc. but you find nothing of substance with a wage that allows you to break even. You have a car loan, but we will ignore that since you need a way to get to work. You have 2 maxed out credit cards, and we won’t talk about your frivolous spending on any and everything trying to impress your also broke friends. You go to a party with your parents, and everyone is talking about their new car/boat/house/pool or their 401k and pension or early retirement and you are embarrassed because you have none of those and retirement isn’t even in your vocabulary…enter Sanders!
Those student loans, credit cards, and unaffordable housing? He will handle it with the stroke of a pen. What compassion! Finally a guy who understands the rotten hand that you’ve been dealt. Unlike Trump, he cares. He will create good jobs…or give you a guaranteed salary a month. He will break up those evil corporations and make college free for everyone. Not only will he make rent control widespread, he will roll-back the prices to something you can afford. This guy is literally the Messiah in your eyes, you hear him speak, and you nod your head up and down so much people start mistaking you for a bobble head.
While your parents, the Republican Party, and others may try to convince you this is not sustainable….news flash to them, you don’t care! As it’s not your money, and you have been indoctrinated to believe corporations and the rich have ruined your life. Just think how much better your life would be if your debts were all gone and you had a minimum salary each month sent out by the government? Even better, the government will give you a voucher for affordable housing and free meals! Where do I sign up? As far as how do we pay for all of this? We’ll tax the rich, and corporations that’s how. They created the mess you’re in so let them fix it.
Of course, I do not support Sanders, I am just laying out a case most of our readers already know. The thing everyone ignored last Presidential primary cycle was Bernie has a major following and his base could care less about anyone else in the race. Had Hillary not already cornered the market on the “super delegates,” in a fair fight, Bernie very well could have been the nominee.
Trying to explain what things cost in the future is fruitless since the people Bernie speaks to have no assets, job or income; they simply can’t relate. Bernie people live in the now, the future isn’t worth planning for if you’re not going to be part of it.
Also notice how little coverage there is of the crisis in Venezuela right now? That is because Bernie wants us to be Venezuela; a socialist ruled, one-party country, where you get in line for your government rations and when the supplies run out you grab food from the back of the garbage truck. Even chief Kool-Aid drinker Jorge Ramos pointed out his dismay about how the country is being run.
The 2020 election appears to be offering many American voters what they say they want, the ability to view socialism firsthand.
If you can’t wait then visit San Francisco.
PS in a capitalist society the bread waits for you
The Chief takes another scalp in this real-life story of how a jerk reacted to not getting his fries piping hot at a local Red Robin Gourmet Burgers in Elk Grove.
The jerk was unhappy about not getting his fries piping hot as described above, so how does he react? Well like any other irrational prick would when complaining on the Internet; he fills out the online survey attached to his receipt and proceeds to light both the store and his waiter on fire. I guess it makes him feel better. After doing so he said he didn’t want a coupon…a first for him, didn’t want free food, also a first, and said he will never go back because the experience was so bad. Keep in mind he paid $10 for a burger, fries and coke, and left no tip.
For those unfamiliar with Red Robin, they are a sit-down place not a fast casual order at the counter place. Leaving no tip is the ultimate jerk move, especially when you ordered the loss leader and complained about your order not being adequate.
The only comments I’ll make on Red Robin is they never have a consistent experience. I have always loved their burger, but the fries run the gamut of being piping hot; lukewarm, and soggy; and being almost straight out of the freezer cold. However, since they are “bottomless” I just order another basket and move on.
I have always found the food to be decent. If a complaint is warranted, it would be they don’t have a niche market and are trying too hard to be all things to all people. All you can eat fries draws a certain crowd, high priced entrees draw a different crowd, just like a dollar menu draws its own crowd. Pick a lane, decide what customer you want to attract and go from there. There is a reason if I go to a fast food place that I go inside to order and eat. I’ve gotten short changed at the drive thru too many times! I never once felt like lighting the store up.
This however wasn’t even the best part of the story. Literally a week later, he spoke about wanting to go back to the same Red Robin for the same deal! Hubris? Holy smokes man, the embers aren’t even out yet, and here you are wanting to go back? For what? A chance to light them up again? Little does the jerk know, he paid with a credit card so the transaction has time and date stamped, so the store knew what he ordered and who his waiter was. Suffice to say the waiter was likely “axed” the question a few days later and terminated for having a horrible complaint filed. Like I said now you’re going to return to the scene of your 1-star service experience?
The jerk doesn’t get it, and likely never ever will. The jerk consumes more television in a week than William and I combined in a month. He knows very little about current events or history, but knows everything going on, on every reality TV show or soap opera…. all while claiming that he watches no TV mind you. He embodies the millennial generation in a nut shell. He lit both the business and his server on fire, and then believed he could just walk on in and all will be forgotten? Sorry dude, your credibility goes out the door with me. A complaint would be justified if a trip to Morton’s or Ruth’s Chris was subpar, but a local chain restaurant? I also believe the jerk lacks cognitive ability to reason. A rational human looks at the experience and says, well I have never been here before, didn’t know what to expect, came in the door for the cheap meal, and left saying I won’t be back…no negative review needed or necessary. Alternatively, a rational person who is a regular might say he is disappointed but is willing to reserve judgment until a future trip can confirm said slippage of service and product. However, this would require far too much from your reality TV aficionado.
It takes a very special person to light-up a waiter who buy the way, is likely doing this while attending school trying to eke out a little spending money on the side. Your complaint likely got him terminated, and likely got the manager a call from corporate about poor customer service.
PS Truth is I visit Red Robin maybe 4 times annually, and I know what I am getting as a result, I ignore the noise and tune out poor experiences.
Kraft Heinz Co reported earnings February 21st and the results were well, not great, Sales were up, but they literally cooked the books as far as compliance goes, slashed the dividend, and wrote down the value of their products.
Before I break down that long sentence I’ll give a little background. Heinz was bought out by Warren Buffett and his Berkshire Hathaway Investment arm back in 2013 for 23 billion. He partnered with a Brazilian PE Firm 3G Capital and gave them a mandate to cut expenses. 3G obliged and what used to be a great place to work and make a living turned into hell on wheels at Heinz.
Manufacturing plants were closed, employees could no longer have free products or a mini-fridge at their workstation. To make a copy, employee’s had to ask permission from their supervisor; plus, they couldn’t print in color and were required to print double sided. Essentially employees were made to feel like they were back in school, under a ruthless teacher.
Every expense was questioned and if unjustified, it was denied. Executives installed by Buffett and 3G used to scold employees saying there is no work/family balance, you should devote all your time to Heinz. Layoffs were plentiful and executives were never afraid to swing the axe. After about 2 years of doing this, and out of ideas they bought Kraft. Buffett & friends, combined the companies and well…lather, rinse, repeat the same process. The combined company now loaded with debt, was aggressively trying to dig its way out…then the problems occurred.
Kraft Heinz fell victim to a corporate profit mentality. They are run by people who have zero experience in the consumer packaged goods field and the results show it. Jim Cramer of CNBC said it best, “Look at these products they make. They are tired and old and not healthy for you. Don’t believe me, look at the ingredients, could win a lot of scrabble games with some of those words!”
In today’s health conscious society people are reaching for products that are “organic, no antibiotics ever, and even buying the farm to fork lie.” Sadly this company offers nothing as far as those choices go. That being said, the advertising and development budget was essentially cut to zero, so I guess it’s a race to see how many bottles of Heinz Ketchup one can sell each quarter?
Kraft Heinz also competes in way to many segments where competition is stiff. Just a couple examples: look at the salad dressing market, it’s basically a race to the bottom, look at the competition and there is no more pricing power. The point I’m making is the store brand is selling for $1, it’s very hard to sell your product for $3. While the brand may be worth something, once you taste the cheaper brand and you see there is not much quality difference it’s not hard to make a switch. As a result Kraft Heinz was forced to lower their price to $1, and the margin on products sold for a dollar cannot be very high, likely you see a couple pennies in profit. The company has lost its way.
On to the disaster quarter. They cut the dividend 40%! Keep in mind, while people like Buffett get rich off this money, many retirees depend on it to subsidize their lifestyle. In addition Kraft Heinz was viewed as a stable company, not flashy, but stable in a sense they weren’t going broke like Sears. Also, heck everyone has at least 1 Kraft or Heinz product in their house. Kraft Heinz also wrote down the value of Oscar Meyer and Kraft by 15 billion, essentially saying the brands they paid for aren’t worth near what they thought they were. So in essence they loaded a company with unsustainable debt and now the brands aren’t even worth much anymore. Even more concerning was the report that they are being investigated by the SEC for accounting irregularities. I will say one thing, I don’t want the SEC investigating me for anything because they are not just a regulator agency; they can literally bring your company to their knees. To add insult to injury, the NASDAQ stock exchange has filed a report that the company is not in compliance with their rules after failing to file a 10-K report at the end of the calendar year. Ouch. Employee morale no longer exists, as evidenced by a 20 percent employee turnover rate annually. Also they have explored the idea of selling brands to try to pay down debt.
How to fix the company
If I were in charge, I would ask Buffett to buy the company outright. I would urge him to take us private and then we could work on the accounting and legal issues without being under intense scrutiny. There would be no dividend being paid out so that money could be put toward debt extinguishment. I would ramp up innovation and advertising dollars because it has become clear the brand power is no longer selling itself. Kraft Heinz has exactly two new products they have launched in the past decade, both were successes; Devour frozen food, and Just Crack an Egg by Ore Ida. This shows the company still has it when it comes to innovation. I would raise employee pay and while this may take a short term hit on profitability, I want employees productive and not looking to jump to a competitor. 20% employee turnover is something only a jerk would be proud of. Also there would be a moratorium on closing plants. Employees are the life blood of the company. I would create an incentive plan to bonus all workers based on production and quarterly sales goals.
As far as selling products for a dollar, that is gone. Advertising should be poured in to make our products worthy of customers trading up for value as opposed to buying it for a dollar because it’s on sale. When it comes to Oscar Meyer meats chock full of bad ingredients, the damage is done, I would create a different brand, with clean, simple ingredients and market it and price it as such. Regarding the current product mix, I would eliminate/sell several. Look at the barbecue sauce aisle alone; Kraft BBQ, Bull’s Eye, Heinz BBQ, and Jack Daniels line are all sold by the same company! In essence you are competing with yourself! Holy smokes, even the most uneducated will tell you they will reach for the cheapest one. Look at this example. Say the Chief kills a wild boar and brings it to Williams for a BBQ. William won’t care what kind of sauce I brought unless it’s a horrible tasting or very obscure one. Eliminating brands will go a long way to simplification and increase profitability. Paying down the debt and increasing employee morale, rather than looking for the next acquisition will go a long way toward getting back to prosperity.
Earlier this week brought great news (as predicted in this space) regarding Bob Kraft–the Patriots owner who “allegedly” solicited a prostitute at a Florida massage parlor. Headlines announced that Kraft would get off.
Horrible pun there but anyway, the prosecutors are offering him a deal that the charges would be dismissed but he would have to admit that he would have been found guilty if it went to trial. Isn’t that the same as pleading “no contest?” Essentially you are saying, “I’m not admitting guilt, but the evidence shows I would have been convicted?” Honestly I’m not quite sure I understand why the offer is so great that he should take it. Kraft isn’t married so it’s not like you have to be publically shamed and your marriage essentially ruined. If I am Mr. Kraft, I’d do the same thing he did with the Patriots when they were accused of spying on the opposing team and using deflated footballs, he did not plea or admit guilt choosing to fight his fines and suspensions each time!
Without going into additional details, Kraft really didn’t do much wrong in my eyes. He paid for a service and a consenting party agreed to the terms. As far as the women being held against their will, I’m not seeing much in the form of arrests. This is hardly the crime of the century but he happened to be a big fish, and sadly (as chronicled in this space), if you have a DA on a rampage looking to be elected to higher office, Bob Kraft is a great fish to get on the line. Now with the case unraveling the DA was forced to offer a “deal”.
The prostitution case against Patriots owner Robert Kraft linked to a Florida sex-trafficking ring could be a long shot for prosecutors — partly because the women he was caught on video with are the 45-year-old spa manager and a 58-year-old licensed masseuse, according to legal experts. Kraft is charged with two misdemeanor counts of soliciting prostitution after twice visiting Jupiter “rub and tug” massage joint Orchids of Asia Day Spa. Police say the business has ties to an international human-trafficking and prostitution ring, and some of the women at the Asian spa and five other affiliated Florida properties are sex slaves from China. But it appears Kraft was caught on camera getting services from two women who are not victims of human trafficking: the 45-year-old manager of the spa, Lei Wang, and 58-year-old spa employee Shen Mingbi, also believed to be an operator of the business — both licensed masseuses and Florida residents.
My advice (keep in mind I have just 2 law electives under my belt) do not take the deal. No plea bargain. If you are offering to drop the charges you have no case! Clearly Kraft can run out the clock on this very weak offensive.
This is merely a last ditch effort by a District Attorney desperate to save face, hoping Kraft agrees to the deal, and he can celebrate a “would have been conviction.” As said before, I tend to be more libertarian on these sorts of issues, and Kraft just got very unlucky in a sense it was a brothel under investigation by the police. Just drop the charges and quit wasting taxpayer dollars on this type of frivolous prosecution that is only being brought to advance a political career. If the prosecutor had a solid case he wouldn’t have made such a limp opening offer the Kraft.
By the way, did anyone see the look on Kraft after he heard the charges would be dropped…likely hasn’t been pleasured that much since…..well never mind.
If I can offer some unsolicited advice to Mr. Kraft it would be this: avoid BJ’s Restaurant. While you may think they offer a certain something, they don’t; however I’ve heard some members of the wait staff can get you a “wet n reckless.” While some on this blog may wish to engage in a “wet and reckless” with employees at a local salsa bar, this particular “wet n reckless” leaves you broke and dry.
I’m starting to get tired of being right all the time…how about you William?
News broke Friday morning (02/22/19) that New England Patriots owner and essentially a villain to all football fans Robert Kraft was arrested for soliciting prostitution at an Orchids of Asian massage bar in Jupiter, Florida. There was a large press conference, and the police department made it seem as if years of detective work finally took down the Sopranos. Additionally there are way more names to be released and Kraft wasn’t even the biggest customer of this place.
Authorities charged at least 173 people with crimes, including human trafficking and soliciting prostitution. Six people are charged with running the ring.
First of all full stop, this is not the first “massage bar” to be busted by the police as a human trafficking ring, and is far from the last. A Massage Envy in Elk Grove, CA had the same thing happen to it. These places are a hot bed (no pun intended) for this type of activity, a massage place that just opened near my office has a sign when you walk in “We offer no additional “services” do not even ask.” It’s even a big running joke with most guys; oh I’m going to a massage parlor, looking for a happy ending.
SO in total about 200 names are going to be dropped, with charges forth coming and I don’t really know why. Let me lay out my case….
First of all Kraft just like any other man decided to engage in a sexual activity at a business, and it sounds like it wasn’t his only trip, I don’t see an issue here. Before you play the morality card, let me add Kraft is obviously in a weird state of his life. His wife died about 7 years ago, he has partied with strippers, hung out with rappers, and even started wearing a gold chain….he is clearly self-destructing. He went to this place for a little rub and tug, and while definitely he has no sense of morality, I don’t see a crime. This won’t play well but I see a nothing burger here, move along and focus on the real criminals in this case.
While he may have engaged in the sex act, it took 2 to tango and sadly this is the part the media doesn’t want you to hear. Kraft is widely seen as a villain, his Patriots have won like 20 Super Bowls in the last 21 years, so he is a manufactured villain. Time to take him down. I remember these conversations in my childhood, ‘life isn’t fair”, “takes 2 to tango”….however that doesn’t apply today, the generation in charge now including the police chief, DA and others in South Florida are ignoring the bigger picture to snag the “big one.” How come no charges have been announced against the owner? What about charges against those holding the girls against their will? The girls were supposedly kept there and not let out, and silence? Your detectives installed cameras, but you didn’t try to save the girls? Just catch Robert Kraft, a pro golfer, the head of Citibank’s banking division, and so far a bunch of no names? This is the type of backward thinking that has become common over the last 10 years, it’s not about identifying the criminal; instead, it’s about ensnaring the biggest catch. I guess public relations is a path to better funding next fiscal year.
The problem is Police, District Attorneys and judges have far too much power, and it is not more obvious than this! Actually I hope someone has a good answer for why surveillance went on so long. If you think people are in danger you get them help ASAP. If you’re wrong, apologize, pay a sum to settle and move on. In this case, how come we haven’t arrested the human traffickers? Many men are behind this, and a few women too. It’s a horrible crime but it doesn’t feel right making Bob Kraft out to be the bad guy here. The crimes are no laughing matter but seriously? This is how low we have stooped as a country? Completely ignoring Jussie Smollett and his half-baked crime?
I just see an old man helping out a local small business. Kraft also makes for great headlines, Spygate…Deflategate….now……Tailgate? Additionally, why does everyone say they “look forward to their day in court?” People actually look forward to that? When I hear that I mark down guilty.
Kraft also openly supports President Trump so I wonder if this is political payback for his support of Trump. Clearly, the league favors the other party.
UPDATE It has come to the attention of this blogger that there is a movement underway to make Mr. Kraft sell his team.
Regardless of the eventual outcome in the investigation in general or Kraft’s case in particular, this is an opportunity for the NFL to live up to the moral standard it touts so fervently. Sports writer Jane McManus called on Saturday for the NFL to ban Kraft from the league if the allegations are true…
Apparently we live in Soviet Russian where the governing powers can just force you out with little notice. I think there is a racial element at play here. 90% of the NFL players are black, the owners are overwhelmingly white, and players can be suspended for conduct such as DUI, domestic violence, drug/gun charges and the like, owners really cannot be. This reeks of a way for the players to punish someone who is without a doubt is one of the most popular owners in football with fans in the “New England Area.”
William, the Blog Father, and I met for lunch a couple years ago and both us had our “tin foil hats on” according to the cheerleaders of this disaster of an economy. A ton of issues were discussed but one item I brought up could reign supreme very soon, the topic of the car loan market. More specifically I spoke about the fact that the market was being flooded with subprime auto loans (not standard loans, think the No Income, No Job, No Assets, No Problem loans for homeowners during the meltdown a decade ago).
For a time, my prediction seemed baseless and unsubstantiated. There was nary a word from any media at all, until Wednesday, when CNBC had an article about it. As predicted at our lunch many years ago, its jaw dropping folks. William runs this site and perfection is not asked for, it’s demanded. We stand behind our predictions, and in this case I wish I was issuing a retraction. Here are some brutal highlights from the article:
7 million American borrowers are at least 90 days behind on their car loan
1 million more than 2010, when we went through the credit crisis
Total auto loan debt has increased by 584 billion, the highest levels ever recorded by the FED
When I digest these numbers, even I myself, the “Nostradamus” of this crisis, am somewhat dumbfounded….aren’t we told that we are in a period of major economic growth and expansion? I am told the stock market is making new highs almost weekly; wage growth should be keeping up as well right? Problem is while most of the above is true, the results say otherwise. We have had economic growth, largely due to low interest rates; this carries over to the stock market increasing to all-time highs. What I am saying is you cannot earn a decent return in a savings account so as a result you invest the money, driving the market up. Corporations, can make loans on the cheap through a bank to finance a large acquisition, like Kuerig buying Dr. Pepper Snapple, or Pinnacle Foods being bought by Conagra. I cannot blame these corporations just like the ones who borrowed money just to juice earnings returns, but back to the car aspect of this blog.
During the last 9 years, banks were able to borrow money from the Federal Reserve Bank for 0% interest. Subsequently, they lent it out at far higher rates of return depending on your credit or FICO score. To sum this up, the bank is taking zero risk, and you the borrower are at their mercy.
So how does this pertain to the above article? Well you walk onto a car lot or dealership because you need a means to get to work. Just like that, you are circled by the vultures posing as car salesman. I say posing because they don’t care about you, they see you as a sale not a person. Don’t believe me then go see for yourself. These dealers will literally hire anyone. Still don’t believe me, these people make money only when they sell, not so much when they are standing around, so when they find a live warm body, you’re dinner! You’re literally their meal ticket because they are on commission and without selling to someone like you, they don’t eat.
Since you need a ride to get to work, they don’t want you to see the affordable compact commuter car. Oh, you have a family then you need that SUV, or crossover, or full size car….think about going to the beach, or snow, or grandma’s house then get our all-wheel drive car over there! You test drive several, and you make a decision. You decided to buy a little more car than you needed but it’s ok because it will pay off in the long run. The sales guy made you feel like a million bucks, sadly, you don’t have said millions so you finance the purchase.
The finance guy (known as “The Closer”) sets up a payment plan…0% APR right? Isn’t that what the ad said? Well not in your case but we can probably do it for 15%. Then he runs your credit. You can’t make the payment over 48 months, so….let’s make it 72 months, and maybe it becomes 29%, but you need to get to work and the payment works so you sign. Congratulations Chief, you are now the proud owner of a new car or used car. It’s a ton of payments but we know you can afford $475 a month. Read the last part again. You got taken but you don’t realize it yet. You whip out the credit card for the down payment, you need the car now but it won’t be ready until tomorrow.
Excitedly, off you go in your new vehicle. Typically you get 45 to 60 days before the first payment is due. The first couple payments are a bit of a struggle but you make them. Eventually a life event happens or other bills just increase as they always do. (Seen what rental prices are doing lately?) All of a sudden a couple years into the loan, you realize you bit off too much but too bad. The car sales guy, he may or may not work there anymore, the finance person, ditto however both got paid up front. Keep in mind there is no fiduciary duty law in this business.
A local car dealership (Paul Blanco) literally runs ads saying we will get you in a car even with bad or no credit…and hence we have this auto loan issue. Frantically you call seeking to work out a payment plan…sorry the car is worth less than you owe, no refinance options exist Chief. Surely your credit union/bank can do something for you, you have been with them for years…negative Ghost Rider. Sadly your car is worth more repossessed even if you keep making payments on it. Surely this is usury or something, there has to be a way out…sorry, no one can help you. By the way, your car will be repo-ed and they will sell it again to another sucker, lather, rinse, repeat.
If you pursue legal action, you have no leg to stand on since you signed the papers. You also will find out the law firm hired by the finance company is Dewey, Skrewem, and Howe…while the in-house finance company hires law firm Howie, Keepum, Kurent. You were took, and are now on the hook, just another statistic in the actuary’s book. The sad cold hard reality is you need a car to get to work, you bought too much car, and got saddled with a high rate loan on a vehicle whose value depreciated tremendously upon leaving the lot. We never learned our lesson from 2008, and we are going to repeat it yet again, in a way that is going to be cataclysmic to the economy and credit markets. As pointed out earlier on this website, you won’t be getting that large tax refund to bring your payments current.
In this case I do wish I was wrong, however I was Really Right.
While conversing with an old college friend the topic of money and debts came up, my degree being in finance I offered to lend a hand. My friend also graduated with a degree in finance from the same college I did. My friend told me she was barely making ends meet. She is single and lives in the Bay Area and makes a decent salary of about 60k a year. She had amassed 35k in credit card debt, and has about $150k in student loan debt; credit card debt notwithstanding this is about normal for a young professional in their 30’s nowadays.
We cannot focus much on the student loan debt, because truth be told, without that degree you cannot even apply for a job at most places. This person is gainfully employed, so they have a paycheck going in their favor. What is the credit card debt about? This was a very painful discussion that initially ended with me saying if you’re not going to be forthcoming, the discussion would move on to another topic.
She began to open up. She revealed that she doesn’t cook so she eats out twice a day. The cardinal sin isn’t so much she is eating out, it’s that she is going to happy hour. Happy hour involves alcohol, and salt filled appetizers at a great teaser rate. I know this too well; you grab a tall one, then order up the wings, egg rolls and chips and salsa for just $11.99. Then upon finishing your appetizer you want another tall beer, then maybe one more, before deciding you probably better order food because its dinner time now…..$15 happy hour just became $70, possibly more with tax and tip……don’t worry just put it on the card! You get up tomorrow morning and need something to cure the hangover so you grab fast food, and spend another $10…lather rinse repeat. Those charges add up.
Reluctantly she went on that she spent quite a bit of money trying to keep up with the Jane’s and Kardashians of the world. I cannot relate to this, I am a guy, and as William can attest I usually have the same shirts, jeans or whatnot until it is ready for Goodwill…but I digress. In addition, I found a premium cable package, gotta watch the soaps every week, and binge watch on weekends. A home phone? ….if you’re under ago 60….lose it ASAP. A brand new iPhone, with a cancellation proof guarantee of a three year contract built in. A gym membership……where she went one time. This friend was in desperate need of help, I was there to advise, but I told her she isn’t going to like what she hears, but it’s got to be done.
The truth of the matter is she doesn’t need a diet, she needs a lifestyle change, and poor decisions have begat more poor decisions. A couple notes prior to me telling the advice that I gave her; she drives an old car and lives in a decent area, by no means high rent district. No car payment, and it’s not my place to tell a girl to live on skid row or somewhere not safe in order to save a buck.
My advice to her was her ditch the gym membership and commit to going for a walk during her break or lunch and park near the back of the parking lot at work. Ditch cable and the home phone. If you don’t think you can live without cable, try Hulu or Netflix or both. The cell phone is problematic however you have agreed to a contract so maybe try to negotiate a lower plan or something, this is the danger of brand new items. Take cooking classes, watch YouTube cooking videos, or I guess if you keep cable watch Food Network. The amount of money you spend eating out daily ads up quickly. What you spend in the course of just one week would likely covered groceries for a month. The key here is McDonald’s dollar menu seems cheap, but the food is loaded with chemicals that make you crave it for lunch, then dinner and a possible late night snack. Your waistline will thank you as well. In addition don’t think eating out for healthy food is the answer either. Salads cost more than $11. Subway may sound good and in some cases can be healthy but costs can add up quickly. The goal here is that we found quite a bit in monthly savings and we could apply this to debt service, starting with the 25% interest rate credit card debt. In her case the student loans were subsidized at 5.5% and honestly the least of her worries.
We found a potential of $800 per month in savings if she can implement the lifestyle changes that we discussed. This doesn’t sound like much but if she remains diligent, it will substantially cut into the credit card debt. Contrary to most people’s opinions, I told her keep the cards, do not cut them up, and in fact keep using them. Dave Ramsey won’t agree, but the way I see it, cash has a way to disappear with no accountability, with a credit card your charges are all itemized out each statement cycle. This is a way of keeping yourself honest, while also paying down the balance.
This plan is a roadmap to achieving a level of financial freedom and other people may have issues with the particulars but if the plan is maintained, it will work. I have to give my friend some kudos, she had her degree, and even found some additional work to provide a little more $$$ on the side. However this is where the kudos end, and cold reality of the world we live in sets in. The plan was not followed….well it was for about 6 months. Reality is a doozy in this case, but well here is the rest of the story as Paul Harvey used to say.
In the case of my friend, she reduced her credit card debt to $17k in just 6 months’ time, everything was going well, then she went back to her old ways. It’s true, you aren’t going to meet anyone to form a relationship with sitting at home eating a can of chicken noodle soup, just like it isn’t true living like a miser will make you happy. However if going out to the bar is recipe for eternal happiness I would rather die alone. Credit card debt maxed out now at 45k and the issuer is having no part of a deal involving reduced payments or more credit extensions. All the while rent in her area has skyrocketed and goes up about $150 a month twice a year, further constraining a budget, now the minimum payment cannot be made! That car…well it’s systematically breaking down and becoming a large money pit, you have no option but to keep sinking money into it. The rent issue? Well you need a roof over your head, so you have to keep paying. The student loans? While you don’t have to pay, you cannot discharge these through bankruptcy. She does not have rent money for next month….adding insult to injury, the complex manager is looking for the last 3 months rent. She is at the end of the treadmill of debt…it’s now over, decisions she made and subsequently have continued to make have finally come home to roost. Even worse rather than seek out help or try something productive, she gambles at the local Indian Casino, and plays the lottery, essentially falling for the lie that the easiest way to double your money is betting it all on black. Suffice it to say, she blames me for telling her to keep the credit card, we no longer have a relationship.
Now I will add some commentary. I prefer using my credit card to track my spending and purchases, maybe it was not a great idea, but ask anyone who is a waiter/bartender/valet, cash tends to disappear quickly and there is no paper trail. While I firmly believe in separating needs and wants, the bigger issue is you can be seduced by a want, and you could convince yourself it’s a need….you need a budget. Make a shopping list wherever you go, grocery stores love it when you insist on going up and down every aisle, it’s easier to trick your mind by those fancy SALE stickers. By the way ever notice those sale prices are not as good as the actual sale prices a week later? Impulse buying perhaps?
When it comes to tackling your debt, pay off largest balance/highest interest rate first. The one that costs you the most needs to be paid down first, then apply additional money to next highest interest rate etc. until paid off in full. Take advantage of local non-profits that are there to help/guide you, ditch that “financial advisor” eager to pitch their latest product to you. Suze Orman and Dave Ramsey are two of the best on the radio, free! They also offer classes for a nominal fee and it is well worth it as blogged about earlier. Additionally, this idea of hording a bunch of money in a savings account, when you have existing debt is ridiculous. Just think about it, your credit card issuer is charging you 30%, your savings is earning 2% at best if you use an internet bank…..William said it best, the house always wins. Having a rainy day fund is ok but deal with your debt.
Playing the lotto and gambling is even worse because the atmosphere is created to make you addicted and play more.
If you need to file bankruptcy and start over, so be it, but understand the difference between dischargeable debt (mortgage, credit card, auto loan) and undischargable debt (student loans). Perhaps worse, she started reading a tax website and decided to start looking into buying a house….get this…..for the mortgage interest deduction. Yes, she thought spending $$$ on a house payment each month and getting a bigger tax refund would get her out of debt. Then worse yet, she joined several dating websites ($$$) looking for a special someone. Again seduced by a child tax deduction and a marriage tax break…news flash the marriage tax break is double that of a single one, however your taxable income will be higher. The goal of marriage is not to share the misery of your past mistakes by expecting someone else to fix them so you can double-down on continuing to make stupid life choices. Truthfully, what guy worth having would willingly enter into a relationship with someone carrying all your financial baggage?
The bottom line is that my friend has no chance anymore, except bankruptcy, and even then the road back will be rough. Good luck living anywhere decent. You won’t be driving a new vehicle for a while and worse your credit will stink for many years. However there is good news, we have some of the most generous bankruptcy laws in the world, so fear not in about 7 years you will get to start all over again! I have a customer who’s family is doing just that, they owned a really nice house in my parents old neighborhood, went into foreclosure, filed bankruptcy, and now they are right back at it 7 years later. Bought a house in that same neighborhood, also near the peak of the market, by the way, bought a huge new boat, 3 new cars, and I’m sure this story will once again end poorly soon, but hey it’s America! By the way didn’t Citibank used to have a catch phrase of “Live Richly?”
Today we had a tragedy in San Francisco, no the land was not sold to the Chinese as has been rumored. A large explosion took place…pandemonium ensued.
Was this an attack by the Russians ordered by President Trump?
Was Leland Yee or “Shrimp Boy” Chow involved?
Was this truly the “big one”?
Did the toxic waste at Hunter’s Point go critical?
Reports surfaced it was just hot air……. but I don’t recall Aaron or George Park visiting San Francisco to give a speech, so I was dumbfounded.
I needed answers, I was told London Breed would make a statement soon…. my reaction was London what? Was this a type of dog, new brand of malt liquor, a clothing line for homeless people, a rap singer or something else entirely? What does a breed of anything from London know about an explosion in San Francisco?
Well it turns out that San Francisco voters—documented and otherwise—elected a Mayor named “London Breed”, I’m more of a corgi guy myself.
The explosion was a result of natural gas—in this instance, said gas was not created from the contributions of local homeless people accumulating on public sidewalks—but from a ruptured pipeline belonging to PG&E that caught fire and burned several buildings. Yeah there’s that company again.
Three-story flames could be seen leaping into the air in television images. Police spokesman Robert Rueca says the fire was reported around 1:10 p.m. and there were no immediate reports of injuries. KPIX-TV reported that the fire started at a construction site.
You hate to see it. Thankfully no one was hurt or killed, but I can’t help but fault this corporation for their blatant stupidity. They easily could have torched their headquarters and collected insurance money…I may know a guy btw! It would have been a real shame if the maintenance records and other documents the Public Utility Commission has been trying to subpoena for the last few months were located in said building, but alas your company couldn’t even blow up the right structure…. SAD!
I don’t even
know how this works since technically or I guess “allegedly” you filed
bankruptcy a week ago. So, I guess the
“ratepayers” are on the hook for this? I
ask because I haven’t seen a gas leak like this since I ate an “extra loaded
bean and cheese burrito” at a certain Mexican joint in Elk Grove! But really, PG&E, I am asking for a
friend, do I pay you this month or do I just pay myself since I guess the ratepayers
kind of own you now? However I am glad
you found a way to pay out $130 million in bonuses to your top executives! I hate the idea of taking food off the table
Sadly, this is just more tone deafness from a corporation surprised that “Paradise Lost” is already a movie…. imagine the revenue that idea could have produced.
This caps off one heck of a quarter for PG&E, too bad something worthwhile couldn’t have been blown up…like, I don’t know, Berkeley?
The infamous government shutdown has come and gone and in a rare blog, I’m not going to get or be political at all. I want to focus on personal finance and how close most Americans are to financial ruin. Hopefully you will learn something, if not go study Socialism 101 and hopefully Alexandria Ocasio Cortez wins in 2020.
For the rest of us, the core of our financial problem in American is called a “paycheck.” You know, one bestowed upon any hard-working person; received once, twice, weekly, or bi-weekly every month. “A day’s work for a day’s pay”, or as some would call it, “money received for services rendered.” However, we as Americans have overestimated the paycheck. We take it for granted. We no longer see it as wages earned, but as money to spend; or in some cases, as alluded to earlier in a separate blog, money needed to pay past debts.
Really, in most respects we never learned our lesson from the bank/real estate/credit crisis starting in 2006. People lost homes, cars, jobs, and other material investments. Your 401k became a 104k, and we as a country swore, we would learn our lesson. Truth is we never did.
The year is 2019 and we experienced a government shutdown. Federal employees were forced to work without pay or told to stay home and you would not be paid. Additionally, in the case of TSA workers, they staged sick outs to avoid the punishment of actually having to show up to work. The workers rebelled because they were no longer receiving a paycheck. (FYI once it was over, they were all paid retroactively to the beginning of the shutdown.)
Changing our lifestyle is a lesson we should have learned a decade ago. Companies had mass layoffs, banks and investment firms went bankrupt, the government bailed out Wall Street. We never learned our lesson. How many stories, articles, interviews etc. did you see featuring government workers forced to go to a local soup kitchen or fill out food stamp applications, workers claiming they were about to be thrown out of their apartments, houses? They never learned their lesson. While my heart breaks for these workers I find it very hard to believe they spend their entire paycheck on just housing and food, and if they do, we are in way bigger trouble as a country then I have ever imagined.
The truth is, these people are liars. They have 2 car payments, possibly a boat/rec vehicle payment, credit card debts, and likely spend far too much on entertainment or dining. However, that doesn’t make for a great narrative so we must focus on the single mom of three who is being evicted and somehow that is my fault because I’m undertaxed?
Poor financial choices have been harming Americans for decades. We are fiscally illiterate people. The biggest problem is we have stopped seeing the paycheck as a means of income. Instead, we now see it as a way to pay-off last month’s debts.
Madison Avenue marketing in all its forms, encourages us to swipe a piece of plastic because we won’t see the bill for 30 days and can afford the minimum payment… buy now, pay later anyone?
The truth is, if we actually had to reach into our wallets and pull-out cash every time that we made a purchase, we would behave in a much different manner. But because our money is just so many pixels on a computer or cellphone screen, there is a lack of restraint on our behavior. Our paycheck is not “real.” Its is an ethereal, untouchable, intangible thing.
The crux of the shutdown matter is this: “Does the Government work for us or do we work for the government?” Once that question is answered we will be able to chart our future. If you are a federal, state, county, city, union, etc. employee take heed of my words; you are 100% at the mercy of the taxpayer base. We have a tendency to vote with our feet, and at some point, we may get transportation out of said country. You have just received an early warning, next time you may not be so lucky. The day of reckoning is coming; unfunded mandates are not easily curable by simply raising taxes or increasing the employee contribution for new hires. As a famous person once said, “socialism is great until you run out of other people’s money” …I doubt that person was Alexandra Ocasio -Cortez.
While this should be a kick in the pants for all workers, especially the previously untouchable federal workers, it won’t be. The shutdown is over…crisis averted…I guess? Actually, this is temporary, the next one may be very protracted. We as workers must come to grips with a very stark conclusion, we are beholden 100% to our employer. If you work in the private sector—we all know our paychecks are tied to ebbs and flows in company profits, if you work for the government—your wages are tied to union agreements. In either case, it’s a scary place.
My advice is to get your financial house in order ASAP, not next week, not tomorrow, ASAP. Immediately get all debt under control and limit spending based on needs, not wants.
Limit pleasure trips and forgo trading in your car for a brand new one, equipped with a higher payment.
Use your cell phone until its obsolete, resist the urge to spend over $1,000 on a new one.
Cable is awesome, when you watch it…. consider cutting the cord, you may be amazed how little you miss it.
Stop looking at ads in the mail/paper/or in store, they are designed to make you become an impulse buyer, your freezer is full, your pantry is overflowing, you don’t need another flat screen, let it go.
That gym membership you signed up for but keep waiting until next week to actually use…. cancel it.
Once you start following these pieces of advice you will find yourself with extra money at the end of each month, resist the urge. This money is not your next payment, it’s found money to save. Extinguish debt, or invest in retirement; however, I prefer starting savings, make a goal of 10% of each paycheck.
Get that savings up to 6-10 months of expenses, now you are your own boss. Something unexpected happens at work, you can take a job you want, as opposed to taking a job for the paycheck to once again, pay off debts. Invest in yourself, learn new skills, and become adaptable, your future you will thank you. Just FYI, calling out sick when you aren’t sick gets you fired in the real world. The fact you drive a basic car, not the latest C class Mercedes will pay off in the future. Have a plan, don’t be the 80-year-old guy or girl working at Home Depot or Walmart because you have too.
I was asked to make my predictions for the upcoming State of the Union address by President Trump, and here is what you can expect to hear:
The speech will heavily feature the border wall
The bully pulpit will be used heavily
The shutdown will be a central issue
If you think Trump caved on the wall, you are sadly mistaken and likely still believe Russians intervened in the 2016 election. Trump wants to give the State of the Union because, just like Reagan, he knows what to do when the little red light on the camera is red. He is going to light into the Democrats so bad on this issue, Pelosi’s Botox filled head may explode.
Yep I just said it, he is going to twist the few remaining neurons in her brain into a pretzel and then bake it on live television until done. This will be a spectacle for the entire country to see. He is going to invite every family who had a member killed by an illegal immigrant come to the speech, sit in the gallery and clap in unison every time he mentions the need for a border wall.
Even better those invited will see first-hand the “lawmakers” who claim to be working for their best interests. Get ready, he is going to quote sitting Democrats who supported the wall in days past, and compare and contrast their statements today. Fasten on your chin straps folks, this game promises to be rougher than the Tom Brady show.
Regarding the bully pulpit, you guys haven’t seen nothing yet. Trump is going to obliterate those even in his own Party. I’ll call this gang the “America Caucus.” This caucus tends to form when a critical mass of vertebrate challenged Republicans are elected. The members of this group tend to be the squishiest we have to offer. Think Graham, Collins, Murkowski, and to replace the departing Flake (no pun intended) Mitt Romney is set to join.
Trump is going to go hard after them, he wants his border wall and he wants healthcare done, and he isn’t going to take the embarrassment of his last attempt sitting down. No holds will be barred, and this has the potential to look more like the OK Corral than a traditional State of the Union.
The shutdown will be addressed, but I guarantee the threat of another one is on the table. Trump is going to remind the nation that he made a good faith offer to the Democrats and that his offer was rebuked. He will then remind the country that he isn’t a politician, he is a negotiator and when the Democrats won’t work with him, he will call them out. Sound familiar? The GOP tried this type of obstruction under Obama, it failed. The Democrats will fail here as well. This concept of being against everything Trump is fine on paper, but the voters want more.
The Democrat’s –like the GOP congress before them—have offered no alternative. The shutdown being the best example. The Democrats kept telling Trump to re-open the government without addressing the wall. They missed a key chance to win an issue. What if: Schumer and Pelosi ok $5 billion for the wall, but in exchange asked for $20 billion for infrastructure? Trump likely goes for it, he touted his union support during the 2016 elections. Following such a deal, they both could have gone on the TV circuit and basically said they schooled “the Donald” and got a better deal. Yes a small border wall, but you averted a government shutdown crisis, and got lots of good union jobs coming to towns near you! Democrat leaders might even have thrown the issue at Republicans who voted for the budget saying Trump and the GOP are causing record spending due to their reckless wall demand. Don’t kid yourself, $5 billion isn’t building much of a wall. In contrast they showed the American Public they have no ideas and don’t care to negotiate.
Final word: Trump is going to mutilate your Party by using of the State of the Union and the bully pulpit made available to him. He has found his footing and is going full bore after you now. No one will be spared from his wrath. You will see quite a few Reagan like traits from Trump. I am even willing to bet some Democrats or all walk out in unison as a protest.
Also does Trump even like being President? I ask for this reason; he seems to enjoy campaigning and giving speeches more than his work, and I think that is due to him being a former CEO. He wants to do it his way, not concede a bunch and hope he can claim victory in the end.
Tune in for the SOTU speech, I doubt you will be disappointed.